Phoenix director Paul Wreford says the firm is seeking legal advice on this but says that the contract which appointed representatives signed with Network Data states they will be liable for clawback if the policy is cancelled.
He says: “The recovery will be made against the advisers if that is the position. I genuinely do not know what the technical position is yet. We are bound by very strict insolvency rules. The rules have been devised to protect the interests of creditors in the round. If the contract says the liabilities can be recovered against advisers then there will be an obligation to do that.”
But administrators Baker Tilly could not confirm that this was the case and said it would be looking to clarify the situation as soon as possible.
Wreford also said that advisers cannot take on their own agencies from Phoenix and receive the renewal commission themselves because it is the job of insolvency practitioners to ensure that any commission is collected for the firm that has gone into administration and dispersed to creditors.
Phoenix takes a cut of the commissions received before they are passed to the creditors.
Wreford also criticised advisers who are cancelling clients’ policies on a systematic basis and rebroking them in order to receive the commission.
He says: “This is morally reprehensible and must be stopped. It is adding to the debts and doing harm to the agencies of Network Data.”
One broker who does not wish to be named says: “I will not be receiving any of the renewals but Phoenix will come after me for clawback. We get all the liabilities. This is not fair as I have never received any commission for some of these policies. We are being ripped off.”
Wreford says: “I want it to be as fair as possible and I want to stress we are not taking advantage of the situation. I do think it is unfair that these advisers have not received any commission on policies.”