LCR13570

Subject:
Dispute concerning commission payable to brokerage staff arising from business produced by independent brokers for First National Building Society (F.N.B.S.).

Recommendation:
The Court having considered the submissions of the parties
recommends that the dispute be resolved on the basis of the
management proposal made at conciliation.

In view of the developing nature of the business the Court
further recommends that the parties meet 12 months from the
date of agreement between the parties to review the agreement
in the light of the circumstances at that time.

Division: Ms Owens Mr Keogh Ms Ni Mhurchu

Text of Document__________________________________________________________________

CD9211 RECOMMENDATION NO. LCR13570

INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990

PARTIES: IRISH LIFE ASSURANCE PLC
and
MANUFACTURING SCIENCE FINANCE

SUBJECT:
1. Dispute concerning commission payable to brokerage staff
arising from business produced by independent brokers for First
National Building Society (F.N.B.S.).

BACKGROUND:
2. 1. The Company has a brokerage staff consisting of 7
brokerage area managers and 24 broker consultants.
Brokerage staff are responsible for promoting products
through independent brokers. Each consultant has a panel
of brokers and is responsible for producing sales from
these brokers. The consultants are paid on the basis of
salary and commission calculated on the sales performance
of the brokers. In 1991 average salary of brokerage staff
was £15,867 and average commission was £16,241.

2. In recent years the endowment mortgage market has
grown substantially. The Company established a joint
venture company called Irish Life Homeloans (I.L.H.) to
sell endowment mortgages linked to the Company's Assurance
product. Brokerage staff promote the I.L.H. product which
is successful.

3. In 1990 the Company established a link with F.N.B.S.
and agreed to act as underwriters for their endowment
mortgage business. The majority of F.N.B.S. mortgages are
sold through its branch network but F.N.B.S. has also
given agencies to a number of independent brokers. Most
of these brokers also hold agencies with the Company and
also sell I.L.H. and Company products. The Union claims
that the consultants should be paid commission of F.N.B.S.
business sourced through these brokers. The Company
claims that the payment of commission is not justified as
the consultants have no role in promoting F.N.B.S.
business with these brokers. No agreement was reached at
local level discussions and the matter was referred on
27th May, 1991 to the Labour Relations Commission.

Conciliation conferences were held on 17th July, 1991 and
7th October, 1991 at which no agreement was reached. The
Company indicated at conciliation that it was prepared to
consider making a nominal payment in respect of the
business concerned but the Union rejected this approach.
The dispute was referred to the Labour Court on 9th
January, 1992 in accordance with Section 26(1) of the
Industrial Relations Act, 1990. The Court investigated
the dispute on 10th February, 1992.

UNION'S ARGUMENTS:
3. 1. The main part of brokerage staff income is from
commission paid on assurance contracts. The agreement
with the Company is that consultants are paid on business
sourced from their panel of brokers. This effectively
means that if the brokers get paid then the consultants
automatically get paid. Despite this agreement the
Company is refusing to pay commission on F.N.B.S. business
which is sourced from these brokers.

2. The F.N.B.S. has given agencies to over 100 brokers.
These brokers also deal with the consultants in relation
to I.L.H. and other Company products. Personal
relationships have been developed between the consultants
and brokers in dealing with queries and problems in
relation to all business associated with the Company. The
brokers associate the Company with F.N.B.S. and I.L.H.
business because of the life assurance content. If the
consultants were to refuse to deal with the queries and
problems of brokers in relation to F.N.B.S. business it
could damage the personal relationships developed between
the consultants and brokers. Although the Company
requests the consultants to promote only I.L.H. mortgages
they have to deal with F.N.B.S. business from brokers and
should be rewarded by full commission payments.

3. The consultants have been paid on Company contracts
transacted through other loan institutions. Other life
assurance companies pay their consultants on similar
business. The loss of commission payments is growing
significantly and could set a dangerous precedent for
future joint arrangements between the Company and other
institutions.

COMPANY'S ARGUMENTS:
4. 1. The Company's rejection of the Union's claim is based
primarily on the fundamental principle that the Company
remunerates staff for the work they are asked to do.
Brokerage staff are responsible for promoting I.L.H.
mortgages with the brokers and are instructed not to
promote F.N.B.S. business. The Company cannot therefore
accept that staff should receive commission in respect of
F.N.B.S. business when they have no role in promoting such
business.

2. When the I.L.H. was set up the Company guaranteed its
partners that brokerage staff would be dedicated to
promoting I.L.H. business. When the link with F.N.B.S.
was established it was agreed that F.N.B.S. staff would
promote F.N.B.S. business with brokers and that Irish Life
staff would not. However the Company expects that
brokerage staff should be helpful in relation to queries
about F.N.B.S. business and be prepared to advise brokers
about whom to contact for further assistance. Such
occasional helpfulness does not justify the payment of
commission.

3. With reference to the Union's concern about the
establishment of precedents, the Company will always
examine on its merits any issue which arises. The
Company's policy is that brokerage staff should be
remunerated well for the work they are asked to do.
Although the Company does not see any justification for
the Union's claim it is willing to consider a nominal
payment to brokerage staff for them dealing with
occasional F.N.B.S. queries in order to resolve the
dispute.

RECOMMENDATION:
The Court having considered the submissions of the parties
recommends that the dispute be resolved on the basis of the
management proposal made at conciliation.

In view of the developing nature of the business the Court
further recommends that the parties meet 12 months from the
date of agreement between the parties to review the agreement
in the light of the circumstances at that time.
~

Signed on behalf of the Labour Court


Evelyn Owens
27th February, 1992 _________________
A.S./N.Ni.M. Deputy Chairman


NOTE

Enquiries concerning this Recommendation should be addressed to
Mr. Alfie Smith, Court Secretary.