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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 71153
Experience:  Over 5 years in practice
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HI, I have had a small claims court claim raised against me.

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HI, I have had a small claims court claim raised against me. We now have a court date which is the 14th March. The claim is from a previous business associate because i was self employed as insurance broker under her business. I reffered some business to her for which she claimed a commission. She paid 50% of that commission to me as a referral fee. The business that she did cancelled and so she had a clawback of the commission. She had no agreement in place for me to repay this money if this was to happen. She did however have an agreement with the client that if they cancelled and the commission was clawed back she could recover the money from them. She has chosen to pursue me instead of the client. Can you advise me please?

Thank you for your question. My name is XXXXX XXXXX I will try to help with this.

Has she said she will repay you at the end please?
Customer: replied 4 years ago.

Hi Jo,


No she wants the money from me instead of the client. She is not going to try and claim the money back from the client she is only trying to get the money from me. She was paid £10,200 of which she gave me £5100. She is only chasing me because she and I fell out because I left her business before this happened. She has not said she wants to chase the client she only wants me to pay.

Customer: replied 4 years ago.

She is saying that under my contract with her if any business that I conduct myself and am paid a commission for I am liable in case the policy cancels in the first 4 years. However she is the one that conducted this piece of business and she merely paid me a referral fee. Usually in a situation like this she would have had an introducers agreement in place however she never did this. In my employment contract it does not state about business that is referred to colleagues and the commission that is paid. It only covers business that I personally do myself.


Can I just check this?

You are a subagent under a head agent? You refer a client to the head agent and the client did business.

The head agent gets the commission

The commission was split between you and the head agent. The client cancelled the policy

If 50% of the commission was paid to you and 50% was retained by the head broker, where does the client come into this having to repay and why should the head agent pursue the client?

On what basis do you want to retain the referral fee bearing in mind that the policy was cancelled?
Customer: replied 4 years ago.

The top part of that is correct in a sense that I was self employed under he umbrella company/brand.


The head agent and us as advisors always get a client to sign a terms of business which states that in the event that the client terminates the insurance policy and the advisor becomes liable to repay the commission that was paid to the advisor, the advisor reserves the right to reclaim that commission from the client to cover the clawback.


I have had nothing to do with this and it was because the head agent fell out with the client that they cancelled the policy which I was not involved in.


Where i referred the business to the head agent I was what is classed as an introducer. In that case we should have had an introducers agreement signed to say that if the head agent cannot reclaim the commission from the client they can then try and claim share back from the introducer for which it was paid.


I do not want to repay because I never agreed that I would. I also do not have the funds to repay this lady.


I still cannot see on what basis the client is responsible to repay the commission if the client cancels the policy in circumstances where the client never had the commission in the first place. In that case, the client is not repaying the commission. The client will actually be paying a penalty and penalties are not enforceable in English law. However, that is not the question.

Whether you have the funds to repay or not is immaterial.

If this goes to court, I’m sorry to have to tell you that you are likely to lose because you have had commission for a product which was cancelled. The Claimant will rely on custom and practice, which as you are aware, is that the commission will be recovered in the event that policy is cancelled.

There is a slim chance that the judge will ask for a copy of the agreement and would find in your favour if that is not forthcoming. On the other hand, the claimant could say that this is an unjust enrichment and it must be repaid.

I’m sorry that this is bad news for you and I wish I could give a more favourable answer.

Can I clarify anything for you?

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