This week Shabana has written to the Financial Conduct Authority on the cladding scandal, calling for an investigation into the conduct of insurers.

A recent Westminster Hall debate brought to light further issues regarding the cladding on leasehold properties, namely issues around building insurance premiums and directors’ liability insurance. Shabana has also recently supported the Birmingham Leaseholders Action Group at a Westminster rally.

Shabana believes there is also scope for the Financial Conduct Authority to open an investigation into the conduct of insurers throughout the scandal. It is clear that regulatory failure is precipitating a scenario where insurance companies can act within the rules of the market, but without offering a fair premium to those affected by what is a national scandal.

In an effort to address the legislative mistakes made in the past, Shabana has also written to the Minister for Housing, Communities and Local Government and the Chief Secretary of the Treasury. She has implored them to work together to ensure the first Budget of this Government addresses this scandal by introducing measures to mitigate the costs associated with remedial cladding work and untenable insurance premiums.

Shabana has highlighted the comparisons made with insurance schemes for people in flooded areas. In 2016 the Government worked alongside the insurance industry to establish Flood Re to provide affordable excesses and premiums for people in flood effected homes. My constituents similarly find themselves living in properties seen by insurers as high risk through no fault of their own, and the Flood Re scheme is proof that the government can work with the insurance industry to address their concerns.

You can read both of the letters in full below.

Letter to the Financial Conduct Authority

Dear Andrew Bailey,

I am writing regarding the ongoing scandal concerning the cladding on leasehold properties.

Over the last six months I have had correspondence with a number of constituents about cladding on leasehold properties. My constituents are a number of leaseholders representing a site in Birmingham, Ladywood with over 140 flats. The leaseholders are deeply concerned about the cladding used on their building but are unable to undertake the necessary works to remedy the situation without significant financial cost.

I have written to the Ministry of Housing, Communities & Local Government regarding their concerns. I understand that the Government has already created a £200m fund to make safe private properties more than 18 metres tall with the same ACM cladding used on Grenfell Tower. However, it is clear that ACM is not the only cladding system that poses a risk to residents.

A recent Westminster Hall debate brought to light further issues regarding the cladding on leasehold properties, namely issues around building insurance premiums and directors’ liability insurance.

I am informed that the insurance premium at the site in Birmingham has already more than quadrupled, and like the estimated £6 million it will cost to remedy the cladding, the cost has fallen on individual leaseholders. As no individual insurer is prepared to insure the building, a consortium of five insurers is currently providing cover. I understand my constituents have to address continued onerous demands from insurers, each with their own particular conditions regarding the state of the building, to ensure their policies are not voided. I understand my constituents have an immediate need to raise £3million to meet some of these demands before an impending deadline from insurers.

A further issue is that residents who sit on the board of directors administering the building find themselves unable to secure proper directors’ liability insurance, and could therefore be liable for significant bills from legal action in the future.

Across the country there are further stories similar to those of leaseholders in my constituency, where residents who purchased properties and insurance in good faith are facing rapidly increasing bills of tens of thousands of pounds. The comparison I repeatedly hear from those affected by this issue is that of properties at risk of flooding. In 2016 the Government worked alongside the insurance industry to establish Flood Re to provide affordable excesses and premiums for people in flood effected homes. My constituents similarly find themselves living in properties seen by insurers as high risk through no fault of their own, and the Flood Re scheme is proof that the government can work with the insurance industry to address their concerns.

It is clear that the government must take some responsibility for the legislative mistakes made in the past. However, I believe there is also scope for the Financial Conduct Authority to open an investigation into the conduct of insurers throughout the scandal. Regulatory failure is precipitating a scenario where insurance companies can act within the rules of the market, but without offering a fair premium to those affected by what is a national scandal.

Would the Financial Conduct Authority be prepared to investigate the cladding scandal, or at the very least make a statement regarding the actions of the insurance industry?

I look forward to receiving your response on this issue.

Letter to the Chief Secretary of the Treasury and Minister for Housing, Communities and Local Government

Dear Secretary of State,

I am writing regarding the ongoing scandal concerning the cladding on leasehold properties.

Over the last six months I have had correspondence with a number of constituents about cladding on leasehold properties. My constituents are a number of leaseholders representing a site in Birmingham, Ladywood with over 140 flats. The leaseholders are deeply concerned about the cladding used on their building but are unable to undertake the necessary works to remedy the situation without significant financial cost.

I have previously written to the Ministry of Housing, Communities & Local Government regarding their concerns. I understand that the Government has already created a £200m fund to make safe private properties more than 18 metres tall with the same ACM cladding used on Grenfell Tower. However, it is clear that ACM is not the only cladding system that poses a risk to residents.

A recent Westminster Hall debate brought to light further issues regarding the cladding on leasehold properties, namely issues around building insurance premiums and directors’ liability insurance.

I am informed that the insurance premium at the site in Birmingham has already more than quadrupled, and like the estimated £6 million it will cost to remedy the cladding, the cost has fallen on individual leaseholders. As no individual insurer is prepared to insure the building, a consortium of five insurers is currently providing cover. I understand my constituents have to address continued onerous demands from insurers, each with their own particular conditions regarding the state of the building, to ensure their policies are not voided. I understand my constituents have an immediate need to raise £3million to meet some of these demands before an impending deadline from insurers.

A further issue is that residents who sit on the board of directors administering the building find themselves unable to secure proper directors’ liability insurance, and could therefore be liable for significant bills from legal action in the future.

Across the country there are further stories similar to those of leaseholders in my constituency, where residents who purchased properties and insurance in good faith are facing rapidly increasing bills of tens of thousands of pounds. The comparison I repeatedly hear from those affected by this issue is that of properties at risk of flooding. In 2016 the Government worked alongside the insurance industry to establish Flood Re to provide affordable excesses and premiums for people in flood effected homes. My constituents similarly find themselves living in properties seen by insurers as high risk through no fault of their own, and the Flood Re scheme is proof that the government can work with the insurance industry to address their concerns.

It is clear that the government must take some responsibility for the legislative mistakes made in the past. I am writing to both the Minister for Housing, Communities and Local Government and the Chief Secretary of the Treasury to implore you to work together to ensure the first Budget of this Government addresses this scandal, by introducing measures to mitigate the costs associated with remedial cladding work and untenable insurance premiums. It is imperative that the Government addresses this as a matter of urgency before my constituents find themselves homeless, and their properties classed as unsafe to insure. I would welcome the opportunity to meet you regarding this issue.

I will also be writing to the Financial Conduct Authority asking them open an investigation into the conduct of insurers throughout the scandal. Regulatory failure is precipitating a scenario where insurance companies can act within the rules of the market, but without offering a fair premium to those affected by what is a national scandal.

I look forward to receiving your response on this issue.