Fatwa on broker commission

Fatwa section of the Islamic Affairs and Charitable Activities in Dubai (IACAD) issued a fatwa stipulating that brokerage companies cannot change the amount of commission which was agreed with the broker without his consent.

Brokers, meanwhile, can move the courts to take their rights if they fail to reach a settlement, the Fatwa section added.

The fatwa was issued by IACAD in response to a question from one of the brokers who asked about the legality of a brokerage company, which had agreed to pay him $50 as commission for each $10,000 he collected from clients.

He said that he received the commission for five months before the company reduced the commission to Dh50.

When he confronted the company, he was told that the commission was reduced because a new partner had joined the company, who had approved this change.

The fatwa stressed that the company shall not change what was agreed with the broker. It added that the new partner is not empowered to change what has been already agreed upon.

IACAD, however, clarified that the company has the right to change what has not been agreed upon earlier.

Follow Emirates 24|7 on Google News.