The recent document updating the Medical Schemes Council policies and guidelines contained two items which may be of interest to readers.
Orphan Client Allocation
“…when a member has been admitted to a scheme without the assistance of a broker, no other person or entity is in a position to assume the role of agent representing the member in appointing a broker thereafter. It follows that medical schemes and third party administrators are not allowed to allocate “orphan” members (members who are not in any way linked to any broker) to brokers or agents or to involve itself in any manner by switching brokers without the requisite authorization. It is important to apply the fundamental principle of client appointing the agent as it is applied in common law.
This applies, for instance, where a client contacts the scheme directly.
Where a broker sells his book to another, a new mandate has to be obtained from each and every client, unless there is a cession clause in the original mandate, signed by the client, authorising the transfer of the contractual obligations.
Remuneration of brokers
- Broker payments should only be made by medical schemes to accredited brokers;
- If there is a lapse in the accreditation period of a broker – the broker may not be compensated for that unaccredited period
- Payments should only be made to brokers who have signed broker agreements in place with a specific scheme/s and to the party identified in the contract, that is to say, either the individual or the broker firm;
- Broker payments should only be made once the scheme RECEIVED the contribution and not on RAISED contributions as is required in terms of Regulation 28 (5);
- Schemes should provide brokers with monthly remittance advices;
- Schemes should ensure that they receive adequate proof that brokers are registered for VAT by means of VAT Certificates etc. Failure to do so could result in schemes over-paying brokers who are not registered for VAT.
The policy document also outlines what may, and may not be paid, other than commission. If you receive fees, other than commission, we suggest you study this document to make sure you are not receiving illegal payments.
Please click here to download the MSC guidelines.