Website Great Insurance Scam the Law
Before addressing this subject it is imperative to understand the law with regard to the charging of a building insurance premium. Clive Briault, Managing Director, Retail Markets FSA, Trading Standards, Michael Foster DL MP and SELCHA all agree that the law is as follows:
- Because a building insurance premium is taxed for Insurance Premium Tax at the basic rate of 5% it would be illegal to add value to it.
- The money used by the landlords of apartment blocks to pay for building insurance, does not belong to them. It is the property of the qualifying leaseholders of the apartment block which is held in trust for them by the landlord.
- Landlords can legally make a demand for in excess of 500% of the building insurance premium which they have paid so long as they openly declare the premium and the extra charges to the leaseholders and the Inland Revenue.
- Leaseholders are not bound to pay the extra charges. They can apply to the Leasehold Valuation Tribunal for a test of reasonableness. The LVT cannot allow an extra charge of in excess of 20%.
- Where the charges are disguised from the leaseholders (and the Inland Revenue), the crime of fraud through deception is committed.
Building insurance policies for apartment blocks are called bordereaux. Landlords will go to any lengths to prevent leaseholder getting sight of Bordereaux.
Leaseholders have a legal entitlement to examine and photocopy bordereaux as per Section 30A of the Landlord & Tenant Act 1985. The purpose of this Section of the Act is to allow leaseholders to assure themselves that the policy details on the bordereau are the same as the details on the documents presented by the landlord for payment to the leaseholders. (See THE LATE GREAT BILL WALKER file).
Section 30A cannot be implemented as it depends on Local Housing Authorities to prosecute. No housing authority has ever prosecuted a landlord for the summary offence of failing to produce a bordereau.
The Zurich policy EJ166904/ Chase Longman Associates shows the huge profits engendered by this scam.
This scam is ultra-respectable but it is also ultra-illegal. (See Michael Foster File and The Meeting at the Attorney General’s Office file)