Paymentshield slammed for trail commission cut
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Brokers are up in arms after having their trail commission slashed from 27% to 5% by Paymentshield.
Mortgage Strategy understands Paymentshield has sent letters to a number of brokers explaining their commission will fall to 5% from November 1 because they have not submitted any business to Paymentshield in the past 12 months.
This would mean a broker previously receiving £500 per month would now get just £93.
The insurance provider told brokers that those not submitting any business to them in the past year were being classed as dormant agents and 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 consecutive months to the firm.
A Paymentshield spokeswoman says: “In line with the dormancy clause clearly stated in our terms and conditions, we confirm a number of brokers who are no longer active with Paymentshield have been notified of a change to their commission.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, their commission will return to its previous rate.”
One broker who contacted Mortgage Strategy says: “My firm is still placing business, but 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 by the decision.
Jason Berry, sales and marketing director at Safe & Secure, says: “It’s a strange move by Paymentshield.”
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