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Claw back the commission you're owed

With insurance, you could get as much as 20 per cent back.

TRAILING commissions on managed funds and insurance within superannuation are set to be banned from July 2012 and July 2013, respectively.

A trailing commission is a percentage of the invested amount, or premium, that an adviser will receive as remuneration for the life of the investment or policy.

Many argue they provide an incentive for an adviser to recommend a product with a high trailing commission over another without one.

Currently, these amounts average between 0.44 and 0.55 percentage points. That's all fine and good if you see your financial planner every year and you believe you are getting some value for your money but if you haven't seen them since your original investment you might be interested in getting some of that money back.

One way of doing that is by signing up with a commission rebate service. There are about 10 of these offering different levels of rebate on different products. They will generally take a certain amount of the commission for example, the first $200, and then give the rest back to you.

Even if the commission ban goes ahead next year it will only be on new products, so you can still get some money back from your existing investments. Depending on how much you have invested, an extra $200 is nothing to be sneezed at. When it comes to insurance premiums, you could get as much as 20 per cent of that back as well.

But what won't be included in the ban next year are commissions on mortgages. These don't come directly out of your mortgage but if you use a mortgage broker there is a good chance they will have been paid a commission from the financial institution. Anecdotally, it does seem that whether or not a lender pays a commission will influence what mortgages a broker will recommend, as it is via commissions they are remunerated.

You can use a commission rebate service to get some of this back but you will have to refinance with them. Some, such as,, and, have registered as mortgage brokers in order to receive the commission which they can then rebate back to you. reports a return of $800 for the average $400,000 loan Irefund says $875 for a $500,000 loan.

Before you dismiss that amount as small change, consider this. If you split it into 12 payments on the $400,000 loan at 6.75 per cent over 25 years and started paying extra after the first year, you would pay off your loan one year earlier and save more than $26,000 in interest. If you used a mortgage offset account, you would pay it off even quicker.

All you have to do is download and fill in a form with relevant details regarding your product and the commission rebate service will do the rest. You don't have to have any contact with your mortgage broker.

It may take a while but eventually the servicing rights will be transferred to the commission rebater and the money will start dripping into your hands.

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