Brokers have hit out at the news that Nationwide pays retention customers £250 but still does not pay procuration fees to brokers for this business.
The lender is sending letters to existing customers who are approaching the end of their term, which offer “£250 cashback for keeping your mortgage with us”.
The letters, seen by Mortgage Strategy, also promote the lender’s range of switcher deals.
The letters say: “As an existing Nationwide mortgage customer, you get access to our best rates to reward you for your loyalty. You’ll also get a £250 cashback to say ‘thanks’ for keeping your mortgage with Nationwide if you take out a new product.”
A Nationwide spokeswoman says: “Since July 2016, we have offered £250 cashback to thank members for staying with us when they decide to take out new borrowing.
“In addition, we broadened our offer and extended the 0.1 per cent loyalty discount to existing customers moving home and taking a new product too, which is also available through the broker channel.”
But the lender has no plans to introduce proc fees for mortgage intermediaries.
The spokeswoman says: “We have procuration fees constantly under review but have no plans to change our current model at this time.”
But brokers say they were not informed of the customer offer and are frustrated with the lender.
London Money director Martin Stewart says: “I fundamentally think that’s bad practice by Nationwide.
“We give lenders 75 per cent of their business. If we had a client that gave London Money 75 per cent of our business, I would look after that client.
“I’m not comfortable with the fact that we do the hard work to introduce a client to Nationwide in good faith, then it tries to retain that client from us. That’s not fair.
“There are a number of brands out there that are extremely loyal to the broking community. Lenders have to be careful, as we aren’t going to cut off our nose to spite our face. We look after the client first, but if two lenders offer an identical product and one pays a proc fee, we will prefer the one that does.”
Your Mortgage Decisions director Dominik Lipnicki says: “If we are scouring the market, we deserve the reward. For brokers that don’t charge brokerage fees, proc fees are what they survive on. So I find this strange by Nationwide.
“If it is willing to pay £250 to retain the client, it can pay a broker that £250 too.”
Mortgages Online independent mortgage consultant Simon Wilkinson says: “This shows no respect to the broker who introduces the borrower. Metro and Virgin are both relatively new at offering brokers product transfers, and Barclays and Halifax have long been doing so. Nationwide will find that business volumes will diminish through the intermediary channel unless it follows suit.”
A broker, who wishes to remain anonymous, says: “You would wonder why Nationwide can’t pay a broker for retention business on a similar basis.”
Of the top 10 lenders by gross lending volumes, HSBC, Nationwide, RBS and Santander do not pay proc fees.