Two Executives have been suspended at the UK’s largest tenant referencing firm, HomeLet, while an investigation into the selling of tenants’ insurance policies is under way.
The investigation follows a crackdown by the Financial Services Authority on the selling of contents insurance policies by HomeLet, which is one of the brands owned by insurance giant Barbon, (the company formed from the former insurance wing of the collapsed property services firm Erinaceous).
The probe revolves around a clause in lettings agents contracts, making it a mandatory requirement for tenants to take out tenants’ content insurance.
It is understood that the clause – which was apparently a long-standing one and not objected to by the FSA during earlier inspections – was originally inserted by agents on the advice of HomeLet.
HomeLet sells its policies to landlords and tenants through letting agents, and claims to sell one in five of all tenants’ references. It has a network of 3,000 lettings agents, all of whom have apparently been contacted and told to remove the clause.
It is understood that the FSA, which requires HomeLet to make sure the agents do not breach the regulator’s rules, has been concerned on two fronts: first, the possibility that making purchase of insurance a condition of tenancy could be an unfair term; and secondly, because the clause breached FSA and OFT guidelines which state that a tenant cannot be asked to buy their own contents insurance – although, confusingly, a tenant can be asked to buy insurance that covers their landlord’s possessions.
The HomeLet spokesperson said: “HomeLet is involved in a review process which may lead to policyholders with tenants contents policies being contacted about how such contracts were purchased. This is a thorough process to ensure it meets the company’s required standards. HomeLet continues to provide insurance products and services to existing and new customers. HomeLet is committed to best practice in the service it offers to landlords and tenants via agents.”
The next step in the investigation will be for HomeLet to contact tenants who were sold the HomeLet contents insurance. HomeLet says the tenants will be contacted ‘shortly’.
It is thought the FSA could have other lettings insurance firms in its sights.
Source: Estate Agent Today
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