The CEO of broker BMS has told his staff in Latin America to hold on to savings they achieve for their clients and book the revenue as a “professional fee”, an internal memo obtained by re-Insurance.com reveals.
In the note, dated 30 January, Nick Cook said: “If BMS achieve a saving for a client by obtaining a price for a contract below the ‘client spend’, as stated in writing by the client broker, the balance can be taken as a professional fee.”
The memo is addressed to the broker’s CEO of Latin American and the Caribbean, where BMS acts as a wholesale broker.
Cook goes on to say: “In all cases professional fee must be proportionate and therefore commensurate with the work undertaken.
“If the professional fee exceeds 25 percent of premiums quoted to BMS Latin America then written justification explaining the additional work undertaken must be documented as a standard form and included in the electronic file,” Cook said.
It is understood that BMS has since revised that figure down to 20 percent and that in the majority of cases the professional fee is taken in lieu of commission, however it can also be taken in addition to other charges.
A spokesperson for the company said: “BMS is proud to lead the way in the transparent and open manner that it acts as a trusted advisor to its clients across Latin America.”
“At all times, and across all regions of the world, BMS operates to market leading and fully compliant best practice standards.”
BMS is part of the Minova Group and a leading London market wholesaler. The broker, which is majority owned by its management and staff, also operates the London market underwriting platform Pioneer.
There is no suggestion that BMS has done anything inappropriate and the structure reflects the different protocols that occur with the purchasing of commercial insurance in parts of Latin America.
The memo makes it clear that BMS brokers must act in accordance with advice from the firm’s legal advisors and adhere to the group’s internal compliance report.
It is understood that BMS’s Latin American business is separately licensed and regulated locally.
Finally, the memo stressed: “Tax figures deducted from ‘amount due’ on BMS placing sheet must clearly be stated as ‘locally payable’ to ensure it is clear that BMS are not handling taxes and are not a tax agent.”
“Taxes must be levied accurately reflecting the exact amount due to local authorities in the relevant territory.”