From Chris Traynor
In response to the letter from Eddie Royce concerning Paymentshield in Mortgage Strategy October 23, I would like to make it clear that Payment-shield has been paying – and will continue to pay – renewal commissions on all policies set up prior to Financial Services Authority regulation, where the organisation remains regulated by the FSA to give advice on general insurance products.
The vast majority of our existing policies – and consequently our agents’ status – comfortably fall within these criteria and we are continuing to pay renewal commissions.
As part of our routine regulatory and risk management procedures we are required, under the regulator’s guidance, to ensure that all our live agents are regulated to advise on general insurance.
Therefore, we regularly check our agency records against the FSA database of regulated entities. Where we establish that we hold an agency on our database that is no longer regulated – or never has been – we write to advise that organisation that we are closing their agency.
As you will appreciate, this avoids the situation whereby Paymentshield might receive new business from a non-regulated source and as such be in breach of FSA guidelines.
At the point of regulation we were required to set up new agencies for all our existing agents in such a way that those agency agreements reflect the terms and conditions of a sector that is regulated.
Statements made by senior Paymentshield management promising payments for life were made prior to our industry being regulated by the FSA. Since that time, market practices have changed.
The agency agreement between an intermediary and Paymentshield makes it clear that the intermediary in question must remain authorised by the FSA, otherwise the agreement will be immediately terminated.
The agreement also clarifies that it supersedes any previous arrangements between the intermediary and Paymentshield prior to regulation.
Furthermore, a refinement of the pension idea is that you sell your general insurance business at the point of retirement, receive the requisite lump sum and use that cash to help fund your income in retirement, thereby achieving the same outcome by taking a different route.
With regard to the transfer deadline mentioned in Royce’s letter, there is no restriction on the period of time it takes to transfer a customer to another regulated adviser.
Intermediaries who are no longer regulated to sell general insurance can transfer their business to another regulated intermediary but they may have to gain the permission of the clients concerned. As readers are no doubt aware, data protection legislation requires that we get confirmation a client wants their personal details to be transferred to another intermediary.
So these are the facts surrounding our business approach. Paymentshield does – and will continue to – pay renewal commission on all policies in force where the agency in question remains authorised.
Sales and marketing director