View more on these topics

Distributors back Lloyds’ quality move but call for increase in proc fees

Major distributors have reiterated calls for lenders to increase proc fees after it was revealed Lloyds Banking Group would introduce quality-based remuneration from next month.

Mortgage Strategy revealed the lender would switch to quality-based proc fees in September, a year after revealing it was considering the idea.

Then last week the lender revealed it would introduce the new payment system for its key accounts from 6 January.

The lender will base payments on the applications to completions ratio, arrears performance and what measures a firm has put in place to prevent fraud.

But the move has prompted calls for lenders to begin increasing their proc fees, as distributors say the cost of acquiring new clients will increase as a result of the MMR.

Mortgage Advice Bureau chief executive Peter Brodnicki says he agrees with the lender’s push for quality and says Halifax has shared performance data with his firm regularly this year.

He adds: “I do agree with the lender’s quality agenda. The impact of quality on procuration fees was always coming, and although the best performing firms will benefit, I believe that there is room to further recognise the significant infrastructure investment these firms have made to achieve the high standards that ultimately result in savings for the lenders.”

While his firm will not be directly affected by Lloyds’ change, Legal & General Mortgage Club managing director Ben Thompson also believes some lenders should increase proc fees.

He says: “As a general rule, over the course of the past five or six years proc fees have been on a downward path from most lenders and some lenders have overshot the downside.

“Therefore, some lenders arguably need to go up again, rather than a wholesale call for higher proc fees. It would be nice to see it all done and tidied up before MMR is implemented and then not have to be able to talk about proc fees again.”

Speaking to Mortgage Strategy, Lloyds director of strategic relationships Peter Curran says the move is “cost neutral”, meaning it has not increased or decreased the overall amount it pays brokers.

He adds: “Some will be getting more money and some will be getting less and that is fine, because we are rewarding people who are doing a better job.

“The question then is: if everyone improves, what will you do? That is something we will have to wait and see when we look at that analysis. We have always got our eye on proc fees and we will take it from there. We are not cutting proc fees, we are just spending it differently.”

Curran adds it is good for the industry to focus on quality.

He says: “It is good for the intermediary industry to have evidence that we are taking a focus on all aspects of risk, of customer treatment and customer knowledge. It can only be good. But key for us is we do this in a fair way.”


Experts say BoE scrapping of FLS will not hit volumes

Mortgage experts are confident the Bank of England’s decision to scrap the Funding for Lending Scheme for residentail mortgages will not hit lending volumes but warn of rising rates in the coming months. The FLS was originally planned to last until January 2015 but last week it was announced there will be no new cheap […]

James Briffitt Nationwide caption competition 27 November 2013

Caption Competition

Can you put the boot in to your nearest and dearest to win a gourmet dinner for two from Brightstar? Submit a witty caption for the photo above and you will be automatically entered into our prize draw. Remember, the funnier it is, the more likely you are to win. What are you waiting for? […]



Star Letter Bridging firms abusing system must be held to account I am often frustrated when faced with opinions and news in our mortgage trade media that get bridging all wrong. One of the most frequent culprits is the affordability/exit route dynamic. People are forever bundling a whole lot of quite different sorts of lending […]


60 Seconds with… Chris Johnson, mortgage product manager at Principality Building Society

Principality currently has a 1.99 per cent buy-to-let deal on the market at the moment – what has been the response?  This product is just one in our competitive portfolio of mortgage products, designed to help all our customers, from new buyers purchasing their first home to someone expanding their portfolio of property to rent […]

Tackling the housing crisis will take more than money

The latest housebuilding figures from the Department for Communities & Local Government confirm the worst fears of many within the property industry. We are failing to address the housing shortage in any meaningful way. Let’s look at the number of housing ‘starts’, new housing projects where work has begun. In England, work has been started […]


News and expert analysis straight to your inbox

Sign up