New mortgage broker - trail commission with mentor

Discussion in 'Legal Issues' started by MortgageConsultant, 26th Jan, 2022.

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  1. MortgageConsultant

    MortgageConsultant New Member

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    I started my mortgage business 2 years ago. I signed up with a mentor with agreement that during mentorship period we will share commission split plus a fixed yearly fee.

    As I was new to business he helped me setup my business advising which aggregator to join among other compliance requirements.

    I followed his advise and he set me up with aggregator under his company name. As I was new to this field I followed his advise without realising consequences.

    Now that 2 years of mentorship period is over I want to go independent. However, my aggregator is refusing to release my trail commission and my client data because technically all the trail and clients belong to my mentor and not me. My account is just a sub-account under my mentor's company. So he owns my data and future trail.

    I worked hard these two years and setup a reasonable size loan book. I am feeling devastated seeing my mentor stealing my trail commission and feeling helpless.

    My aggregator says there is nothing they can do as I gave consent to being setup as subaccount under my mentor's company. Any transfer of data and future trail from current subaccount to my independent account can not be done without my mentor's consent.

    My mentor is not replying to my calls/texts or emails.

    Is there anything I can do to stop him from stealing my hard earned wages?
     
  2. boganfromlogan

    boganfromlogan Well-Known Member

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    Wow.

    Stupid me, but I thought trail commissions weren't allowed any more. I know nothing about this industry BTW, but am repeatedly shocked by what goes on.

    Edit: oh the government never got around to banning trail commission.....
     
    Last edited: 26th Jan, 2022
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  3. Scott No Mates

    Scott No Mates Well-Known Member

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    Work out how to retrieve your client data, join a new aggregate, get your clients to refinance with the new aggregate so the mentor will need to repay their trails. :D
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What does your contract say?
     
  5. MortgageConsultant

    MortgageConsultant New Member

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    There is no separate contract between me and mentor about commission split.
    There is however a contract on aggregator's form signed by both me and mentor that says what the commission split is going to be between me/mentor/aggregator. It was submitted to aggregator as part of account setup process.

    It doesn't say anything about "mentorship" or a 2 year window etc. It says the agreement is valid until changed all signed parties.
     
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    The challenge here is that its not the agg thats refusing to release the data and the comms.

    If your mentor asks for this to happen, im sure the agg would make it so

    ta
    rolf
     
  7. thatbum

    thatbum Well-Known Member

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    Sounds like there might be elements of a valid contract there to me. How much money is at stake? You'll probably need legal advice if you want to investigate whether its worth legally pursuing.
     
  8. Luca

    Luca Well-Known Member

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    Learn from the mistake, try to work with the mentor, and move on! At the end of the day, there is a signed agreement that you want now to be changed. It`s like one of your clients comes back to you and says "ops I didn`t read there were trial commission, please give that money back to me ;-"
     
  9. MortgageConsultant

    MortgageConsultant New Member

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    That's right.

    When I started out I didn't know that there was no requirement for me to be setup under his company. I am sure my mentor knew this and still advised me to be setup that way. I trusted his advise as he was my mentor and I was new to industry. I had bigger things to worry about such as getting new clients and understanding loan approval process etc.

    Do I have a valid legal ground considering as a mentor he was supposed to guide me instead of setting me up for exploiting in future?
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    You could potentially sue
     
  11. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    If the trail has been set up under your mentors agreement, then it is under their control. The only way you get it out of that agreement is if you refer it to the contract you have with the mentor.

    If you don't have a contract that helps you out, then you're probably about to learn a hard lesson. In this case, suck it up, get your own aggregator agreement and move on. You'll take a hit, but staying in the existing agreement will hurt more in the long run.

    Keep in mind your mentoring agreement may stipulate that you pay the mentor even if you create a new aggregator agreement.
     
  12. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Are you sure you're being exploited? Looking back I don't think my own mentor made much money out of our agreement in those first two years. I did pay him a split for a number of subsequent years. It was only a small percentage of what I made so I hardly noticed, but it did add up to a significant amount over time.

    I've also mentored new brokers, it cost me more than I was paid initially and it was the money they paid me after the first 2 years that made it worthwhile. These agreements did have sunset clauses on them so they weren't paying forever, but we have all shared in each others success.

    I can also say that after 17 years I still get benefit from the mentoring relationships that were established back then.
     
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  13. MortgageConsultant

    MortgageConsultant New Member

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    Thanks everyone for valuable inputs.