Brokers have called for procuration fees to increase, after a few lenders recently pushed up their introduction fees paid to brokers, however, lenders were dismissive of this move, stating there are currently no plans to increase them.
David Hollingworth, associate director for communications at London and Country Mortgages, told FTAdviser that there has been a buy-to-let impetus on procuration fees recently and more are likely to join Skipton and Leeds in pushing fees towards 0.5 per cent, which should become the norm.
“As the markets pick up lenders will need to turn to brokers to get the volumes they want. The MMR has brought with it capacity issues, as lenders now need to give advice and are increasingly requiring intermediary help to curb customer waiting times.
“There’s a recognition that as brokers do more, they deserve to be paid more, so there will be proc fee increases across the board, but this isn’t a huge increase, more of the market regaining its equilibrium.”
Last week Skipton Building Society increased its buy-to-let procuration fees by 15 basis points from 0.35 per cent for new buy-to-let cases, following in the footsteps of Leeds Building Society upping its procuration fees on buy-to-let and holiday let mortgages through intermediaries from up to 0.37 per cent to up to 0.5 per cent.
Coventry Building Society raised proc fees for both directly authorised brokers and appointed representatives at the start of the year. Those that were directly authorised saw a nine basis-point rise, with mortgage clubs receiving 0.43 per cent gross, up from 0.34 per cent. Appointed representatives’ proc fees also rose, but varied by network.
Ray Boulger, senior technical manager at John Charcol, agreed that there was definitely a trend for procuration fees edging upwards and it follows that other lenders would soon follow suit.
“It think it’s easy to overestimate the impact of this. Buy-to-let lenders have paid higher proc fees than on residential, so effectively these two [Skipton and Leeds] are just coming into line with the market.”
Mr Boulger added that as costs are going up along with more demand for advice from MMR, so an increase in proc fees will be very helpful.
Earlier this year Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, said he expected a “general upwards shift” in proc fees as a result of the MMR.
He said: “I believe more lenders will raise their proc fees this year as they recognise the increased work being done by intermediaries to deliver the high quality of business they require.”
Bob Riach, managing director of Scunthorpe-based Riach IFA, said that while brokers deserve higher proc fees because of the increased workload since MMR, decisions are based on researching the market and getting the right fit for client criteria, rather than anything to do with commission.
“I suspect if a few lenders up their proc fees, then more will suit, which is great for advisers, but to be honest I haven’t really noticed as it’s all product and client driven now.”
Dale Jannels, managing director at All Types of Mortgages, added that: “Since MMR, daily workloads on applications have increased and therefore if the proc fees don’t, I can only see the end consumer being charged higher fees as a result.”
A spokesman for Virgin Money told FTAdviser that it keeps proc fees under constant review, but at present has no plans to increase them.
A Santander spokesperson also stated that: “We have no plans to change our procuration fee terms. Our fees are linked to business quality and this is now recognised across the intermediary market.”
Rob Davies, spokesman for Natwest Intermediary Solutions, told FTAdviser that the firm’s current proc fee for directly authorised advisers is gross 32bps and for appointed representatives gross 35bps, adding that “as with all aspects of our proposition we monitor and regularly review our fees”.
A spokesperson for Halifax also stated that proc fee policy is regularly reviewed. “Last year we conducted an extensive review into our proc fee structure and the wider market, deciding to link our proc fee payment structure to the quality of business supplied.
“In August this year, we became the only major lender to pay a full proc fee on product transfers. This change aligns intermediary reward with customer mortgage needs and compliments our commitment to be the best bank for customers.”
