Lesson 5 – Explaining the Nature and Amount of the Benefit

5.1 State the actual amount

Where MyEstate will receive a fixed amount, the clearest approach is to state the actual amount.

Example

“If you instruct Green Street Conveyancing following our introduction, it will pay MyEstate a referral fee of £150.”

Staff should not replace a known figure with vague wording such as:

• “A small fee”;
• “A nominal commission”;
• “A commercial benefit”; or
• “A standard referral payment.”

5.2 Variable fees

Where the fee varies, the disclosure should explain:

• The amount or range;
• The percentage;
• The method of calculation;
• What event triggers payment; and
• Any maximum amount, where applicable.

Example

“If you purchase the recommended insurance, MyEstate will receive commission equal to 10% of the provider’s net premium.”

If the exact amount cannot be calculated at the time of the first disclosure, the method should be explained clearly and the amount provided when known.

5.3 Non-financial benefits

Where MyEstate receives a non-cash benefit, the disclosure should describe it accurately.

Example

“The provider does not pay MyEstate a fee for each referral. However, it supplies MyEstate with discounted marketing services under our commercial partnership.”

5.4 Connected companies

Where the provider is connected to MyEstate, the disclosure should explain:

• The nature of the connection;
• Whether the businesses have common ownership;
• Whether profits remain within the group;
• Whether MyEstate staff receive incentives; and
• That the customer may use another provider.

5.5 Customer costs

The referral disclosure should not be confused with the provider’s own price information.

Customers should be given or directed to clear information concerning:

• The provider’s charges;
• VAT;
• Possible additional costs;
• Cancellation rights;
• The scope of the service; and
• Who will enter into the service contract.

5.6 Approved disclosure template

Referral-fee disclosure: MyEstate has a commercial referral arrangement with [provider’s full name]. If you instruct this provider following our introduction, MyEstate will receive [£amount/a fee calculated as follows]. This payment is made by the provider for the introduction. You are not required to use this provider and may appoint another provider of your choice. Your decision will not affect how MyEstate handles your offer, application or transaction.

Lesson 5 key point

The customer should understand who benefits, what is received, why it is received and whether using the provider is optional.