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Proc fee cuts show lenders seek quality

Nationwide and certain Lloyds Banking Group brands are the latest lenders to cut proc fees to directly authorised firms, seemingly suggesting providers prefer to deal with networks and their appointed representatives.

DA brokers who commented on the developments on Mortgage Strategy Online were hoping the news was an April Fool’s joke, but alas the changes are real.

Lenders are after quality and cutting their cloth accordingly when it comes to distributors who can and can’t deliver on this.

But what these reduced proc fees have done is make joining a network more attractive. There are costs for being a member but the enhanced provider commissions that networks can garner often cancel out any fees charged.

This effectively means ARs can take advantage of the benefits networks offer such as exclusive deals, compliance support, marketing and increased bargaining power at no additional cost to individual firms.

Some brokers may want to cling on to their DA status but for many, financially speaking, this could be a no-brainer.

One might question whether this signals a move away from intermediary distribution. Some believe the days of brokers could be numbered but we think otherwise.

The role of brokers in helping the market get to where it is today cannot be underestimated and most lenders acknowledge the benefits of dealing with them. Long may this continue.


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  • Liz 16th April 2012 at 9:16 am

    This will not encourage quality. Some of the best advisers I have ever worked with are from small IFA ifa firms, and some of the worst (as well as some of the best) lurk under the network umbrella. You cannot generalise like this.

  • Anon 14th April 2012 at 9:24 am

    Having come from a network background as a mortgage broker, my network went bust and I lost thousands of pounds.

    Having moved into the IFA market with a DA firm, I find it disgraceful that I am now losing out again with reduced proc fees for doing the same work as a broker with a network will do.

    While being an IFA, I am strongly mortgage based and this kind of behaviour by lenders is what is killing the market.

    For Mr Adams to suggest that DA firms give poorer quality advice than ARs of networks, he hasn’t any real grasp of reality.

    No surprise that he is an MD of a network.

    Will I rejoin a network? No thanks, will avoid that for two main reasons.

    Firstly, the scope of advice I can give as an independent adviser is far greater, resulting in a better service to my clients. I can use any lender in the market, not just those on an extended panel that a network provides. Therefore, I would argue the quality of my advice is actually greater.

    Secondly, I know that once business has been completed, my earnings will come directly to me, not to a network where I can potentially lose thousands of pounds for a second time.

    I am sure some will disagree with me, but it irks me that a network MD can question the quality of advice given by a DA firm given some of the awful quality advice given at my former network!