Retrocession Agreement Meaning

In Liechtenstein, unlike Switzerland, there is no relevant case law concerning the recovery of retrocessions on heritage liability contracts. However, as in Switzerland, the contractual nature of an asset management agreement implies that the client is entitled to all the benefits of management, in particular handovers. The client may require his asset manager to release all transfers. Unlike Switzerland, however, there is a more favourable prescription period for customers in Liechtenstein. It has been 30 years, so it is possible for the client to recover transfers for a much longer period of time. [16] However, since most banks and asset managers have not adequately informed their clients of the retrocessions made, many clients have the right to assert their rights to the transfers. [11] [Citation required] In the Swiss financial sector, retrocessions are kickback commissions that banks, asset managers, trustees and financial service providers receive after the purchase of financial products such as funds, commitments, structured products, etc. Returns are generally not paid or obtained on the basis of the performance of the financial product; This means that even if the client`s portfolio performed negatively, clients were still receiving their contractual bank fees and, on the other hand, transfers of 0.5 to 2% of the assets under management. [12] Retrocentration fees are commissions paid by a third party to an asset manager or other new fund manager. For example, banks often pay a handover fee to asset managers who work with them. The bank will encourage and compensate executives if they bring transactions to the bank.

Banks may also charge third-party transfer fees, such as investment funds, for the distribution or promotion of certain financial products. The judgment (4A_508/2016) of the Federal Court of Justice of 16 June 2017 specifies the legal limitation of the transfers. Clients who have retained Swiss asset management companies over the past 10 years can be recovered retroactively. The legal statute of limitations begins on the day the Swiss asset management company received the handover. [15] The retrocession agreements are any agreement, contract, certification or other agreement by which each insurance subsidiary assigns all or part of the liability of that insurance subsidiary in the context of an insurance policy or insurance policy reassigned by such an insurance subsidiary. So far, no Swiss bank has issued an official directive on how to recover illegally detained transfers. On the contrary, banks largely ignore the subject, tell their customers that they have no right to enforce their claims, or even leave the requests unanswered. The argument is that banks and asset managers face a conflict of interest when purchasing financial products that pay a certain percentage of kick-off commissions. [6] When deciding on the fund or structured product it buys, the responsible asset manager should act only in the best interests of his client and thus buy the best performing fund, stock, structured product, etc. However, since kick-off commissions vary widely between 0.5% and 2% and are, in most cases, refunded to the buyer regardless of the performance of the financial product, the bank or asset manager could attempt to maximize profits by purchasing products that pay the highest returns. Without limitation of the above, the Underwriting Manager pays in a timely manner retrocession bonuses resulting from retrocessionaries in the reinsurance transfer agreements on the funds of the operating account and carefully endeavours to recover from these retrocessionaries all the reassurance claims due.

HG 150054 states that clients with enforcement mandates are also entitled to return and research fees that have been illegally detained by Swiss banks and asset managers.