| Date Issued: | 24/07/2024 | Applicable to: | Insurance firms | |
| Link(s): | Freeholders face class action over insurance commissions – Leasehold Knowledge Partnership | |||
Context
The LKP has announced that a class action over hidden insurance commissions, which leaseholders have unwittingly been paying for years, has been launched by City solicitor Liam Spender, also an LKP trustee.
Key points to note and next actions
Spender has been challenging insurance costs and other service charges in multiple actions at his site, Saint David’s Square in London’s Docklands. He has been backed by his law firm Velitor, which has secured multimillion pound funding for the no win no fee claims from Balance Legal Capital LLP. Leaseholders can read more and sign up at the Leaseholder Action website.
The article sets out that many leaseholders have been paying insurance premiums for their buildings that have included hidden “commissions”.
Velitor says charging secret commissions on insurance premiums is unlawful, as leaseholders were never told and therefore have not given “informed consent” to these additional charges. Velitor says that, as a result, these commissions remain the property of leaseholders.
Mr Spender successfully challenged a £100,000 insurance commission at Saint David’s Square, and Velitor estimates that the same issues may affect up to 900,000 flats owned by the largest freeholders.
The class action claim will seek to reclaim hidden commissions, any resultant increases in Insurance Premium Tax (IPT) and interest going back at least six years. Mr Spender will seek to extend this period. The claim is open to any leaseholder who owns, or has since 1997 owned, a leasehold flat in England and Wales.
In addition to the potential impact on the freeholders involved, recent actions have also called upon the insurance intermediaries involved to provide evidence so there is a danger that they will be included in the action. In addition, if insurers have been complicit in allowing commissions to be flexed to allow commission sharing, the insurers may also be included within the action.