MyPlanner managing director Philippa Sheehan criticised current agreements from the majority of insurance companies where the adviser who takes over servicing rights of a client is clawed back for cancelling their policy, even though the client’s previous adviser received the commission for the writing of the policy.
Ms Sheehan told Risk Adviser she confronted one insurance company about this issue and their response was that no adviser should take over servicing rights until they have the information on the client’s policy.
“Their recommendation was for planners to have the client sign two authorities – one for information on the policy and the second for when we have the information to then take over the servicing rights,” she said.
“In an industry that already has too much paper work, insurance companies are now recommending more paper work and more systems.
“Surely, you can take over the servicing of a client to see that what they have set up is appropriate or not, and not be penalised for doing the right thing.”
Ms Sheehan said that such a situation arises when the adviser has to act on best interests duty.
“I have no issues with planners receiving commission for insurance if that is what their business model is. The life insurance reforms are not going to change planners wanting to charge commissions if they see fit,” she said.
“Insurance companies, I encourage you to take the lead and tidy up your agreements for the sake of good planners who are trying to do the right thing by the client and are being penalised.”
Philippa, Are you serious?
“Surely, you can take over the servicing of a client to see that what they have set up is appropriate or not, and not be penalised for doing the right thing.”
Here’s a novel idea. Maybe the right thing is to get the client to sign an authority to access information on the policy (like most professionals would) so you can ascertain whether the policy, benefits and premiums are appropriate for the client before you transfer the policy to your register and take on any additional responsibility.
Or does that slow down the receipt of trails into the business for policies which you never implemented, which is really what the take over of servicing rights process process is all about.
Adam !!! Your an idiot mate
Chris, you have your blinkers on. i have been caught with a $5000 clawback for a client I bought from a client base and had never seen. The insurer did not even bother to listen and despite my protests I was forced to accept this. Stupid comment.
So in all the work we do as advisers, your complaining about signing a second authority? Seriously? So you take over a policy, receive commissions and then determine if it is appropriate. So where did you disclose to the client you would receive commissions when you took over the policy and prior to the SOA being provided? Surely that document is more work than a second authority. What happens if the clients declines your SOA, but since you are still the listed adviser do you keep the commissions….if so why do you deserve them?
I fail to see what all the fuss is about. The servicing adviser has ALWAYs been responsible for the claw back because that’s where the “contract” between adviser/dealer group now lies.
Authority to enquire always if you are unsure. And lets face it, how often do you transfer within the 12mth (soon to be two year) responsibility period.
If you want to receive the trail then you take on the risk of what happens to the policy. The heavy lifting has been done with setting the policy up (which is why the adviser was paid). Use an adviser authority first to gain information if you are concerned about claw back. That is what we do.