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We can help you with the issues relating to mandatory commission disclosure

Property managing agents could be forced to disclose how much commission they and brokers make from arranging buildings insurance after the Competition and Markets Authority (CMA) found a lack of transparency was damaging leaseholders’ interests.
 
Typically the leaseholders are given an invoice which does not explain how much commission property managing agents or freeholders earned. Leaseholders are also not told if the company purchasing insurance on their behalf has links to the broker they are buying it from.
 
The CMA concluded that the high levels of commission were leading property managing agents not to look for the best deal for their leaseholders.
 
It has proposed that property managing must disclose all information relating to the commission payments they earn.
 
Disclosure of fees, charges and commissions
 
The CMA recommend disclosure of (i) what is included within the core management fee and rates of management charges, (ii) administration and supplementary charges, and (iii) commissions (including commissions earned by the property manager for arranging the buildings insurance).
 
They recommend that property managers must, for each property they manage (because charges may vary depending upon the contract and administration charges set by the landlord) fully disclose details of:
 
The services and activities that are provided and paid for within a core management fee. This could distinguish between services provided under the service charge and as a management fee. Where non-routine projects incur a management fee, either fixed or related to the size of the project, the rates applied must be disclosed, including any points at which the rate of charge varies.
 
All administration and supplementary charges for services, to enable leaseholders to better understand the charges they face as a leaseholder.
 
Any commission earned by the property manager (including fees/commissions in relation to building insurance). 
 
What to do next? 
 
We can help you with the issues relating to mandatory commission disclosure. If you would like to talk to an expert for more information about your insurance programme, or to discuss any other risk or insurance need, please give us a call. 
 
Call 01789 761660 
 
Web: www.pi-propertyinsurance.co.uk

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