FSE Wales: Proc fees must reflect the work involved

Paradigm's John Coffield says lenders must acknowledge the greater level of work involved in placing mortgage cases today and should be paying a procuration fee suitable to the increased workload.

Related topics:  Mortgages
Rozi Jones
29th June 2017
john coffield paradigm fse glasgow
"While I don’t think there should be a one size fits all approach when it comes to proc fees, some lenders are still paying the same fee they did pre-MMR."

Speaking at yesterday's FSE Wales, Coffield said that while it would be right for advisers to expect a larger proc fee, he wasn’t convinced the industry would get to that point anytime soon.

Coffield said: “Some lenders have announced they intend to pay retention proc fees in the summer, or later in the year, simply because they do not want to be ‘last man standing’ in terms of announcements. While I don’t think there should be a one size fits all approach when it comes to proc fees, some lenders are still paying the same fee they did pre-MMR.”

Adrian Scoutes of Nationwide – a lender that has yet to start paying retention proc fees – said: “We are saying we’ll be paying from the summer and we’re sticking to that. Currently we’re in testing mode.”

David Whittaker of Mortgages for Business added that advisers active in the buy-to-let sector, especially in writing portfolio landlord mortgage business, should also expect to see increases in procuration fee levels from the last quarter of this year.

Whittaker said that he had recently been at a closed event for buy-to-let lenders where one lender representative outlined their approach to paying for portfolio landlord business. “One lender representative stood up in front of us all and said that in Q4 they will be paying more to brokers who are having to do more work on managed portfolio cases,” he said.

He suggested that when this lender moved, advisers could expect similar changes from others in the marketplace. He added: “That change will force the others to move. When one goes, others will follow. It is good news that the market will be recognising your contribution and will begin paying for it.”

Whittaker said that while predictions for buy-to-let gross lending had been downgraded by the CML recently – to £35bn in 2017 and an anticipated £33bn in 2018 – advisers still had opportunities within the sector, and that the lending figures did not necessarily take into account the value of product transfer business which increasingly lenders were paying for.

Liz Syms of Connect for Intermediaries agreed that product transfers could be a major source of business for advisers, plus suggested that in the lead up to the portfolio landlord underwriting changes – due to come into effect on the 1st October – activity levels might increase.

She said: “There is the potential to see a spike in business before the end of September. Advisers and clients could get the benefit from the current rules now as we don’t know how the new rules will land.”

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.