Even if the ban on commissions continues to apply for the time being – there is something in the air: The Regional Court of Cologne had decided that the agent or insurance broker acts legally if he passes on his commission or brokerage fee to insured persons in whole or in part. In 2011, the Administrative Court of Frankfurt had already ruled that the regulation on the prohibition of commission payments was unconstitutional. Since then, there have also been no more notifications from BaFin in this regard.
Freedom of choice for the customer to decide whether he does not need advice?
Why should the customer not be free to make the right decision and save money? The cannibalisation of sales alternatives is facilitated by the Internet. An alternative to the net policy calculated entirely without commissions is the commission fee for some agents with a broker’s license and Internet sales. This annoys broker associations, because the job description regularly includes “the duty to perform an individual performance and needs analysis” – i.e. object examination and risk assessment, instead of “commission fee against waiver of advice”.
Already the Federal Court of Justice, and now also the Regional Court of Cologne, are of the opinion that a waiver of advice by means of general terms and conditions or forms – quasi in return for the commission fee – is inadmissible. The way out is already mapped out, for example the mediation via a professional association, an association for members only, or as a multiple agent. Alternatively, an individual agreement with the (future) UN could be considered, with the difficulty of avoiding even the appearance of general terms and conditions in order for the agreement to be effective.
Renunciation by the UN of the need for advice in the context of private autonomy
Professor Schwintowski had already explained to the German Bundestag on 27.03.2007 how the waiver of consultation in accordance with the EU Mediation Directive can be implemented in practice:
“The customer waives advice (and further documentation) by declaring to the agent that he wants a very specific product (e.g. a personal liability insurance policy from Calamitas) and that he has no other wishes or needs”. If both were documented, the EU Mediation Directive would be complied with – in contrast to the (mere) wording of the VVG2008 which was planned at that time.
Of course, an estate agent may write at his door that only the person who knows exactly what he wants and therefore does not need any advice is allowed to enter. It would be the same on the Internet. This could be preceded by an “information portal” that leads the customer to this conclusion. Common (GTC) forms for waiving documentation and advice do not fulfil this requirement and are already being cashed by courts via GTC law, i.e. without having to resort to higher-ranking EU law.
Limits of fee advice by insurance brokers
The § 34d GewO allows the fee advice by the broker, but not (yet) explicitly towards consumers, and furthermore there is no rule for the remuneration in this respect: If one wants to deviate from the previous legal rule of the performance-related remuneration (compared to self-employed persons), special legal knowledge is required to conclude an effective individual agreement. On the other hand, operating with net tariffs or (partial) commission payments for the self-employed often appears to be quite unproblematic.
In practice, however, some structured sales organisations work en masse with consumers with some kind of non-performance-related fees – this appears to be just as illegal as if the same customers were promised (partial) reimbursement for product referrals.
Fee-based advisory services via financial instruments or fee-based investment advisory services allow, for example, time remuneration, fixed price, turnover fee, volume fee or a percentage according to client assets. For insurance brokers, on the other hand, it is traditionally customary to agree on the performance-related remuneration – something else that can also be agreed on a form, but the legislator has not yet expressly permitted this – at the latest when EU law prohibits commissions, this point will also have to be regulated. Meanwhile, the broker can also save himself any kind of admission according to GewO and WpHG by being (temporarily) employed by his client and receiving a pay slip.
Insurance consultants as a way out?
The small number of insurance consultants working in practice shows the minimal interest of clients in fee-based consulting. Such advice, however, is not aimed at the conclusion of a specific tariff or contract, and is therefore rather product-comparative – including the prohibition of agreeing or accepting a sales (performance) fee. A mediation here is only very occasional, and if necessary with relatives or family members is permitted. However, cooperation between brokers and (insurance) legal advisors is permitted, according to the motto separate funds (and offices) – good friends. The double licence as a broker and VB or RA usually results in the fact that a licence must be returned. An exception would be the VB or RA as manager of a brokerage firm – provided that a sales activity is excluded.
The brokerage fee is always due to the UN – even if the BoD pays it
In 2015, the legislator has explicitly clarified for the real estate broker that the broker (as always the insurance broker) is always owed the commission by the client. And how is it possible that the insurer pays the brokerage fee (even though he is not a client at all)? The trick: it is said that the insurer impliedly promises the client that “we will pay the broker’s commission debt” for him. The customer often does not even know whether the broker is getting something for the deal right away, or perhaps later, or perhaps both. This has the consequence that in case of breach of fiduciary duty the brokerage fee can be forfeited and the client will be reimbursed by the broker. This is the legal case of full commission, even if the customer has not suffered any damage at all as a result of the breach of fiduciary duty.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.experten.de (published in Expert Report on 21.01.2016)
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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