Large Banks Breaking Commission Laws

[cottonland]

By law in ar, you can pay a referral fee, but is has to be paid on ALL referrals and can not be contingent on placement of the business. They are prob still in violation.

 

[Heather]

Our credit union has something going on with Medicare advantage and Med Supps. They are working around the no cold calling rule on advantage plans and calling their senior citizen members to attend seminars and sign up for plans in addition to mailing them. The girl giving the seminars is a captive agent with Blue Cross Blue Shield. I can't figure this out, who is getting paid what and why are they doing this?

Then they break the rule where you can't serve meals to the seniors at these seminars or anything that could be assembled into a meal.(like a tray of rolls and a tray of meats) I can serve my seniors a donut and they got a catering truck dropping off food. They must be making some money off this.

 

[Zanetti90]

I think this is similar to this

http://m.mpamag.com/news/big-bank-in-hot-water-over-kickback-allegations-22444.aspx

 

[GXR2]

So I have a friend who works for a large local banking institution & he does commercial lending. He specifically told me that if he refers business to their insurance division, he gets a cut of the revenues.

When agreements are done between business units of an organization there are ways to structure it so it's not illegal. If they were seperate companies, even owned by the same company, that wouldn't be so easy, and probably not legit.

That said, you can compensate for a referral. You can't compensate for a sale.

 

[Beachguy]

So I have a friend who works for a large local banking institution & he does commercial lending. He specifically told me that if he refers business to their insurance division, he gets a cut of the revenues.

How could this be legal if he doesn't have an insurance license? We all know the banks are doing this & he specifically said it's based off "total revenues" but if that's coming from the sale of insurance products in certain situations, how the hell is that OK?

Meanwhile us retail agents have to watch out backs & never give money contingent upon a sale.

I assume it's PA. Probably Univest or beneficial. Send an anonymous letter to the ins dep.

If it's beneficial. Don't worry. They aren't long for this world.....they are crumbling.

 

[scagnt83]

Banks get to play by slightly different rules than the rest of us sometimes.

However, if the bonus is based off of total revenue, and not on just the specific sales of the referral, then it would be legal.

Essentially it is classified as an employee bonus program. Bonus programs can be structured based on a % of total revenue. They can be interdepartmental within a financial institution. In most states it is the same for a multi discipline local financial services company (like an insurance agency and mortgage lender and CPA all working under one larger umbrella of a holding company)

As long as the bonus is based on the overall revenue of the division, and not on the specific policies they refer, then its all above board. The % of total revenue the referrer gets can even be based on how many referrals they give in that period.

Its no different really than the bank giving employees a Profit Sharing Plan. Insurance sales revenue would be going to non licensed employees with a Profit Sharing Plan. Legally its no different with a bonus plan based on total revenue.