"Advisers must do their part to consult more of their back-books and ensure their existing customers’ needs continue to be served, alongside those of new clients."
Lenders such as Halifax, BM Solutions, Barclays, Clydesdale and Metro were the early adopters, and this shouldn’t be forgotten in the wave of recent announcements, but it was the move of Santander that triggered the next surge, with major lenders like NatWest and Nationwide following to complete the set.
While these moves by lenders to pay brokers for their work in retaining business will be welcomed with open arms by intermediaries, it is important to bear in mind that a number of lenders won’t actually be introducing these fees until later on in the year. Time is of the essence for brokers, particularly as thousands of borrowers are currently taking advantage of the low rate environment and remortgaging now, which is why this development in the mortgage industry needs to be implemented sooner rather than later. It is only fair that brokers are recognised for the vital role they play in the advice process, ensuring that borrowers are fully aware of all the options available to them when they reach the end of their mortgage term.
However, for a healthy market, the onus is not solely on the lenders. Advisers must do their part to consult more of their back-books and ensure their existing customers’ needs continue to be served, alongside those of new clients. As part of that, brokers need to capitalise on these changes from lenders, encouraging their clients to stay with a lender, should it be their client’s best interest.
By doing this, brokers will ensure that retention business is incremental, and is not simply cannibalising existing remortgage business. Retention fees are generally lower than standard proc fees (a subject for another day) so it is important that customers get the right advice and not just the easiest route.
In the long term, the decision by many mainstream lenders to pay retention proc fees will serve to strengthen the crucial relationship between lenders and brokers, ensuring better quality, choice and cost effectiveness for borrowers. It is great that the debate around procuration fees is finally being addressed, and we hope that in due course all lenders will implement this change into their business. Now that mainstream lenders have officially announced their intention to affect this change, the next step is to make sure it is done so in a timely manner.
