The Issue
Regulation 46 ensures transparency for tied tenants in relation to premises insurance and gives them the right to find a cheaper policy.
Star Pubs and Bars' Code Compliance Officer - whose role it is to verify compliance with the Code - reported to the PCA in August 2021 that information provided to tenants about premises insurance had not complied with regulation 46. Star said this had caused no detriment to tenants. The PCA has since confirmed this compliance issue runs from the start of the Code in 2016.
Under regulation 46, the pub company must provide the tenant with information about the premises insurance where it intends to charge the tenant in respect of the premium. This ensures full transparency and allows the tenant to look for a cheaper policy. If they find one that is suitable and comparable, the pub company must buy that policy or agree the tenant will not have to pay the difference.
Specifically, the information supplied under regulation 46(2) must include whether the amount the pub company charges the tenant to insure the premises is more than it pays in respect of the insurance premium, and how much more that is. The pub company must also say whether it will receive any commission or rebate in connection with the policy.
Star took the view that it was not possible to comply with regulation 46(2) due to its self-insurance arrangements through a company owned by the Heineken group (which also owns Star). Star told the PCA that at the point it had to write to tenants under regulation 46, it was unable to say whether there was information it needed to provide under 46(2), particularly as it did not hold information on the insurance premium for a particular premises.
Star also admitted that correspondence sent to tenants in December 2020 about the insurance recharge had not included necessary detail about the identity and operation of its policy and the option to price match. Further information was sent to tenants in March 2021 to address this and Star has since updated its Guide to Insurance Responsibilities to make the position clearer. Star has also assured the PCA that in future such correspondence will be signed off by its Code Compliance Officer and legal team.
The PCA continues to work with Star to ensure there is transparency for tenants as required by regulation 46 and to assess the extent of previous breaches of regulation 46 and any impact on tenants from non-compliance. Enquiries are also being made with other pub companies to ensure compliance where there are similar self-insurance arrangements. Further information will be published as appropriate.
