I was interested to see the news item on Norwich Union's admin backlog (MM, May 2), having suffered similar problems.
NU's systems (as with most life offices) do not generate a commission payment until the policy document is issued. From the reaction I have had from NU (and Standard Life and Scottish Widows), smaller IFAs do not appear to realise that they can claim interest on the late payment under the Late Payment of Interest (Commercial Debts) Act 1998.
The rate of interest is up to 8 per cent over base rate. The life office has no option but to pay interest on that basis if it is claimed but only (as I understand it) by smaller companies with fewer than 50 employees.
If the defined-payment system comes in and commission offset is being used, is the inter-est attributable to my firm or do I have to return it to the client?