Commission "Clawback" whats that?

Basejumper

Hi all.
In these hard times I have had to cancel my Life Insurance, luckily I have one with my current employer. however as i cancelled this prior to the term of 48 months, the financial associates who I delt with are trying to clawback their commission from the premiums i have not paid, in full in 7 days £1.2k (£997 outstanding amount, £42 Tracing Agent fee, £180 Sol costs +VAT
Has anybody got some guidence on where i stand from a legal perspective

lisyloo

Has anybody got some guidence on where i stand from a legal perspective

Did you agree to it?
If you don't have their terms of business letter then ask them to provide a copy and show where you signed up to this.

Basejumper

I do have the TOB letter and yes i did sign, however, I have been reading some information on another site which talks about Consumer protection from unfair trading and in there I have plucked out this, if the total amount or range of amounts are not given then this COULD be determined as unfair trading. Who is to say that ALL of these amounts are correct etc. I welcome your thoughts

lisyloo

What are the Solicitors costs for?
If they got a solicitor involved at £180 +VAT and didn't just write you a letter first, then I would say that's unfair for a start.

Any chance you can re-instate the insurance, until at least the 48 months are up? I'd be begging the insurer on the phone to see if there is any way to re-instate it.

Ultimately it would be up the FOS or a judge to decide whether the terms you have been given are fair but to slap on the solicitors costs when a letter would have done does IMO appear to be not mitigating their losses.
You need to raise these issues with the firm first. If you aren't satisfied with the reponse raise a formal complaint. If you reach deadlock then you can go to the indpendent and free FOS, however I guess they could still try to pursue you for it in the meantime.

dunstonh

however, I have been reading some information on another site which talks about Consumer protection from unfair trading and in there I have plucked out this, if the total amount or range of amounts are not given then this COULD be determined as unfair trading. Who is to say that ALL of these amounts are correct etc. I welcome your thoughts

The amounts are not plucked out of thin air and they are disclosed on the illustrations issued at point of sale.

If your agreement states that you were using commission to pay for the fee and a commission clawback has occurred then you are liable for the difference in the commission received and the fee agreed.

There are some firms that try it on but they are typically the ones that have no agreement anywhere. You say you have signed agreement.

The method of agreeing a fee and using the product to pay for it is very common. Indeed, for many financial products, it will be mandatory to do it that way from 2013. So, anyone saying that it is unfair doesnt really know what they are talking about. That said, some of the fees they are asking for is pushing it. (solicitors costs on first attempt to contact you is excessive and that wouldnt stand up. However, if you have ignored earlier requests then it is fair enough)

Basejumper

Thank you both. I think I understand. i wish I could scan the TOB and then perhaps a more skillfull eye could be cast. I will try to bullet point the main crux. The Financial Associates (FA) dont charge fees for arranging insurance contracts because the Insurwer pays FA a commission via another company. this is wholly dependant and reliant on the premiums required over a 48 month period. In the event that premiums are not maintained for that period or the policy is cancelled the client (me) understands that the other company will require part or all of the commission to be repaid by FA as result of unpaid premiums.
All payments to be made by the client under this agreement shall be made in full without any 'set-off' or withholding for any counterclaim, unless the client is required to do so by law. if any sum payable under this agreement is not paid when due then that sum will bear interest from the due date until payment in full is paid at 2% pa over HSBC base rate together with the costs of recovery of the debt.
This agreement in no way affects the clients right statutory cancellation rights as set out under FS & Markets Act 2000

lisyloo

Did they also show you what their commission was on another document?
I believe this is always declared.

If they have showed you the amounts and you agreed you would pay "all" of it, then I'm not clear on what part you think is unfair??

I would be disputing the solicitors fee IF this was their first contact.

Basejumper

Thank you lisyloo. That was my point in post 3, I did not have and after telephone communications I still have not received any document declaring their commission.
I will dispute the solicitors fees and request disclosure of their other fees to which we both refer and see if that is signed

jamesd

I see it saying there that you understand that the commission may be clawed back. What I don't see in that is any agreement that you will pay the amount that is clawed back.

dunstonh

I did not have and after telephone communications I still have not received any document declaring their commission.

The illustration showing the premium and sum assured etc shows the commission. This is also sent out by the provider post sale with the cancellation rights. So, you get it twice from two different sources.

lisyloo

to be repaid by FA

Very clever.
You MAY have found a technicality in the wording.

If that is ALL the wording then I would ask them to point you to the part where they have the ability to clawback from you.

Of course I'd be suprised if that is ALL the paperwork.