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Dear Secretary of State | Release Date: 29th February 2024

To read a shorter summary of this Dear Secretary of State letter, click here.

To access the original FCA document, click here.

Long Summary

The Financial Conduct Authority (FCA) provides a comprehensive update on multi-occupancy buildings insurance (MOBI), addressing significant concerns for leaseholders. The update encompasses progress in regulatory measures and collaboration with various stakeholders.

Enhanced Leaseholder Rights and Protections

In response to leaseholder challenges in MOBI, the FCA conducted a swift consultation, resulting in new rules effective from 31 December. These rules require insurers to:

The FCA’s report in September 2022 highlighted increases in risk premiums charged by insurers as a significant factor in leaseholders’ rising costs. Subsequent analysis showed:

The adoption of a common data code by ABI and BIBA in February 2023 marked progress in data recording. However, challenges persisted in providing granular data for buildings with varying risk profiles and fire safety issues.

Insurance Intermediaries, Remuneration, and Commission

Following the FCA’s April 2023 report on broker remuneration, regulatory actions were taken against outliers in the intermediary sector. These included skilled person reports to identify issues and require urgent remedial actions. Senior management attestations were also mandated for steps taken to address fair value and compliance issues.

ABI Designed Reinsurance Scheme

Progress on the ABI-led reinsurance scheme, a recommendation from the FCA’s September 2022 report, aimed to provide additional reinsurance capacity for properties affected by fire safety risks. This scheme was anticipated to reduce insurance costs for affected buildings and leaseholders.

FCA’s Review and Key Findings

The FCA’s detailed review from January 2019 to August 2023 involved key insurers and an MGA. The review focused on:

Regulatory Focus and Future Actions

The FCA plans to continue scrutinising firms’ assessment and evidence of fair value, especially for MOBI. The focus will be on improving data use for compliance with fair value rules. The FCA will employ regulatory tools as necessary to ensure compliance and address deficiencies.

Adoption of the ABI/BIBA Industry Data Standards

Despite improvements in data recording following the implementation of the ABI and BIBA industry data code, reporting challenges persisted. The FCA acknowledges progress but emphasises the need for enhanced data analysis and reporting specific to MOBI.

Insurance Intermediaries, Remuneration, and Commission

The FCA’s report in April 2023 on broker remuneration outlined actions against non-compliant intermediaries. The FCA used a range of regulatory tools, including skilled person reports, to identify issues and enforce urgent remedial actions. Senior management attestations were also required from several firms to address issues related to fair value and compliance with product governance rules.

ABI Designed Reinsurance Scheme

The ABI has been working on a reinsurance scheme recommended in the FCA’s September 2022 report. The scheme aims to provide reinsurance capacity for properties affected by fire safety issues, potentially reducing insurance costs for affected buildings and leaseholders. While the scheme’s launch took longer than anticipated, the FCA remains supportive of this initiative.

Key Take-Aways and Actions


The FCA’s detailed summary outlines significant progress and ongoing efforts to address challenges in MOBI. Insurers are expected to fully comply with the enhanced leaseholder protections and improve their approaches to risk modelling, pricing, and data management. The FCA remains committed to ensuring fair outcomes for leaseholders and will continue using its regulatory tools to enforce compliance and address any shortcomings in the insurance sector.

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