Secondary

fees

Gap Cover Commission Calculation

A number of Moonstone Compliance clients queried the interpretation of the commission payable in respect of GAP cover products.

The following bands were provided:

Individual and group policy
Monthly premium band Maximum Commission Level
Above R1,200 5%
R601 to R1,200 10%
R300 to R 600 15%
Less than R300 20%

Billy Seyffert, COO of Moonstone Compliance, made the following enquiry to the Regulator:

Should the commission on Gap Cover policies be calculated strictly on the band within which the premium falls, or should a staggered approach be followed?

For example: is the commission on a premium of R1 000:

  1. R1 000 x 10% = R100 or
  2. (R300 x 20%) + (R300 x 15%) + (R400 x 10%) = R145?

The FSB indicated that interpretation 2 above is the correct one. A staggered approach needs to be followed to calculate the commission.

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