The FCA has been warned on numerous occasions there was an issue, but it failed to act
By Content Director Saxon East
How inept is the FCA?
The regulator has at last been driven into action over rising buildings insurance premiums.
This follows a demand by Michael Gove, secretary of state for levelling up, housing and communities, to review the buildings’ insurance market for multiple occupancy residential buildings.
Yet Insurance Times first wrote about this topic 10 years ago. There have been repeated articles on this, as well as warnings from across other sectors that this was an issue.
Furthermore, FCA heads of general insurance have previously discussed potential buildings insurance issues with brokers at our Broker CEO Forum events. Broker attendees openly admitted to the regulator that there was a real problem here.
A huge issue was that managing agents and brokers carve out massive commissions that then get bundled, without transparency, into service charges for leaseholders.
Insurers did nothing to oversee fair customer treatment in the distribution chain.
In 2014, the UK’s competition watchdog warned about ”excessive charges”. The Competition and Markets Authority urged the FCA to consider regulating freehold commissions.
But the FCA did nothing. Not even a thematic review.
Now, with the issue apparently at crisis point, it needed a senior politician to spark the FCA into action.
The FCA could have addressed this 10 years ago. It could have helped leaseholders pay a more proportionate amount for buildings insurance over all these years.
FCA shake-up needed
Will the FCA be held to account for this ineptitude? Unlikely.
The regulator, bogged down in staff strikes, pay disputes and high levels of employee unhappiness, needs a shake-up.
Signs are beginning to emerge that the regulator will face greater scrutiny.
The government intends to hold the FCA up against international standards of competitiveness. Moreover, if there is truly going to be a ”bonfire of red tape”, as prime minister Boris Johnson puts it, the FCA will need reform.
For the fed up insurance sector, that day can’t come soon enough.
No comments yet