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Leader: ‘Pay for what you get’

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Proc fees have become one of the most talked-about areas of the mortgage market over the past year, particularly since the MMR was introduced in April.

It soon became apparent after the new rules were introduced that the amount of work brokers had to put into each case had risen significantly.

This, in turn, led senior figures within the industry to call for proc fees to increase across the market. 

Some lenders have responded to those calls, although many of them are merely falling in line with their competitors.

While the calls for increased commission have come from many within the broker market, nobody has specified by how much – until now.

L&G says the average proc fee paid by lenders is around 0.4 per cent. So it may surprise many that senior figures within distribution are calling for the average fee to rise to 0.7 per cent.

The old argument goes that brokers should be charging fees, and, of course, that is a sound business strategy. But it must be remembered that lenders are relying more heavily on the broker sector now and therefore it is only right that they pay a fair fee to acquire business.

And in a new world where quality is king, the old cliché of “You get what you pay for” seems apt.

Pink director Mark Graves has put forward one of the more interesting solutions in recent times. He has suggested lenders should sign up to an industry charter whereby they all agree to pay the same fee.

While this is unlikely to come to fruition, it is certainly a valuable contribution to the ongoing debate – a debate that will likely run for some time.

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