Plevin question

Brokerwise

If firm was paid, say 20% commission on a standalone policy would this still be subject to the Plevin rules if the insurer took, say 40% commission in addition? This would never have been disclosed to the firm selling the product at any point and as such would they have any liability along the selling firm for non disclosure or would it be a non breach of Plevin for the selling firm concerned ?

dunstonh

If firm was paid, say 20% commission on a standalone policy would this still be subject to the Plevin rules if the insurer took, say 40% commission in addition?

I don't believe the insurer cut is included as that is manufacturer level. It isnt really commission. It is a profit margin factored in after risk premium. It is commission paid in the distribution chain that matters. e.g. if a network is involved and they took a cut then that is included in addition to the broker cut. If you used a broker/facilitator in the chain, then their cut is included as they are part of the distribution factored into the price.

If there was a profitshare arrangement where the broker got paid an amount if claims were lower than expected, then that gets included. However, that sort of arrangement was rare with brokers (if at all). It was mainly used with bank products. This is why we are seeing banks pay out on types of PPI that were not expected to breach the tipping point. It is the profit share that is taking them over. There was a lot of debate on that in the consultation period as many felt that as profit share was a commercial agreement at book level and not individual level and had no impact on the price the consumer paid, it should not be included. However, the FCA decided it should be.

Most broker sales of regular premium PPI are expected to be under the tipping point. Bank sales of regular premium PPI are now expected to be just over the tipping point because of profit share.

You are aware of the window?:
However, we recognise there will be relatively more impact and cost for
brokers who mainly sold regular premium mortgage PPI, concerning which fewer mis-selling
complaints are upheld and more credit agreements (if sold before April 2004 and still in force
at April 2008) are in scope of s.140A.

I assume when you say regular premium PPI you mean MPPI? If not, and its not linked to a debt, then its outside scope.