Just Mortgage Packaging has taken out an indemnity insurance policy to reassure brokers their proc fees are safe in its hands.
The Horsham-based packager says it has taken out the policy, which is underwritten by Lloyds of London, to assure brokers their money is safe be-cause some packagers have recently gone into administration while owing brokers proc fees.
The insurer will be notified every time a case is offered and under the terms of the policy, proc fees up to the value of £100,000 per broker will be insured.
Sharon O’Callaghan, director at JMP, says the packager initially looked at the strategies being adopted by its competitors, including opening separate bank accounts for proc fees.
She says: “We came to the conclusion that opening separate bank acc-ounts is little more than a gimmick. In some cases, the money in these acc-ounts remains under the control of the packagers involved.
“That’s why we decided the most appropriate way to safeguard brokers’ income would be to take out an indemnity policy that covers proc fees.”
JMP says it has seen a rise in the number of brokers using its services since introducing the policy.
Danny Lovey, proprietor of The Mortgage Practitioner, says: “In these uncertain times, any initiative from a packager that gives brokers the comfort of knowing their proc fees are safe is welcome.”
But Andy Sewell, managing director of OFM Group, says: “An indemnity policy may cover commission payments for brokers with completed cases but if the packager stops trading, what happens to pipeline business?
“This strategy does little to address the inconvenience suffered by brokers and ultimately their clients.”