IBSC drafts guidance but CII president says there’s already enough on treating customers fairly

Brokers are concerned about the implications of the regulatory probe into buildings insurance commissions and want clearer guidance on how to negotiate commissions with property managing agents (PMAs), the chair of the Insurance Brokers’ Standards Council (IBSC) has said.

A recent update by the Competition and Markets Authority (CMA) found evidence that leaseholders could be over-paying for cover and raised concerns about PMAs being incentivised to choose an insurer willing to offer high commissions.

The CMA added that it could force brokers, insurers and residential property owners to disclose their commissions. It is also investigating the relationships between property managers and insurance brokers.

IBSC chair Paul Anscombe said: “The issue for brokers is the treating customers fairly aspect of paying often significant commissions to property owners and managers.

“Brokers want guidance in this area. Most are not concerned about the level of their net retained income after pay-aways.”

Anscombe added that brokers were unlikely to be materially affected by the proposed commission disclosure plans, because they had not typically commanded the high commissions.

But he warned that brokers should keep a clear evidence trail to justify commission levels if ever asked by the regulator.  

The IBSC is drafting guidance for its 1,000-strong membership.


Biba said it was waiting to hear the outcome from the CMA’s investigation before releasing formal guidance to its members.

But chief executive Steve White added that brokers had no control over the charges issued to tenants for the insurance part of a service charge by their customers – the PMAs or property owners.

“Insurance brokers have an agency relationship with either the PMA or property owner and have duties to them under the laws of agency. Therefore brokers have no relationship with the tenant,” he added.

Biba deputy chairman Stuart Reid added: “Having read the paper it does seem the issue here is very much between managing agents and, freeholders and their clients. The CMA has asked for views and I will read with interest what those views are when they are made public.”


New CII president Ashwin Mistry said there was already enough guidance for brokers to follow on treating customers fairly.

He said: “I think in many ways there are enough documents in play. The FCA conflict of interest review covers this directly and indirectly. The CII code of ethics tells you how to behave in a professional manner.

“If brokers have not read the contents of the thematic review that is negligent – ignorance is no defence.”