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.
I firmly believe it constitutes a conflict of interest for a structured settlement broker or settlement planner to be involved in both the creation and transfer (destruction) aspects of structured settlements. Nonetheless, such disclosures are crucial because commissions and finder's fees can vary significantly, directly impacting the amount of money the seller (or transferor) of structured settlement payment rights ultimately receives. Some commissions and fees can reach as high as 4%! To calculate the lump sum, the factoring company must discount the periodic payment rights being transferred, then add its costs (including commissions or finder's fees) and profit margin to the deep discount.
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…
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