"The 25bps of ‘poison’ you’re currently getting paid for this retention work is just not enough and it needs to go up to a normal procuration fee level."
Speaking at FSE Manchester, Adrian Moloney of OneSavings Bank said that the product transfer opportunity was “a massive part of the market that brokers haven’t had a part of before”.
Brightstar's Rob Jupp agreed, adding: “Product transfers are your big opportunity, both residential and for buy-to-let. The way you grow your business is by getting involved in product transfers. However, at the moment, the 25bps of ‘poison’ you’re currently getting paid for this retention work is just not enough and it needs to go up to a normal procuration fee level.”
Robert Sinclair of AMI said that the current product transfer market was in the region of £100bn per year. He said: “The big opportunity is how advisers get into this £100bn because at the moment we think that 80% is being done directly by the lenders.”
Jupp highlighted that when product transfers are put into the mix then the total intermediary share of mortgage business drops considerably. He said: “I saw a presentation from LBG recently which suggested that, with product transfers in the mix, the intermediary/direct share of the market is not 70/30 in the intermediary’s favour but actually more like 54/46.”
Louisa Sedgwick of Vida Homeloans did however sound a note of caution for advisers when it came to product transfers and retention. “Retention procuration fees and product transfer fees are great,” she said. “However my major fear is that down the road the broker gets cut out of the deal completely when the lender contacts that borrower direct. This is therefore a great opportunity to keep managing your client banks really well.”
Sinclair added that it was difficult to get a full picture on the product transfer market because currently the CML does not collate the information, however he said this was coming in 2018 albeit not retrospectively. He said that when adding the £100bn product transfer market to existing gross lending figures the mortgage market was very close to its pre-Credit Crunch levels.
