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Chargebacks & the ex-vendor

Guest Mariko

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A client decides to change their NQDCP vendor as well as their informal funding arrangement. Client plans to surrender all of their COLI policies put into place by their former NQDCP vendor and use a different funding methodology with their new vendor. Former vendor is trying to incorporate COLI chargebacks into this client's "exit fees". Any guidance on whether former vendor is making a legal violation (of either NASD or California State Insurance Law) or is this action just unprofessional? Assume that no service agreement can be located between client and former vendor.

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IN order for any fees or charges to be assesed there must be some written document authorizing such a fee/charge. The fact that a service document can not be located does not mean that one does not exist. The vendor should produce the service agreement in order to legally be entitled to the charges. Otherwise the surrender of the policies will be subject to the fees chages contained in the policies. I dont under understand what NASD rule would apply to an insurance policy. NASD governs stocks traded on an exchange.


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