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Paymentshield could face legal action on commission

Paymentshield has been threatened with legal action over its decision to stop paying renewal commission to brokers who are no longer regulated to sell general insurance.Sue Lambert-Hope, a retired mortgages adviser, says she will be contacting other brokers who have also had their renewal commission payments stopped with a view to taking legal action against Paymentshield for damages and monies withheld.She says: “How can a company built on integrity lose it so quickly? How can it decide that it will no longer pay commission on business that I brought it, on which it is still making a profit?”She adds that she knew there was a possibility that clients she advised would switch policies in a few years but she expected to be paid commission until that time.The FSA has told Mortgage Strategy that there is nothing in its rulebook that says a firm can or cannot pay a person renewal commission once they have retired from the industry.A spokesman for the FSA says: “Commission is not a regulatory issue. There is no rule about whether a firm should or should not pay this.”But Chris Traynor, sales and marketing director at Paymentshield, has hit back at the criticism about its decision to stop paying renewal commission.He says although the FSA does not have any rules concerning the payment of commission fees to a person once they have retired Paymentshield was right to cancel the payments.He adds: “It affects us because when a client wants advice on payment protection insurance they cannot go back back to the broker because they are no longer regulated so they will have to come to Paymentshield.”However, the broker still wants to be paid the commission for that business.”In response to threatened legal action, Traynor says that before Paymentshield decided to stop the renewal commission it sought legal advice from a firm that said it was within its rights to cancel it.

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  • Dan Mather 11th February 2012 at 2:35 pm

    I’m submitting around 100 cases a year to Paymentshield…BDM has said to me this is a nest egg and retirement fund,very disappointed reading these posts.I’ve also been told Paymentshield aren’t paying renewal commission on the premium increase when reviewed.