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.