But the fiddling will go on for as long as leaseholders are not a party to the insurance contract that they are obliged under the lease to pay for
The issue of freeholders and managing agents fiddling insurance commissions at leaseholders’ expense was raised in the Times earlier this month.
Sir Peter, 74, said that secret commissions were part of a broader pattern of mistreatment of leaseholders. “Those receiving cowboy commissions by ripping off leaseholders in order to secure the landlords’ insurance business will be brought to account,” he said.
Leaseholders ‘losing millions from bribes’ to renew insurance
Secret commissions are being paid to property agents behind leaseholders’ backs, with undisclosed payments from insurance brokers said to run into “hundreds of millions of pounds”.Sir Peter Bottomley, a Conservative MP and co-chairman of a parliamentary group looking into leasehold reform, warned th
The article also featured former insurance broker Neil Holloway, 61, founder of M2 Recovery, which seeks to recoup furtive and possibly unlawful commissions.
M2 Recovery Ltd – Secret Commission Recovery Specialists
M2 Recovery specialises in establishing whether secret payments under insurance policies have been made by brokers by way of an inducement to secure the insurance business
The practice may constitute an illegal bribe and, as such, secret commissions going as far back as six years could be recovered.
Mr Holloway addressed the All Party Parliamentary Group on leasehold reform last July on the issue of dodgy commissions.
LKP is making renewed efforts to get the Competition and Markets Authority and financial ombudsman to take up the issue, which involves hundreds of millions of pounds.
“If leaseholders have to pay the insurance bill then they should be considered a party to the contract with absolute right of disclosure of any commissions involved,” said Sir Peter.
M2 Reovery claims to have secured refunds worth hundreds of thousands of pounds on behalf of clients, including a banking group and a high street retail chain.
“Agents are not being transparent and are being influenced by insurance brokers to push tenants into situations that may not be best for them,” said Mr Holloway.
Nigel Glen, CEO of the Association of Residential Managing Agents, said that his members must disclose if they are taking a commission from brokers and that “best practice” is to tell leaseholders how much.
Leaseholders can make their own judgement on how effective this is.
In fairness, ARMA supports the statutory regulation of managing agents.
Royal Institution of Chartered Surveyors members have been told that they should declare commissions two years ago.
Jonathan Gorvin, RICS head of regulatory policy and development, said:
“Under our scheme, firms must account to clients for any commission they receive from insurance work and therefore an undisclosed payment should not occur under any rules.
“Where we find failures, we take disciplinary action. This would include removing firms from registration.”
These are tough sounding words, but the regulatory regimes of both organisations have proved a shambles, with the regulator of ARMA, former Labour Minister Sally, resigning saying self-regulation cannot work.
Meanwhile, the RICS disciplinary process has proved woeful, with more than 200 disgraced chartered surveyors being rehabilitated owing to a procedural errors.
Case against Benjamin Mire collapses, as RICS disciplinary process descends into shambles
A spokeswoman for the British Insurance Brokers’ Association told The Times: “The insurance contract arranged by the broker is between the property owner and the insurance company.”
Payments to agents were “not secret” as far as brokers were concerned “and are appropriately accounted for”.
Which, of course, is the absolute standard get-out.
Leaseholders are “flat-owners” when it comes to selling them the dream of home ownership.
At all other times, they are tenants. As tenants they are not a contracted party to the insurance and therefore have no right to know its details.
And the grisly fiddling just goes on and on and on …
Related posts:
Leaseholders pay up to 60% more for buildings insurance because of secret commissions, reports The Times, Harry Scoffin,
Times journalist defeats MB Freeholds and RMG over insurance dispute
Homeowner in Kingston gets £6,000 leasehold insurance premium, with an £10,000 excess if he is flooded
Rich should buy freeholds and cream commissions, says Sunday Times
Times reports inquiry into dodgy freeholders
Estate Agent Today supports LKP’s campaign to introduce commonhold
Neil Holloway, owner of Mulberry Insurance Services Ltd which collapsed just over 12 months ago owing over £1,500,000 to unsecured creditors of which £0 was recovered. According to the post collapse report there was also around £280,000 ghosted out of the company when it was in serious trouble to “connected parties”. Also known to have had issues with the FCA
Do not trust this man. I repeat, DO NOT TRUST THIS MAN!!!!!!!!!!
Or … perhaps a smear against a man who might just help level the field for leaseholders in their repeated, repeated, repeated … efforts to prevent freeholders and their professional stooges cheating them over insurance.
Why is the insurance for a two-bed flat in a Victorian conversion of 2-4 units, always but always about double the cost of a four-bed Victorian house?
the liquidators report is hardly a glowing reference particularly para 1.1.3
This can be viewed
https://beta.companieshouse.gov.uk/company/02819279/filing-history
Not a smear, solid facts that are publicly available and easily verified. It’s shameful that you not only attempt to defend this character but astonishingly go on to promote him!!!
Why is a white four door BMW more expensive than exactly the same white four door Skoda? Perhaps they aren’t the same? Overcharging/exploitation is of course wrong but so are misleading comparisons and promoting crooks as white knights
Question?
If due diligence is essential before appointing a managing agent, why not in this case?
And if due diligence turns up a history of a liquidated company with unpaid debts and unexplained payments wouldn’t extreme caution be the watchword?
I am reminded of Dudley Joiner and the RTMF?
They have done some very good work, but their history was to say problematic in the extreme.
Having investigated further investigated these claims, I regret to say that I too have substantive concerns over the activities of Neil Holloway and his companies.
It does appear that a substantial amount of money cannot be recovered and a substantial amount of money does appear to have been paid out without proper explanation being offered to the liquidators.
M2 Recovery is currently listed as a dormant company.
Well, it sounds like he may have plenty of experience that would be relevant in dealing with the fragrant characters who earning their living playing the angles of the leasehold sector.
If Mr Holloway helps leaseholders unpick insurance scams in their blocks of flats, all power to him.
(And it is worth recalling that he is quoted in the original Times article).
My question is answered, it clearly hasn’t been hacked as – true to form – when presented with irrefutable facts admin simply doubles down on their position and hardens their resolve as they cannot possibly be wrong. Using the fact that somebody is quoted in The Times vs the fact that large sums of money have gone missing, never to be recovered, isn’t exactly balanced
It seems the Freeholders/Landlords/Developers have finally seen the end of the Leasehold Exploitation when the first 7 posters forget to follow the Thread instead. go for SOK and LKP.
Insurance Commissions are just another of the many SCAMS used by MA such as Firstport Retirement (FR) to Exploit Leaseholders. They do this by bringing in a Middleman, a Sister Company, who then brings in a Broker, each receives a Commission totalling circa 44%.
The Broker receives two Commissions one for the Rebuilding Premium 6% and another for the Terrorism Cover 5% Firstport Retirement through Firstport Insurance have in the past received Commissions of 33%.
When challenged the CEO of Firstport agreed in the past Commission have been too high and was later made to resign for admitting Commissions were an Exploitation.
Firstport used both Kingsborough Insurance(part of the Firstport Group) and Oval Insurance to place their development insurance.
Oval which did the lions share of the work charged around 5% commission, whilst Kingsborough were charging over 30% commission.
Intriguingly the role Kingsborough played seemed to shift in evidence given to different tribunals.
Indeed one tribunal ..found it hard to understand what if anything Kingsborough did and ordered a full refund of their commissions.
It may be indicative that during this period the average number of employees at Oval was 900 whilst the average number of employees at Kingsborough was 14.
The former CEO of Firstport did say that “Historically insurance commissions were too high”. She reduced them to 14%, but would offer no refund to overcharged residents.
She also said (whilst it was still called Peverel) that re-branding was not an option. She also said expansion was not an option until their service problems had been addressed..
My understanding is that the CEO left Firstport after a botched I.T upgrade.and before a disputed compensation claim had been settled. Apparently the CEO had to put her own money into the company.
She subsequently moved to Ainscough, where rather perversely she appointed Andy Davey who headed up Cirrus during the price fixing scandal.
Michael,
Firstport Retirement as Managing Agent (MA) when known as Peverel Retirement
1. Peverel Development to be insured.
2. MA, Peverel Retirement instructs Kingsborough (Sister Company) to arrange Insurance.
3. Kingsborough contacts a Broker – Oval.
4. Oval as broker brings in Large Insurance Company eg (Zurich or Lloyds of London).
5. Kingsborough receives a commission of up to 33.05% for the Introduction.
6. Oval receives a commission up to 6% for finding Large Insurance Company for the Development.
7. Oval also receives a commission up to 5.5% for Terrorism Cover for the same Development.
A Leasehold Valuation Tribunal (LVT) stated that Kingsborough Insurance was seen to have carried out very little for the Development and all the Commission they received were refunded.
It was noticed at the time that during this period the average number of employees at Oval was 900 whilst the average number of employees at Kingsborough was only 14. The money made by Kingsborough reflected that they did very little to earn the profits made.
Janet Entwistle former CEO of Firstport did say that “Historically insurance commissions were too high”. She reduced Commissions to 14% ( still money for nothing) but did refuse to refund any of the Commissions paid.
Prior to the enactment of RTM legislation in 2004, unscrupulous freeholders reigned supreme with the right to place buildings insurance and then to charge leaseholders extortionate premium rates for the privilege.
With ground rent on long leaseholds at the time more usually set at a modest annual level, such freeholders had a field day demanding premiums at three to four times the actual market rate. In 2004, in our own case the annual market premium was c. 8k, whereas the demanded premium was c. £23.5 k p.a. It is of note that today, after fifteen years of claims history and allowing for incremental cost increases,, our annual premium is c.£15 k. – still c. £9k below the 2004 extortionate demanded level.
RTM and the old LVT put an end to all that.
LKP and Private Eye reported on the activities of one such group – the Regis Group (and their own in-house Pier Management Ltd) in November 2018. A glance at the archives of the old LVT show that appearances by Regis Group (Pier Management) are too many to mention.. However, one decision of the LVT is of major import and can be found at CAM/OOKF/LSC/2010/0133..
In this case Regis was ordered to file and serve details of the claims record of the building in question, the methods used to obtain insurance and whether any commission was received by Regis or any associated person or company. .
In reply, Regis failed to provide any detail of the claims record and, in an unsigned letter from in-house Pier Management, simply informed the Tribunal how it obtained insurance,
David Bland, Pier Management, informed the Tribunal at the hearing that the insurance policy was a portfolio policy rather than a block policy. and the number of units covered by the portfolio policy was 18-20,000 (2010). The Tribunal concluded in the case in question:
“The premium demanded of this lessee is about £575.00 per annum for this property which is presumably at the lower end of the spectrum in value of properties in the portfolio. Even if it were typical , then it is not difficult to see that the total premium for this portfolio could be say 20,000 x £575, i.e £11,500,000. A modest commission of say 20% would mean in income for the Respondent (Regis) of over £2,300,000. 20% is very much at the lower end of the range of commissions seen by this Tribunal in these cases. This would mean that this landlord (Regis) is making a very substantial undisclosed “secret” profit which this lessee is contributing to in addition to service charges and administration fees. ”
This case and the Peachey case reported by LKP/Private Eye in November 2018 are not isolated.. They are, along with the case reported by the Times above, examples of a nefarious trade in which unscrupulous freeholders continue to engage.and openly intimidate and harass gullible and vulnerable leaseholders into making payment
Only the few ever take such matters to a Tribunal, and excepting RTM and the LVT (and 1st TTP) in the few cases reported, clearly this scurrilous activity remains unchecked.