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|
|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:
- R1 000 x 10% = R100 or
- (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.