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Paymentshield slammed for trail commission cut

Brokers are up in arms after having their trail commission slashed from 27 per cent to 5 per cent by Paymentshield.

Money Marketing sister publication Mortgage Strategy understands that Paymentshield has sent letters to a number of brokers explaining that their commission will fall to 5 per cent from November 1 as they have not submitted any business with Paymentshield in the last 12 months.

This would mean a broker previously receiving £500 per month would now get just £93.

The insurance provider told brokers that by not submitting any business with them in the past year they had become a dormant agent and were therefore subject to changes in commission rates according to their contract.

It is believed that to receive their original level of commission brokers must submit one policy per month for six months to the firm.

A spokeswoman for Paymentshield says: “In line with the dormancy clause clearly stated in our terms and conditions, we can confirm that a number of brokers who are no longer active with Paymentshield have been notified of a change to their commission.  

“However, should these intermediaries demonstrate a return to active submissions then their commission will return to its previous rate.”

One broker who contacted Mortgage Strategy says: “My firm is not dormant, it is still placing business, just not with Paymentshield, because it has become increasingly uncompetitive in recent years and I have a duty to find the best deal for my clients.”

Another broker says: “This move will cost intermediaries hundreds of pounds each month, threatening their businesses.”

General insurance distributor Safe&Secure says it is also surprised at the decision.

Jason berry, sales and marketing director of Safe&Secure, says: “It is a strange move by Paymentshield.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Trail commission…..money for nothing (as the song goes)!!! No wonder the FSA have this on their radar.

  2. Jason Berry of Safe & Secure says this is a ‘strange move’ by Paymentshield – yet page 4 of the S&S contract states the following:

    Introducer fees will continue to be paid providing at least two new client referrals are successfully converted to signed up cases by Safe & Secure per month

    Meaning that if you dont hit the minimum standard with S&S your commission will stop completely! Not much different to Paymentshield’s stance, and that of many other insurers!

  3. Just had a call from my Paymentshield BDM a few days ago asking me for some business. Told him due to treatment of brokers 4-5 years ago over commission in retirment, policy admin fees were no commission is paid and uncompetitive premiums I am no longer using them. Guess this is just another string in the bow!

  4. Doesn’t anyone else think that 27% commission is excessive? I feel sorry for the clients

  5. Nigel Barker-Smith 17th October 2011 at 11:34 am

    Ignoring PaymentShield for a moment, BEWARE this will no doubt be the start of all providers currently paying comission, having a rethink.

    This is a good example as to the benefit of deriving your income from clients and not providers.

  6. Tony has hit the nail on the head, we need to examine each and every provider agreement for every product we receive trail on and protect ourselves and our business from such rip off agency agreements, presumably the clients are still paying their premiums, so the only reason for this is that Paymentshield is trying to increase their profits and liquidity without paying the price for the continued business, because their plans are too expensive and not being sold by brokers

    Maybe brokers need to re-broke every case now and take their existing business away from Paymentshield . I used to use them a lot when I
    advised on mortgages, no longer do that so no need to advise on ASU.

  7. As I understand it, the products provided by such companies are annually renewable. Why is the insurance still with Paymentshield if the premiums are not competitive? Could it be the 27% renewal commission that hinders rebroking? I think that it may very well be the case. Tough luck.

  8. Paymentshield are so out of touch it is unreal, they still get the revenue in, so why reduce the trail? What has changed?

    They are so uncompetitive it is unbelievable, I expect everyone will do as I do, go to a more competitive company. Ran by idiots.

    Their karma awaits……..

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