PMS and Legal & General in war of words over proc fees

11 April 2012 | By Samuel Dale

PMS has hit out at Legal & General over comments made in last week’s Mortgage Strategy about proc fees.

In last week’s magazine Ben Thompson, managing director of L&G mortgage club, said recent proc fee cuts represent a blow for brokers.

He said: “We’ve always said that when the recovery comes round the most growth is going to come from the intermediary channel so it’s important lenders keep them financially healthy and motivated in the quiet periods so they can take advantage when the market returns.”

John Malone, executive chairman of PMS, has blasted Thompson for hypocrisy because when L&G launched a pilot with ING Direct last year it involved a proc fee which Mortgage Strategy understands was below 0.3%.

Malone says: “Every major lender was about to significantly reduce proc fees to match the new lender. It would have led to complete carnage. I find it rich for Thompson to say it’s a shame about recent proc fee cuts when he was doing this last year.

“His actions were going to create a tsunami in the broker market and we would hardly have had an industry left. We were not prepared to deal with this lender with such low proc fees.”

Thompson says the pilot with ING did involve a lower proc fee but it was always intended to be a pilot.

He says: “The pilot phase did involve a slightly lower proc fee than that paid by most other lenders however this was always a pilot.

“It was a success due to the investment and efforts of ING Direct and all firms involved in the pilot. This led to ING launching more widely in the market, to the likes of PMS and others, and at a proc fee level that represented a proper launch not a pilot.”

Thompson says ING Direct’s presence in the mortgage market over the last few years has been valuable for the whole industry.

He adds: “We believe there has been a lack of choice in terms of lending and competition has been a good thing to bring to the market in these difficult times.

“It is also worth highlighting that ING Direct offers good proc fees compared with some other lenders so we are a little bemused about the comments that has been made.”

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Readers' comments (19)

Anonymous | 11 Apr 2012 1:17 pm
Note to editors: ING Direct proc fees were indeed paid out from April last year. I can't speak for intermediaries for other networks (I'm with Sage/Honister Capital), but the gross fee was in fact 0.35% to L&G, and 0.31% to the network after they took their cut.
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GARY | 11 Apr 2012 1:33 pm
I don't know why they're moaning at each other. There's not going to be a broker industry left soon, there's hardly one left now.
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Phil | 11 Apr 2012 2:02 pm
Let us all look at what is happening to the mortgage broker community from a proc fee stance. In 2000 when i opened diesel was less than 90p a litre and a first class stamp was about 24p. Lenders had free phone and free post and provided all the forms etc. Now diesel is nearly £1.50 stamps are about to be 60p and gone are the free phone and free post options. we provide all the paperwork at our excpense and proc fees are lower. Being honest i am amazed more brokers have not gone to the wall already.
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Anonymous | 11 Apr 2012 2:18 pm
Stamps? Really? Electronic submission anyone?
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Peter | 11 Apr 2012 2:51 pm
Not forgetting we are generating twice as much paperwork in order to process a mortgage application and it is taking twice as long. That is providing the clients don't realise they could have had a better deal if they had gone direct! Dual pricing is a wonderful thing, as is Treating the Customer Fairly
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Anonymous | 11 Apr 2012 2:52 pm
Proc fees need to be 0.5% minimum. This would encourage more brokers to return.
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Bobby | 11 Apr 2012 3:40 pm
35000 brokers in 2007
8000 in 2012
0 in 2014

Well done lenders and the FSA. Your work is almost complete now.
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colin | 11 Apr 2012 3:53 pm
i don t follow what PMS beef is........a pilot that paid less than 0.30% ..so what its a pilot/trail run the AR'sinvolved in the trail obviously had the choice of taking part or not.......the genuine launch to all L&G AR's paid 0.35% gross and still does...ok a little less than some...but at the time market leading rates and no dual pricing.
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colin | 11 Apr 2012 3:54 pm
bobby..there will always be brokers!!!!!!
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GARY | 11 Apr 2012 4:41 pm
Well after 8 years of running my own mortgage business, I think i've just about had enough myself. TTFN
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