Commissions clawed back from staff who sold toxic products, but no decision yet on final sum
By Lorna Tan 04 September 2009
Local stockbroker Phillip Securities has started clawing back commissions from staff who sold toxic products - and advisers fear they may have to pay even more out of their own pockets.
The firm has not decided on the final sum, and is withholding a portion of monthly commissions from advisers who sold Minibonds structured products that failed in the financial crisis.
This is pending a final decision on the amount advisers must pay up.
It is industry practice for most financial institutions to claw back commissions from advisers found to have improperly sold investments to customers.
However, affected advisers at Phillip are seeing red over any move to take more than commissions earned from the ill-fated Minibonds.
Said one, who declined to be named: ‘We are very unhappy that the company pushed the responsibility to us. If it wants to claw back our commissions, we will willingly allow it, but if it is more than that, it is too much.’
The advisers say they acted as product introducers and were not required to carry out risk profiling during the selling of the failed Minibond products.
When contacted, a Phillip spokesman said: ‘Retention of commissions is only a provision for contingency purposes. A decision has not been made whether the representatives will bear full responsibility on the compensation made to customers. The company’s immediate focus is to manage resolutions to customers.’
As an interim measure, Phillip is deducting $1,000 a month from advisers’ commission accounts. The deductions started in June and $3,000 has been deducted so far from each affected adviser.
Recently, about 1,000 Great Eastern Life agents were told to return up to $12.6 million in commissions earned from GreatLink Choice (GLC) policies they sold some years back. The insurer recently decided to buy back the GLCs at full cost as a goodwill gesture to customers.
Advisers at Phillip earned about 1.2 per cent in commissions for the products in question, which works out to $1,200 for a $100,000 transaction. In cases where Phillip has decided to compensate the investor, the payouts range from less than 50 per cent to 100 per cent.
In a letter dated July 9 sent to affected advisers, Phillip stated that the deductions are required ‘only as a provision for final deduction’ from the advisers’ accounts. It also said the deduction will continue ‘until a final resolution’ is made on the advisers’ complaint cases.
According to the latest figures, Phillip had 712 Minibond investors, of which it has received 242 complaints. As of June, it decided to compensate 86 cases, of which three would receive full compensation and one would receive at least half the capital sum invested. The other 82 would receive partial compensation of below 50 per cent of capital sums invested. The total compensation is about $610,000.
Phillip, which has about 200 advisers, declined to disclose how many advisers are affected by the monthly deductions.
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Pay-back time at Phillip Securities
Commissions clawed back from staff who sold toxic products, but no decision yet on final sum
By Lorna Tan
04 September 2009
Local stockbroker Phillip Securities has started clawing back commissions from staff who sold toxic products - and advisers fear they may have to pay even more out of their own pockets.
The firm has not decided on the final sum, and is withholding a portion of monthly commissions from advisers who sold Minibonds structured products that failed in the financial crisis.
This is pending a final decision on the amount advisers must pay up.
It is industry practice for most financial institutions to claw back commissions from advisers found to have improperly sold investments to customers.
However, affected advisers at Phillip are seeing red over any move to take more than commissions earned from the ill-fated Minibonds.
Said one, who declined to be named: ‘We are very unhappy that the company pushed the responsibility to us. If it wants to claw back our commissions, we will willingly allow it, but if it is more than that, it is too much.’
The advisers say they acted as product introducers and were not required to carry out risk profiling during the selling of the failed Minibond products.
When contacted, a Phillip spokesman said: ‘Retention of commissions is only a provision for contingency purposes. A decision has not been made whether the representatives will bear full responsibility on the compensation made to customers. The company’s immediate focus is to manage resolutions to customers.’
As an interim measure, Phillip is deducting $1,000 a month from advisers’ commission accounts. The deductions started in June and $3,000 has been deducted so far from each affected adviser.
Recently, about 1,000 Great Eastern Life agents were told to return up to $12.6 million in commissions earned from GreatLink Choice (GLC) policies they sold some years back. The insurer recently decided to buy back the GLCs at full cost as a goodwill gesture to customers.
Advisers at Phillip earned about 1.2 per cent in commissions for the products in question, which works out to $1,200 for a $100,000 transaction. In cases where Phillip has decided to compensate the investor, the payouts range from less than 50 per cent to 100 per cent.
In a letter dated July 9 sent to affected advisers, Phillip stated that the deductions are required ‘only as a provision for final deduction’ from the advisers’ accounts. It also said the deduction will continue ‘until a final resolution’ is made on the advisers’ complaint cases.
According to the latest figures, Phillip had 712 Minibond investors, of which it has received 242 complaints. As of June, it decided to compensate 86 cases, of which three would receive full compensation and one would receive at least half the capital sum invested. The other 82 would receive partial compensation of below 50 per cent of capital sums invested. The total compensation is about $610,000.
Phillip, which has about 200 advisers, declined to disclose how many advisers are affected by the monthly deductions.
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