Who Insures the Building?
Buildings insurance must be the responsibility of the freeholder, the resident management company or the managing agent acting for the freeholder.
If the responsibility to insure falls to the managing agent acting on behalf of the freeholder (and they also handle any other any other insurance-related matters that makes them meet the definition of a ‘regulated activity’) then the Financial Conduct Authority (FCA) requires them to be regulated. The type of insurance regulations covered (and the reason why managing agents fall into the net) are as follows:
- Arranging insurance and choosing the best quote (with the former as a given as most leases don’t allow leaseholders to obtain their own buildings insurances, or for other leaseholders to club together to purchase it);
- Advising the leaseholders (who are the clients) to include recommending a particular insurance company;
- Dealing with the administration which includes placing the insurance and ensuring the premium is paid to the insurance company (or broker). It also includes the provision of documentation during the conveyancing process to lenders and solicitors.
How Agents Become Authorised and Regulated
There are a number of ways in which a managing agent can become authorised and regulated which are as follows:
- Directly authorised and regulated by the FCA which provides a wider scope but as would be expected, incurs a larger cost;
- Act as an appointed representative of the broker who takes responsibility for their conduct rather than it be directly controlled by the FCA but will likely involve dealing with the principle broker;
- By being a member of an organisation such as ARMA or the Royal Institution of Chartered Surveyors (RICS).