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

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

To access the original FCA document, click here.

Short Summary

The Financial Conduct Authority (FCA) addresses developments in multi-occupancy buildings insurance (MOBI), focusing on leaseholder concerns. Over the past year, the FCA has advanced consultations and established new rules in collaboration with various stakeholders.

Enhanced Leaseholder Protections

The FCA’s new rules, effective from 31 December, mandate insurers to act in the best interests of leaseholders. These include fair product design, avoiding biased remuneration schemes, ensuring fair value in policies, and transparently disclosing policy details and commissions.

Insurer Risk Modelling and Pricing Analysis

The FCA’s review of insurers’ pricing strategies revealed that:

Data Standards and Reporting

Following the adoption of the ABI and BIBA industry data code, the availability and compliance with data recording improved. However, challenges remain in detailed data analysis, particularly for buildings with fire safety issues.

Regulatory Actions and Future Focus

The FCA has taken regulatory actions against non-compliant firms, emphasising the need for continued improvement in fair value delivery and compliance with product governance rules. The FCA supports initiatives like the ABI’s reinsurance scheme, aimed at improving the insurance market for affected buildings and leaseholders.

Key Take-Aways

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