Commission "Clawback" whats that?

Basejumper

Exactly FA are responsible for paying back this amount. My contract would be with the insurers via an intermediatary. because it was them that got the business they would be paid by The Insurer the commission - not me surely. I have been on the phone to a friend who is a Mortgage Advisor who knows of this company and he believes that they have already been in trouble with their main partners and the FSA for gambling basically. FA could have told me that this amount, what ever that is could be paid up front do you still want it? or we will take a chance that this person is likely to keep the policy for the full term thereby them then realising their payment plus interest due to the longevity of the policy.

weighty1_2

The FA is not "gambling" that you keep the plan for the full term. The chances are that after the 48-month clawback period they do not give 2 hoots whether you cancel it or not as they will lose nothing, except a small trail commission payment each month with is normally a matter of pence.

The interest rate is the rate they charge you if you do not cough up the clawbacked commission straight away and they have to pursue you through the courts, not an amount they are hoping to earn from the premiums.

Whilst there may be a technicality with the wording of the terms of business it does sound like you are rightly being pursued as you signed an agreement stating the commission would need repaying in the event of you cancelling within 48-months.

dunstonh

My contract would be with the insurers via an intermediatary.

You have a contract with both.

because it was them that got the business they would be paid by The Insurer the commission - not me surely

Where do you think the commission comes from?

I have been on the phone to a friend who is a Mortgage Advisor who knows of this company and he believes that they have already been in trouble with their main partners and the FSA for gambling basically.

It may be right. It may be wrong but it has absolutely nothing to do with your situation.

FA could have told me that this amount, what ever that is could be paid up front do you still want it?

Only IFAs have to offer that option. FAs do not.

lisyloo

Whilst there may be a technicality with the wording of the terms of business it does sound like you are rightly being pursued as you signed an agreement stating the commission would need repaying in the event of you cancelling within 48-months.

I am not a lawyer, but there is nothing is that wording that says the client has to repay.

mikey72

lisyloo wrote: »

I am not a lawyer, but there is nothing is that wording that says the client has to repay.

And the interest looks like it refers to missed payments, or part payments, so way off the mark there.

dacouch

lisyloo wrote: »

I am not a lawyer, but there is nothing is that wording that says the client has to repay.

The OP has not copied and pasted the relevant T&Cs verbatim, they're typed it out hence the odd spelling mistake.

The original T&Cs may not have the error your case hangs on.

Perhaps the OP could type the T&Cs up verbatim as it could make a big difference

jamesd

weighty1 wrote: »

Whilst there may be a technicality with the wording of the terms of business it does sound like you are rightly being pursued as you signed an agreement stating the commission would need repaying in the event of you cancelling within 48-months.

I disagree. The wording provided gives a benefit to the client. It's telling the client that if the product is unsuitable and the client ends up canceling, the seller won't still end up getting full payment. That increases the duration for which the seller has to ensure that the product is suitable, lest it lose some of the income from the sale.

Trying to prevent unsuitable sales is part of the reason why product producers have clawbacks, so that there is a disincentive to wrongly sell products.

The seller seems to be trying to turn that into a you owe us money instead of a we're protecting your interests clause.

magpiecottage

jamesd wrote: »

Trying to prevent unsuitable sales is part of the reason why product producers have clawbacks, so that there is a disincentive to wrongly sell products.

Not really - particularly if an IFA is involved as the insurer has no responsibility for the sale.

The point about clawback is that the insurer pays a large amount of commission up front and only recoups it from the premiums over anything up to four years. If the premiums are not paid for that long then it wants a pro rata element of the commission back.


As far as the OP's position is concerned, the Client Agreement IS a contract. Whether it is enforcible will depend on a number of factors.

The first is whether it is fair - and the FSA has indicated that a consumer must be able to understand it for it - including how much they might have to pay in order for it to be fair - see here.

Coupled with that, it must be clear - any ambiguity is likely to be interpreted by FOS or a court against the party which wrote the agreement.

I have not seen the Client Agreement but, having drafted them, it is quite tricky to get the clawback term watertight - and if an Appointed Representative, like this firm, rather than the compliance team at its network, wrote it, I think it is at least as likely to be flawed as not to be.

If the OP wishes to complain, then it would be best to write to:

Intrinsic Financial Planning Ltd
Wakefield House
Aspect Park
Pipers Way
Swindon
Wiltshire
SN3 1SA

Fax 01793 521 259

Faxing is good - cheaper than a letter and you get an instant receipt for it.

lisyloo

The original T&Cs may not have the error your case hangs on.

I totally agree and have said so several times.
We don't have all the paperwork.
But I'd say it's certainly worth investigating whether the contract does make the OP liable for lost commission.

My first step would be very simply to ask them to point me to the place in the documentation that states that I am liable for lost commission.