Question for Brokers

Paul100

Hi Guys,

I am a broker myself, I was an AR of the Mortgage Times, who I am sure you know have gone into administration.

I am now up and running with a new network and have been since the start of the year.

My question is with regards re-broking life cover. I have a number of clients who are still in their clawback periods on the life policies I set up for them. I have spoken to a few of them and they are more than happy to "re-do" their life cover, especially as I have access to more providers now and can save a bit of money on what they are paying now for the same cover. However I am concerned as to what will happen to the clawback on these policies if i re-broke them. A few guys I know are under the impression that the clawback liability died with the Mortgage times but I am not sure that is the case and dont want to re-broke a lot of policies to then be left with a large bill from the mortgage times administrators.

What are peoples views on this and does anyone have any experience or advice?

Thanks in advance

Paul

JA1000

Can't clawback from something that isn't there. It will be absorbed, ask one commissions department to check and then you'll know, they wont connect with a question on one policy. Churning is quite common but under these circumstances not sure why you are concerned, did you carry the trail?

Paul100

Like I say my only concern is that obviously Mortgage Times doesnt exist anymore, but that the administrators of the life providers from the cancelled policies would come after me for the clawback.

There would be a considerable amount to rebroke if only even 25% of my clients were happy to do so

luckyfool

Ethically if you were paid on indemnity I would be concerned about doing this, as you were paid on the business and I could see the insurer taking a dim view of it. You will probably have had a personal guarantee to the network which might come into play as well. Another matter completely if the commissions had never been paid or were retained by Mortgage Times.

JA1000

As a broker why are you interested in churning? TCF on all the new policies or a new contract with greater longevity on the commission???

What you are saying by rebroking is that you were too expensive in the first place and they could have got a better deal.

Conrad

Paul I personally am against churing and think it's a bizzare way to earn a living, but that aside, the life companies will almost certainly persue you.

Paul100

Thanks for the input so far Guys.

Obviously "churing" isnt how I make my living, but for a number of reasons it seems/seemed like a good idea due to a) now being in a position to get the clients a better deal and in all honesty potentially an easy way to make some money and recoup some of teh money lost when mortgage times went bust

luckyfool

Yes, but if the life company paid mortgage times, and mortgage times paid you on these cases, then you owe the original life company any potential clawback at the very least ethically, and potentially legally. Even if the life company were not able to pursue you legally, I would imagine they would have second thoughts about giving you an agency to potentially do the same thing to them a 2nd time in the future.

Dan_1976

What is the status of Mortgage Times? They went into admin but I know the Revenue wanted to wind them up.

I would say it depends on who your agreement is with and on what has happened to commision and proc fees owed to you.

If you agreement is with the insurance company they owe you and you will owe them. If its with the Times then the same applies. If it is still in Admin or being wound up they could call in any debt owed to pay to creditors then again you are also owed commission.

I would try and find out more from whoever is running the admin or winding up order. It may not be finished with yet. Just dont assume, it will just make an !!! out of u and me.... Sorry about that!

When I joined the BSC I was not longer liable for clawback but the AR I worked under was and so was the network. I handed over my client bank which has paid for any clawback owed and my OR was happy with all of this. However I did not owe the revenue hundreds of thousands!

Money_Yoda

I'd start by looking very carefully at the wording of your original agreement with Mortgage Times to see if this type of scenario is mentioned in there, it should define what liabilities you carry on business written - if the company still exists, all be it in Administration, then the ageement will still be enforceable.

As regards the Life Companies - as long as a move in provider is justifiably in the clients interest; be that premium, benefits, or conditions then they can't get too bent out of shape as you're looking after your clients best interests (that's after all what we do).

We all aim to look after our clients best interests with the tools we have available at the time. If the tools change then we have to look again and see if the previous products are still appropriate - our clients would expect nothing less of us.