Secret commissions

[JK0]

Can you break down the 52%? Was this for insurance commissions only?

Let me guess:

Asbestos survey, Electrical inspection, health & safety inspection, accountancy... (Usual lucrative nonsense.)

[Gordon999]

In many leases, the wording states the "Lessor has sole right to decided on the insured cover ".

The Times dated 5 July 2019 carried the report about secret commission extracted from buildings insurance:

" Freeholders and managing agents are overcharging leaseholders for the insurance of their flats, while also pocketing large commissions from the insurers. Campaigners for leasehold reform are calling on the government to crack down on the practice.

Sir Peter Bottomley MP, the co-chairman of the All-Party Parliamentary Group on Leasehold and Commonhold Reform, says: “We believe unfair service charges cost leaseholders hundreds of millions of pounds each year with secret commissions on buildings insurance deals making up a large part of it. Regulators must do more to bring this corrupt practice against leaseholders to an end.”


The above 2 paragraphs is all I could see free of charge. The paper charges £8 for 2 months reading.

https://www.thetimes.co.uk/article/l...ions-k39fz6x8f

[Stacker]

In many leases, the wording states the "Lessor has sole right to decided on the insured cover ".

The Times dated 5 July 2019 carried the report about secret commission extracted from buildings insurance:

" Freeholders and managing agents are overcharging leaseholders for the insurance of their flats, while also pocketing large commissions from the insurers. Campaigners for leasehold reform are calling on the government to crack down on the practice.

Sir Peter Bottomley MP, the co-chairman of the All-Party Parliamentary Group on Leasehold and Commonhold Reform, says: “We believe unfair service charges cost leaseholders hundreds of millions of pounds each year with secret commissions on buildings insurance deals making up a large part of it. Regulators must do more to bring this corrupt practice against leaseholders to an end.”


The above 2 paragraphs is all I could see free of charge. The paper charges £8 for 2 months reading.

https://www.thetimes.co.uk/article/l...ions-k39fz6x8f

Yes Gordon the CMA and the Office of Fair Trading are looking at this, unfair terms etc

[michelle230]

Michelle - if you are representative of the LKP, I would strongly object to you being involved with the FTT. I am not saying that the FTT is perfect by any means but there is a layperson on the Tribunal, maybe the choice of layperson could be improved.

And thats of course because it's a fair and balanced system and you can expect totally unbiased judgement.
https://www.leaseholdknowledge.com/l...outham-resigns

[eagle2]

And thats of course because it's a fair and balanced system and you can expect totally unbiased judgement.
https://www.leaseholdknowledge.com/l...outham-resigns

Michelle - Is your link relevant to this thread? You have posted the link before on a different thread,

[eagle2]

"Back in 1998 a government minister said that leasehold “has its roots in the feudal system and gives great powers and privileges to landowners. It is totally unsuited to the society of the twentieth – let alone the twenty-first – century.” Why hasn't this abusive system been killed off yet? "
This was a comment made in the same newspaper article.

[eagle2]

The newspaper article again raised nothing new, it just identified that insurance commission can amount to 40% to 60% of the premium and that the commission can be shared by 3 different parties. There is nothing wrong with raising the subject again but you wonder why the practice has not been stopped before and the proposal for disclosure of part of the commission is hardly the solution.

[michelle230]

Michelle - Is your link relevant to this thread? You have posted the link before on a different thread,

No. Apologies - I was aware of that. But it was relevant to your post.

[Stacker]

The newspaper article again raised nothing new, it just identified that insurance commission can amount to 40% to 60% of the premium and that the commission can be shared by 3 different parties. There is nothing wrong with raising the subject again but you wonder why the practice has not been stopped before and the proposal for disclosure of part of the commission is hardly the solution.

Disclosure is required so that the leaseholders know how much the policy has been inflated by. FTT tribunal cases state no more than 10% is acceptable because its to cover the claims handling should there be a claim so they can hardly charge hundreds for doing the work, the FTT know this and apply this....they base it on the time taken to manage any claims and if there are no claims then claiming a high commission is not justified. Also I found out that the brokers receive a commission from the insurance company for the volume of business they place with the insurer...so possibly the managing agent, freeholder and broker benefit at the expense of the leaseholder..

[Stacker]

Leaseholders pay up to 60% more for buildings insurance because of secret commissions, reports The Times

By Harry Scoffin The property section of The Times has this month been leading on calls to end opaque insurance arrangements for leasehold blocks. In a sign of how leasehold is now dominating the news agenda, the title’s investment editor Mark Atherton has published on the issue of secret commissions over two consecutive Saturdays. Leaseholders […]

[Stacker]

Hi,

Are we only concerned with insurance here?

On recently becoming a director of our RMC and finally having sight of the financial statements it has become apparent that our outgoing managing agent actually acquired 52% of the money paid into our service charge account over a 4 year period.

How is this possible when RICS had conducted 2 investigations?

During the same period the same defunct Ombudsmen Services Property also concluded 2 biased investigations!

In my opinion neither of these organisations should have any input into a new Regulator.

RICS are always biased and in favour of protecting their own, its a sham!

[Stacker]

Which estimated that leaseholders were being overcharged by £700 million per annum in 2011. The Select Committee noted that the leasehold sector is now larger and that figure is likely to be higher.

ARMA estimate that £1.3 billion of unprotected client money is held by managing agents.

That is the scale of the problem and explains why unscrupulous individuals have been attracted to the sector.

So why aren't the Financial Ombudsman Services doing anything about this? They could help oversee and regulate the commercial insurance business for flats as they do with all other financial products?

[Stacker]

The newspaper article again raised nothing new, it just identified that insurance commission can amount to 40% to 60% of the premium and that the commission can be shared by 3 different parties. There is nothing wrong with raising the subject again but you wonder why the practice has not been stopped before and the proposal for disclosure of part of the commission is hardly the solution.

The solution is transparency and accountability, stop inflating the cost of the insurance to the leaseholders.

[Stacker]

It's true and also difficult to prove especially if they own their own insurance broker as well.
Also will cost you if you have been added to a multi block policy where some of those properties are considered risky for a variety if reasons.
My F/H was found guilty of running an unauthorised HMO. Our insurance shot up even more!

So do you get to see the policy, invoice and are you able to ask for sight of/ disclosure of the commissions?

[Macromia]

RICS are always biased and in favour of protecting their own, its a sham!

This is the problem with a lot of regulations etc. that are supposedly in place to protect leaseholders.
'Best practice' isn't decided by organisations that are there to protect the interests of leaseholders, it is decided by organisations like RICS, ARMA and ICAEW - organisations whose primary objective is to protect the interests of managing agents, accountants, etc. who will be making money off leaseholders.