by Structured Settlement Watchdog
Settlement Planners that are engaged on the destruction side (transfer) of structured settlements, by former plaintiffs or their attorneys, should disclose to those sellers (transferors) of structured settlement payments rights what commissions or finders fee they are making.
While I maintain my belief that it is a conflict of interest for a structured settlement broker or settlement planner to work on both the creation side and destruction (transfer) side of structured settlements, such disclosures are important because the commissions and finder's fees are variable and essentially affect the amount of money that the seller (or transferor) of structured settlement payment rights will receive. Some commissions and fees are as high as 4%! In order to compute the lump sum the factoring company has to discount the periodic payment rights being transferred then supplement the deep discount with its costs (including the commissions or finder's fees paid) and profit margin.
In July 2005 the Society of Settlement Planners approached the National Association of Insurance Commissioners ("NAIC") and the National Conference Of Insurance Legislators ("NCOIL") in an effort to encourage disclosures of commissions earned/paid on the "creation" side of structured settlements.
A number of structured settlement brokers, including myself, already use a form of structured settlement affidavit which includes such a disclosure. Given The Society of Settlement Planners position on that I see no reason why the Society of Settlement Planners or its membership, or any other structured settlement broker or settlement planner that is engaging in both the creation and destruction side of structured settlements, should have any objection.
Evidently, from what I can glean from Internet advertising, some of the factoring companies (a/k/a advanced funding companies or settlement transfer companies) are even offering monetary incentives to attorneys to refer clients with structured settlements to them for the purpose of buying their structured settlement payment rights. I believe that those fees should also be disclosed.
I'm interested to hear what the rest of you are thinking...