DRAFT REGULATIONS DEAL WITH CONFLICTS OF INTEREST
Momentum provides cash sign-on packages that, in the short ter m, can be greater than any commission that would have been paid by a representative’s previous employers.
However, Johann le Roux, the chief executive of Momentum Retail, says the churning of products against the best interests of clients is not permitted. He says the switching of risk life assurance products has been the result of the continual enhancements in benefits, and the reduction in premiums has been to the consumer’s benefit.
He says the switching of risk policies is more an issue for product providers because they face the prospect of losses if policies are cancelled early. These losses are due to the assurers’ upfront costs in issuing policies, particularly the commissions they pay.
Although risk products have become increasingly competitive, they are also becoming increasingly complex, making it easier for unscrupulous salespeople to get you to sign up for a new product, generating a new round of commissions.
Often, policyholders are told only about the initial premium levels based on best-case scenarios, with premium increase shocks lying in wait for future years, particularly if they start suffering from ill-health.