![](https://www.leaseholdknowledge.com/wp-content/uploads/2024/07/LiamSpenderClassActionBIG-1024x543.jpg)
Freehold owners face an existential legal onslaught as lawyers today launch a class action over hidden insurance commissions which leaseholders have unwittingly been paying for years.
The initiative has been launched by City solicitor Liam Spender, also an LKP trustee, who 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 this website:
https://www.leaseholderaction.com
BBC TV’s report this morning can be seen here:
Millions of leaseholders have been paying insurance premiums for their buildings that have included hidden “commissions”, divvied up between landlords and insurance brokers. Because leaseholders are not a party to these insurance contracts that they have to pay for, they have no way of knowing the scale of the commissions involved, although landlords do have a feebly enforced obligation to tell them if asked.
After the Grenfell tragedy in 2017 and ongoing building safety crisis which has blighted so many lives, insurance costs have soared – and so have the hidden commissions.
Last February the Financial Conduct Authority (FCA) reported that between 2019 and 2022 £1.6 billion was paid out by leasehold homeowners in insurance premiums.
The FCA estimated the average “hidden” commission charged was 30% of the premium, and there was evidence some leaseholders were facing an uplift of up to 60%.
Mr Spender told BBC Radio 4’s Today programme this morning that on these figures the amounts of commission paid could exceed £480 million.
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.
Mr Spender said:
“I was able to expose and recoup the secret commissions through which freeholders took money from unknowing leaseholders.
“Through this group action, Velitor is now looking to help others recover secret commissions they may have paid.
“The plight of leaseholders and their unconscionable and unlawful treatment by some freeholders is nothing short of a national scandal. This legal action will be a significant step in addressing it.“
In November last year MPs were aghast to hear his account of the vulnerabilities faced by leaseholders in litigation against rip-off charges:
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.
To take part in the claim leaseholders must sign up here:
Leaseholder Action Home
Leaseholder Action is challenging insurance brokers and landlords for secret commissions, that have left leasehold flat owners out of pocket collectively to the tune of millions of pounds.
There is no charge for joining the claim and there is no risk to leaseholders. Leaseholders could receive between £1,500 and £3,500 for each flat, including IPT on the commission and compound interest. Velitor and their funders will receive a proportion of any damages awarded by the courts.
![](https://www.leaseholdknowledge.com/wp-content/uploads/2024/07/GilesGroverLiamSpenderclassaction-1024x576.jpg)
Giles Grover, a former property manager and leaseholder who is part of the influential End Our Cladding Scandal group, investigated the insurance commission at his Manchester block, which has the same type of cladding as Grenfell and, as a result, the building’s insurance premiums rose 500%.
“It is disgraceful that, while residents were dealing with unsafe cladding in the aftermath of the Grenfell tragedy, insurance brokers and freeholders were splitting hidden commissions on our building insurance.
“In just three years our insurance costs rose more than five times to over £440,000 a year. Charging high rates of commission on such huge sums for doing next to no work will have made them a packet.
“I would say they are nothing but freeloaders, profiting from the misfortune of others.”
Secret commissions will become unlawful as a result of the Leasehold and Freehold Reform Act 2024.
However, the Act is not yet in force and is not retrospective.
This proposed group action is currently the only way for leaseholders who were misled about secret commissions for years, before the change in the law, to recover their money.
By opting into the Velitor Law action claimants will agree to pay 40% of their damages to Velitor which will be shared with the funder.
Velitor and their barristers will be working at discounted hourly rates.
In addition, successful claimants will pay the funder £100 of their damages for expenses, rising by £10 for each year that the action is active. The claim is backed by “after the event” insurance to cover any costs risks. If the claim is not successful, then claimants will pay nothing.
The FCA concluded in their April 2023 report ‘Multi-occupancy buildings insurance – broker remuneration’:
‘One of our key findings in the broker market was evidence of some high commission rates and poor practices which were not consistent with driving fair value to the customer. We noted that our rules require that the prices paid represent fair value and that we were concerned that the levels of commission and practices of commission sharing did not always represent fair value for those bearing the costs of this insurance.’
![](https://www.leaseholdknowledge.com/wp-content/uploads/2024/07/MickPlattLiamSpenderclassaction-1024x576.jpg)
We are leaseholders with one of the big Social Housing Landlord of the G15 Group.
We are told by a company director that they take no commission from the Insurance premiums..
We have no way of checking this.
Our premium has rocketed this year, apparently because many major insurance companies are refusing to take on social housing. So our landlord has had to move from its normal insurer Zurich who have provided cover for the whole company for many years to a smaller but much more expensive one.
Our landlord has provided us with the reasons for the increase, it appears we just have to accept the situation.
Michael,
We have registered for this no win no fee class action and have received an automated reply which says, in part, “We will notify you of your eligibility to join the claim and send further details once our checks are complete”
Do you remember the old saying “nothing ventured nothing gained”
Why do you have to accept the situation Michael?
Have you given thought to actually making your own enquiries and finding out the facts for your self?
Stephen
I have no way of checking if our landlord MTVH receives any commission.
In 2022 I queried this with them and received confirmation from a Director that they received no commission from the Insurance Company.
The current cost has rocketed and the new insurer is AXA and the broker is Arthur J Gallagher. It is likely that the broker takes commission, is that legal?
I have again written the a company director and asked again for confirmation that no commission is received from the insurance company, the broker or anyone else.
What more can I do about this, we are all very old, average age 85/90 years in a retirement home with extra care. We rely heavily on the landlord for services and do not want to cause problems if it is unjustified.
Michael,
If you sign up for that no win no fee class action the Proffesionals will notify you of your eligibility to join the claim, and send further details once their checks are made.
Can this class action include 50% shared owners of a housing association flat with a lease dating back to 2001? Grateful to know please.
Is LKP aware of the Canary Riverside insurance decision? The Tribunal ruled that leaseholders were overcharged more than £1M in secret insurance commissions.
They charge leaseholders 40% plus VAT on any commission clawed back so 48% plus they will be getting their own fees back if they win in court as well and then get a further £100 – it does seem to be rather one sided.
@Stephen, this is not correct. Any costs recovered will be set-off against the 40% and not paid in addition to the 40%.
Solicitors and counsel are working at discount, which will only be recovered if the claim succeeds.
Leaseholders participating in the claim will have all the work done for them by solicitors, counsel and experts to which they would otherwise not have access.
I am sure most leaseholders will see the value in that offering.
Dear Mr Spender,
I for one can see the obvious benefits of that welcome and generous offering, and have taken it up.
I would like to thank the Solicitors, Counsel and other experts who have volunteered to work at discount rates. That kind of comittement to duty is rare in my estimation.
So, our Buildings insurance is due in September… do we write (again) to the FH & tell them we have applied to be included in this Class action and see what they do? We have refused to pay in the past & they took us to court. I suppose this legal case will take time to build and present to a court & then will it become an “open” claim similar status to PPI ongoing giving people a chance to claim?