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PMS and Legal & General in war of words over proc fees

PMS has hit out at Legal & General over comments made in last week’s Mortgage Strategy about proc fees.


In last week’s magazine Ben Thompson, managing director of L&G mortgage club, said recent proc fee cuts represent a blow for brokers.

He said: “We’ve always said that when the recovery comes round the most growth is going to come from the intermediary channel so it’s important lenders keep them financially healthy and motivated in the quiet periods so they can take advantage when the market returns.”

John Malone, executive chairman of PMS, has blasted Thompson for hypocrisy because when L&G launched a pilot with ING Direct last year it involved a proc fee which Mortgage Strategy understands was below 0.3%.

Malone says: “Every major lender was about to significantly reduce proc fees to match the new lender. It would have led to complete carnage. I find it rich for Thompson to say it’s a shame about recent proc fee cuts when he was doing this last year.

“His actions were going to create a tsunami in the broker market and we would hardly have had an industry left. We were not prepared to deal with this lender with such low proc fees.”

Thompson says the pilot with ING did involve a lower proc fee but it was always intended to be a pilot.

He says: “The pilot phase did involve a slightly lower proc fee than that paid by most other lenders however this was always a pilot.

“It was a success due to the investment and efforts of ING Direct and all firms involved in the pilot. This led to ING launching more widely in the market, to the likes of PMS and others, and at a proc fee level that represented a proper launch not a pilot.”

Thompson says ING Direct’s presence in the mortgage market over the last few years has been valuable for the whole industry.

He adds: “We believe there has been a lack of choice in terms of lending and competition has been a good thing to bring to the market in these difficult times.

“It is also worth highlighting that ING Direct offers good proc fees compared with some other lenders so we are a little bemused about the comments that has been made.”


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  • We're all doomed!! 16th April 2012 at 8:59 am

    With the onset of RDR, IFAs will not be earning any fees from providers for Investment related products from Jan 1 2013, so it’s my belief that it’s only a matter of time before this is rolled out to Mortgages and Protection. Charging Fees will be the only way forward before long.

  • john smith 13th April 2012 at 10:57 am

    its survival of the fittest. i worked out a long time ago that we cant survive on proc fees alone so either have to increase other services we offer or charge more arrangement fees. if people want to leave the industry thats great news for the ones who want to stay as there is less competition. with non advised sales soon to be banned its only a matter of time that the broker market will be booming again

  • colin 12th April 2012 at 2:16 pm

    bobby, your negativity knows no bounds…and if thats the way you think, then guess what its what you percieve as reality.

    Yes its tough out there, but its still busy, there are still people wanting and needing to move or people on higher SVR’s that can remortgage.

  • Bobby 12th April 2012 at 11:04 am


    A lot of it is hot air and bluster as all the facts show mortgage levels at all time lows. Even though svr rates re going up the re mortgage figures for last month were the lowest in 13 years and they will now fall to virtually none. The re mortgage market is now dead to all intents and purposes. Lenders do not want to lend, any of them, and it is now worse than 2008 and I don’t think we will get to £ 100b mortgage lending this year now. The whole market has ground to a complete halt and this will make headline news in 3 months when all the stats come to light.

  • GARY 12th April 2012 at 10:32 am

    I love it when we are told to start charging fees & to stop relying on proc fees. That would be a GREAT idea if I was seeing lots of people in the 1st place. However, when you only see a couple of people a week, how do you risk putting them off with a fee?
    I also don’t understand how so many people seem to be busy. We have lots of clients, but either they are happy to sit on low trackers or SVR’s, or are un placeable due to lending changes.
    Although we still come across other brokers that seem to be happy to sumbit fraudulent cases. Maybe they charge fees??? LOL

  • teddy Long 12th April 2012 at 10:13 am

    I think youre absolutely spot on anon@5.06.
    But PMS dont make any money if an adviser charges a fee for their advice to a direct lender – and so their beef is more about self preservation. .

  • Ross Keeley 11th April 2012 at 10:41 pm

    I personally don’t rely on proc fees for my income, I see myself as a professional and charge for the service I provide just like any other profession such as solicitors, plumbers or a mechanic. A mechanic will sell you new car parts and charge you for fitting and labour, why should brokers be any different? Brokers who don’t already adapt to a fee charging model need to change their ways or be left out in the cold.

  • Phil 11th April 2012 at 5:43 pm

    anonymous at 2.18 you obviously never post a suitability letter or send documents to lenders. Have the bottle to put your name next time. Last time i looked the internet wasnt free. As usual the client will pay the cost of reduced proc fees as the only wasy to survive is to charge a broker fee. add this to the large fee charged by lenders and you start to price yet more people out of getting independent advice. Well done everyone the clients are really being treated fairly arent they.

  • Terry Tibbs 11th April 2012 at 5:06 pm

    I understand that proc fees are part of my income and the higher fees do help, but surely the customers needs are more important, if ING’s mortgage fits my clients needs best and I can access the product then I’ll send them the deal. I’d much rather 0.3% than nothing at all!

  • GARY 11th April 2012 at 4:41 pm

    Well after 8 years of running my own mortgage business, I think i’ve just about had enough myself. TTFN

  • colin 11th April 2012 at 3:54 pm

    bobby..there will always be brokers!!!!!!

  • colin 11th April 2012 at 3:53 pm

    i don t follow what PMS beef is……..a pilot that paid less than 0.30% what its a pilot/trail run the AR’sinvolved in the trail obviously had the choice of taking part or not…….the genuine launch to all L&G AR’s paid 0.35% gross and still does…ok a little less than some…but at the time market leading rates and no dual pricing.

  • Bobby 11th April 2012 at 3:40 pm

    35000 brokers in 2007
    8000 in 2012
    0 in 2014

    Well done lenders and the FSA. Your work is almost complete now.

  • AA 11th April 2012 at 2:52 pm

    Proc fees need to be 0.5% minimum. This would encourage more brokers to return.

  • Peter 11th April 2012 at 2:51 pm

    Not forgetting we are generating twice as much paperwork in order to process a mortgage application and it is taking twice as long. That is providing the clients don’t realise they could have had a better deal if they had gone direct! Dual pricing is a wonderful thing, as is Treating the Customer Fairly

  • Tom Cleary 11th April 2012 at 2:18 pm

    Stamps? Really? Electronic submission anyone?

  • GORDON ENSOR 11th April 2012 at 2:11 pm

    Thank god im out of this business, in the 70s we all worked direct, i handled General Ins and Investments and as long as you treated customers fairly and looked after there interest, now what do we have Middlemen feeding of the backs of Producers because Very few lenders and ins companys will deal with small brokers, the hardest part of any business is finding customers, the industry now stinks, the only people making any serious money are Networks the IFA AND TRAFFIC WARDENS TELL THEM TO GET OFF THERE BACKSIDES AND START DOING WHAT ALL GOOD SALESMEN DO PROSPECT MAKE APPOINTMENTS AND CLOSE DEALS

  • Phil 11th April 2012 at 2:02 pm

    Let us all look at what is happening to the mortgage broker community from a proc fee stance. In 2000 when i opened diesel was less than 90p a litre and a first class stamp was about 24p. Lenders had free phone and free post and provided all the forms etc. Now diesel is nearly £1.50 stamps are about to be 60p and gone are the free phone and free post options. we provide all the paperwork at our excpense and proc fees are lower. Being honest i am amazed more brokers have not gone to the wall already.

  • GARY 11th April 2012 at 1:33 pm

    I don’t know why they’re moaning at each other. There’s not going to be a broker industry left soon, there’s hardly one left now.

  • Jon T 11th April 2012 at 1:17 pm

    Note to editors: ING Direct proc fees were indeed paid out from April last year. I can’t speak for intermediaries for other networks (I’m with Sage/Honister Capital), but the gross fee was in fact 0.35% to L&G, and 0.31% to the network after they took their cut.