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Lower proc fees could force brokers to charge

RAY BOULGER, A TIPPING POINT WILL COME
RAY BOULGER, A TIPPING POINT WILL COME

More brokers may be forced to charge fees after a number of lenders have revealed that they are making changes to proc fees in the new year.

Barclays, The Mortgage Works and Lloyds Banking Group are all changing their proc fees on January 1.

Barclays is ending its enhanced proc fees on offset mortgages and stopping fees on further advances.

TMW is cutting its proc fees to certain distributors that have had enhanced rates in the past.

And Lloyds group brands Halifax and BM Solutions are also making changes to key accounts, which will see some fees falling and others rising.

In Mortgage Strategy’s August broker census, 64% of brokers revealed they charge for advice.

Ray Boulger, senior technical manager at John Charcol, says: “The more proc fees reduce the more brokers will have to start charging fees. There comes a tipping point when you have to charge fees to be economically viable.”

But David Hollingworth, head of communications at London & Country, disagrees, saying: “No-one wants to be paid less but our fee-free model is part of our brand. “We are not going to make a knee-jerk reaction but will keep the situation under review.”

A spokeswoman for Barclays says the changes it has made will result in a uniform and transparent proc fee which will be clearer for brokers to understand.

And a spokeswoman for TMW says: “TMW has historical arrangements with certain distributors and the enhanced proc fee for these firms will be coming down in the new year to align it with the rest of the market.”

A spokeswoman for Lloyds group says the industry has changed considerably and its new structure will be more appropriate for today’s market.

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