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Abbey to link proc fees to quality of business

Abbey for Intermediaries is making a number of changes to how it pays brokers’ proc fees on its core residential range.

From July 2 the lender will now take into account quality of business when determining how much brokers are paid.

Mortgage Strategy understands that as a result, the proc fees payable to some key accounts will increase, while the proc fees payable to others will remain the same or decrease.

Proc fees will be set at account level, with business quality one of the considerations now determining commercial terms.

It is believed that for directly authorised intermediaries who transact through mortgage clubs, the gross proc fee terms will be 33bps for core residential cases.

For ARs of networks who are not part of its key account set, the proc fee terms will also be 33bps for core residential business.

While the proc fee for key accounts will vary between 35bps and 40bps, with the quality of brokers’ business now determining part of that.

It is believed key accounts with good quality business will be paid up to 40bps, with mediocre business 37bps and poor quality business 35bps.

It is understood the lender will judge what proc fee its key accounts receive against a number of key metrics, such as packaging of cases, the conversion rate of applications to offer and the overall quality of cases.

In April, Mortgage Strategy revealed that a major lender was looking to pay proc fees to brokers based on the quality of business they submit.

A spokeswoman for Abbey, says: “We are making some changes to the proc fees we pay on our core residential business. This is in line with recent competitor changes in this area. We are committed to writing mortgage business that is good quality and to offering borrowers the right mortgage for their needs, and these changes support our commitment to working closely with our key account partners to achieve this.”

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  • colin 25th June 2012 at 1:40 pm

    theres been a noticeable difference in underwiting in the last few days……….they are even more anal than ever.

    Given they are trying to find every reason to not lend much of this issue will be rendered irrelevant anyway!!!!!!!!

  • andy 21st June 2012 at 4:07 pm

    Heard it all now. Some jobs worth in a dark office with a bright idea trying to save a bit of money to prop up another failing Bank. I guess thats me at 0.33% now but why bother supporting such arrogance. Given the crap service on offer from Underwriters at this place will we get the opportunity to vote on their staff pay rises each year, I suspect not but what a nice thought………….local BDM dont bother calling in again.

  • Malcolm Davidson 20th June 2012 at 7:22 pm

    And “Brokers to link business volumes to quality of service” would be a preferred headline.
    They’ve just taken 25 days to assess a valuation report for my client!!
    And whoever handles their PR should be shot – lumbering from own goal to own goal since FSA visit.

  • Richard Scott 20th June 2012 at 2:06 pm

    Would echo the minority of positive comments listed. Apart from a period 18 months ago, Abbey have treated me fine, rarely any onerous requirements, app system is simple, enter the correct details and back them up with documentation that corroborates what you have enterred. How hard is that! I suggest all the Abbey bashers have submitted cases that match fastrack on paper but in reality don’t then they can’t back up the info they have enterred – and thats Abbey’s fault?
    I for one am looking forward to 0.40% not 0.37% I currently get. Suggest the negatives drink the half empty glass!

  • Phil 20th June 2012 at 11:28 am

    I must admit that I always find the service from Abbey to be ok. Maybe I just packahe things correctly. I agree that we want the crap brokers out of the industry. It would be interesting to see how many fast track cases that then get information requested are the ones that suddenly lose the property.

  • Heather 20th June 2012 at 10:40 am

    Agree with Aidan Cox entirely.

  • Anonymous 20th June 2012 at 10:00 am

    Queries – what do they mean by a key account? I assume these are big companies, so basically they would pay more for a quality mortgage aplication from a big company but not to a small company?
    What do they mean by conversions to offer – is this DIS to offer or full apps to offer? If its the lest likely of the two, DIPs, then that is pants, but if it is APPS thats fine PROVIDING they don’t penalise the broker for things that fall outside of their control, eg: chain breaks down, client loses their job and pulls out, client gets gazzumped, etc, if they penalise because broker cannot provide payslips say then thats fair enough.

    That said it is almost laughable that Abbey of all people are talking about quality business and pacakaging as I have found them to be the most immkorral, disorganised, shoddy lender on so so so many occasions that I literally only use them now if they have the best deal by miles and even then it is with a massive warning to my clients about my experiences of their service so that they understand the full picture. To tell the truth I avoid them like the plague!

  • James 20th June 2012 at 9:27 am

    In simplest terms it isn’t really going to have a major affect on the majority of brokers. It won’t affect DA’s, and people who are part of a network, the proc fee has hardly changed if changed at all. What people also need to know, is that the proc fee is based on an average, with I think a 10% tolerance. If you send in quality business you have nothing to worry about! As well it works boths ways – if the business is higher quality than average then you can earn a better proc fee. So I don’t know why people are moaning. Its simple, send in quality business and you get practically same proc fee or in some cases better. If your network average is higher then you have the potential to earn a greater proc fee. I guess the people who are moaning, might be the ones who may not send in good quality? If i’m wrong then what’s the problem?

  • Ancient Wisdom...is a mortgage broker in N3 20th June 2012 at 8:54 am

    Abbey need to get their processing times in order for prefectly packaged cases – until then, we are not submitting any cases to them at all – so I dont give two hoots anyhow. Their rates are awful at the moment so no big loss to advisers – a bigger loss to Abbey.

  • Shock horror 19th June 2012 at 11:56 pm

    SHOCK HORROR……Company wants quality business!
    We all do it, you deal with the lead providers who give you the best quality and you prioritise the customers who offer you the most. So don’t even dare to blame someone else for doing the same!!
    If you don’t like it, place business with Nationwide and Lloyds…..oh sorry, they dropped proc fees for no reason whatsoever a few months back didn’t they???? Santander are actually paying MORE for better quality!! HOW DARE THEY?!
    Also good to see some nonsense flat pack “Spanish bank” points, about Santander UK, a ringfenced BRITISH bank who pay a full proc fee on the full balance of a ported mortgage if I remember rightly??? When they don’t have to!
    Well done Santander, time to steer at quality and away from this deadwood and poor quality defensive advice.
    If you do quality business, nothing to worry about. If you don’t, quite rightly, then see you later. Why should you be paid the same for less quality?! I don’t buy a new range rover for the same price as a knackered old mini just because we are all car dealers, quality matters, beans aren’t all the same price….because they are beans!
    NO SCANDAL HERE, JUST A GREAT MOVE BY A FORWARD THINKING LENDER

  • Mozmil 19th June 2012 at 6:23 pm

    Other lenders will now simply follow this procedure with quite possibly Lloyds banking group announcing the changes very soon. Regardless of whether the cases are of good or poor quality, the lender will still make money off the cases by way of fees and payments…lender always wins!

  • James Lindon-Travers 19th June 2012 at 6:05 pm

    If Colin’s spelling and punctation is anything to go by – he is probably on the list he speaks of!

  • colin 19th June 2012 at 5:31 pm

    on the face of it, although the devil is always in the detail, this is aimed at the chancers that still exist in our industry. i m led to believe that Abbey still get an awful lot of applications that don t stack up in terms of requested documentation matching info input. Ultimately wasting a load of time.

    If you are submit accurately, have evidence to prove, submit that evidence in a timely manner and your cases complete….not alot will be different.

    Had the FSA unertaken individual registration ads they should have done yonks ago, you wonder if this sort of thing would have been neccesary. I would expect Abbey already have a list of names they would like to see the back of and will use this as a tool to eventually get rid of.

    interesting times.

  • caroline 19th June 2012 at 5:25 pm

    “and overall quality of cases” gives them the excuse for the lowest fee. far to non specific.

  • J Tanner 19th June 2012 at 5:24 pm

    Maybe this is just one more reason why not to use this lender. They should put their own house in order first me thinks!

  • Peter Suttill 19th June 2012 at 5:22 pm

    So as a directly authorised intermediary would the Abbey please show me statistical evidence that key account AR’s have provided better quality business than me. Can’t can they – so it is volume not quality we are really talking about!

  • john smith 19th June 2012 at 5:21 pm

    am i the only one who thinks this is good news? the proc fees are not decreasing drastically if at all. they simply will pay higher fees for good quality business. why are some brokers getting defensive

  • Dazed & Confused 19th June 2012 at 5:21 pm

    Could someone please explain that to me in nice simple terms…I honestly haven’t got a clue what they are going on about.

  • colin 19th June 2012 at 5:18 pm

    A spokeswoman for Abbey, says: “We are reducing the proc fees we pay, because we can. This is apparently in line with recent competitor changes in this area. We are committed to declining mortgage business that is good quality and to offering borrowers the right mortgage for OUR needs, and these changes support our commitment to achieve this.”

  • Dermot Brannigan 19th June 2012 at 5:15 pm

    I agree with previous comments. If you could be certain they would never mess up, then maybe this could be an option. But as we are moving to adviser charging, I can’t see how it will benefit the customer. Plus, the big key accounts won’t be penalised as much as a smaller company. But then the Spanish do need the money, as they’ve spent everything else we’ve given them!

  • James Lindon-Travers 19th June 2012 at 5:12 pm

    Whilst in principle paying a proc fee commensurate to quality makes sense, if you work within a Network – some members quality will be better than others. Lenders should have sufficient MI to reward effectively each business rather than a blanket fee for each distribution channel.

  • Jamie 19th June 2012 at 5:08 pm

    Total nonsense!

  • Sort out your back office first !! 19th June 2012 at 5:08 pm

    And increased to 1% for cases where the underwriter has messed the case up and asks for documents at different stages of the underwriting

  • Kevin Banting 19th June 2012 at 5:06 pm

    Spanish banks – quality of business, get the casa in order first!

  • Aidan Cox 19th June 2012 at 4:58 pm

    Thats fine Santander but can we counter balance that with me being able to bill you if you screw up/ website problems/ long time holding all of which cost me time and money. No? – thought not!

  • Aidan Cox 19th June 2012 at 4:57 pm

    Thats fine Santander but can we counter balance that with me being able to bill you if you screw up/ website problems/ long time holding all of which cost me time and money. No? – thought not!

  • Kevin vella 19th June 2012 at 4:52 pm

    and for our next trick …..

  • Lisa 19th June 2012 at 4:50 pm

    Well that’s as clear as mud!