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