Labour Court Database __________________________________________________________________________________ File Number: CD89714 Case Number: LCR12650 Section / Act: S67 Parties: PROVIDENT PERSONAL CREDIT LIMITED - and - IRISH DISTRIBUTIVE AND ADMINISTRATIVE TRADE UNION |
Commission rate applicable on the introduction of personal loans.
Recommendation:
5. Having considered the submissions from both parties the Court
recommends that the proposed new personal cash loans be introduced
at a commission rate of eight and one quarter per cent.
Division: Ms Owens Mr Keogh Mr Walsh
Text of Document__________________________________________________________________
CD89714 RECOMMENDATION NO. LCR12650
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: PROVIDENT PERSONAL CREDIT LIMITED
(REPRESENTED BY THE FEDERATION OF IRISH EMPLOYERS)
AND
IRISH DISTRIBUTIVE AND ADMINISTRATIVE TRADE UNION
SUBJECT:
1. Commission rate applicable on the introduction of personal
loans.
BACKGROUND:
2. The Company is part of the Provident Financial Group which
operates in Britain, Northern Ireland and the Republic of Ireland.
The Company offers unsecured credit to customers in the form of
credit documents i.e. shopping vouchers and bonds. These
documents are exchanged at nominated retail outlets for goods or
other services. The nominated retailers have agreements with the
Company to accept and be reimbursed for the documents. The
retailers pay an agreed discount to the Company which supplements
interest paid by the Company's customers. The Company employs two
types of agents (i.e. self-employed and employed agents) who
collect repayments from the customers at the customers' homes.
These agents are paid a commission in the Republic of Ireland of
nine and one third percent on their collections. Because of
competition from other lending firms the Company proposes
introducing personal loans (i.e. cash loans) and has offered a
commission rate of seven and one half percent to the agents. The
Union has rejected this offer on the basis that the common
commission rate of nine and one third percent at present in force
should apply to any new business and that the rate can only be
varied by agreement between the Union and the Company. No
agreement was reached at local level and the matter was referred
on 18th May, 1989 to the conciliation service of the Labour Court.
A conciliation conference was held on 4th July, 1989 at which no
agreement was reached and the matter was referred on 5th October,
1989 to a full hearing of the Labour Court which took place on
10th November, 1989.
UNION'S ARGUMENTS:
3. 1. The agreed commission rate for all products sold by the
Company is nine and one third per cent. This has been the
agreed commission rate for many years and can only be varied
by way of agreement between the Company and the Union.
3. 2. The Company is proposing to introduce a new line of
business which will replace rather than add to other existing
lines. If the proposed new commission rate of seven and one
half per cent on personal cash loans were implemented the
agents would take a substantial wage cut.
COMPANY'S ARGUMENTS:
4. 1. In order to compete with other lending firms the Company
must be in a position to offer personal cash loans to its
customers. This would be an additional service and is
unlikely to replace documentary credit.
2. Over the past fifteen years there has been an increasing
demand from customers for personal loans and there has been a
loss of business to competitors who offer cash loans. If the
Company provided a personal loan service the agents could
increase their earnings by selling the new service to existing
customers and would be more competitive in seeking new
customers.
3. A number of the Company's agents have signed unsolicited
requests for the introduction of the seven and one half per
cent commission on personal loans. It is the Company's
feeling that the Union is not reflecting the interests of the
majority of the agents.
4. The Company is operating in a loss making situation. Over
the past five years there has been a decrease in the number of
customers, sales and agents commission. This emphasises the
need for the introduction of personal loans in order to stop
this decrease in business. The lower commission rate of seven
and one half per cent on personal loans would be offset by the
increase in business due to the introduction of personal
loans.
5. In the case of documentary credit the Company receives
discount from the retailer and the Company gives nine and one
third per cent commission to the agent on collection. In the
case of the personal loan the Company will not receive any
discount from the retailer and will incur additional overheads
such as bank charges and higher bad debt provision. It would
therefore be unrealistic to pay nine and one third per cent
commission for personal loans.
RECOMMENDATION:
5. Having considered the submissions from both parties the Court
recommends that the proposed new personal cash loans be introduced
at a commission rate of eight and one quarter per cent.
~
Signed on behalf of the Labour Court,
Evelyn Owens
__20th__November,__1989. ___________________
A. S. / M. F. Deputy Chairman