Ongoing commission, churning and working with the intermediaries.
A couple of days ago we spoke about the life offices and their approach to commission and movement to other products within their stable.
A reader had the following to say: "...I queried a change of broker recently with Momentum for an RA and was informed that even if this change of broker is done, all further commission is still paid to the original broker for making the sale..."
Jeffrey Wiseman, head of Financial Solutions & Compliance at Momentum Sales had this to say: Momentum's policy regarding the payment of commission is determined by the nature of the product and the agreed remuneration.
On the upgrade of legacy policies, Momentum's contract with independent intermediaries generally entitles the independent intermediary to all upfront commission in respect of the total value of the premiums that he procures for Momentum.
According to Wiseman if the original policy provides for annual premium escalations, the commission payable in respect of these escalations will be paid to the original intermediary.
The new servicing intermediary will be entitled to all commission in respect of additional premiums that he or she procures for Momentum in respect of the policy.
Where commission is payable as-and-when or where the intermediary remuneration is payable as an advice fee, these payments follow the servicing intermediary.
Editor's thoughts:
* So nothing has really changed and it appears, at least in Momentum's case, that churning is the only way that a broker can be paid any commission. I guess this may all change when the new dispensation comes into being?