Proc fees for retention don’t add up, says AfI

Abbey for Intermediaries has ruled out paying brokers proc fees for retention sales in the near future as it says the case for such payments does not stack up financially.

Ricky Okey, managing director of intermediary distribution for Abbey and Alliance & Leicester, says that at the moment it has no intention of following Halifax in offering commission for customer retention.

At the lender’s key accounts conference in Sunningdale last week Okey told delegates: “Despite our best endeavours we can’t find a way of making this work economically, and we can’t see how Halifax is making it work either.”

Last month AfI wrote to customers whose current deals are due to expire in August waiving early repayment charges and advising them it may be cheaper for them to switch lenders.

During the conference Okey confirmed that such mailings will continue but said that some changes had been made in light of complaints from brokers.

The next letter, which was due this month, will now be mailed to borrowers in May and will include a line about seeking independent financial advice.

Andrew Montlake, director at Coreco Group, says he does not begrudge AfI’s retention decision and that the conference was refreshing in itshonesty.

Montlake says: “Every lender has its own way of doing things. I have always maintained that it’s up to brokers to stay on top of their client bank.

“There is room for AfI to look at the question of proc fees but at least the lender is engaging with brokers and there’s no point in us beating our chests about the way it goes about its business.”

Speaking to Mortgage Strategy after the conference, Okey also outlined AfI’s plans to promote other financial products alongside mortgage deals.

Following successful trials with London & Country and Positive Solutions, the lender is initially looking at offering current accounts along with mortgages, with a view to offering savings accounts and credit cards in the future.

Okey says: “It will pay us to do some different things on mortgages and I know a number of lenders are talking about adopting a similar approach.”

Matthew Wyles, group distribution director at Nationwide, reveals in the April issue of Lending Strategy that Nationwide is now looking at cross-selling more products via brokers.

He says: “Up until now we have locked brokers into the mortgage product silo and I’m asking my colleagues why.

“We have a big network of brokers who know and trust our brand and who are short of revenue at the moment so why shouldn’t we take the opportunity to promote more of our products?”