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Lloyds considers linking proc fees to case quality

Lloyds Banking Group is considering linking its procuration fees to the quality of business submitted.

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The lender says it does not have any immediate plans to change its proc fee structure but says it is something it will “continue to review”.

LBG head of intermediaries Peter Curran says: “Improving quality is clearly a good thing and we are keen to work with intermediaries in a number of ways to make this happen. There are no immediate plans to link quality of business to proc fee but, as with all elements of our structure, this is something that we will continue to review.”

In July, Abbey for Intermediaries implemented a quality-based proc fee system, meaning networks would be paid a blanket fee based on the overall quality of their brokers’ business.

Abbey judges the proc fee levels its key accounts receive against a number of metrics, including the packaging of cases, the conversion rate of applications to offer and the overall quality of submissions.

Abbey’s changes meant proc fees for its key accounts now range from 0.35 per cent to 0.4 per cent, with the quality of brokers’ business now being the key factor determining the level of proc fee paid. Directly authorised brokers receive a 0.33 per cent proc fee.

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  • Chris Gardner 19th September 2012 at 11:20 am

    I still stand by my assertion that brokers face a bleak future and will be edged out of the market by mainstream lenders.

    However i think there is more at stake here: If you allow this to happen, that is linking the performance and quality deal to your remuneration then you are quite possibly leaving yourselves open to litigation down the line.

    Used in a court as evidence in say a fraud case a barrister could easily convince a court that the transaction was not arms length and merely a one-off introduction, that is to say, you have a contractual relationship with the lender whereby you have accepted payment based on perfomance of the loan/application therefore you have tacitly agreed to share in the downside or losses of that loan. it only takes one test in court and precedent is set.

  • Luke Atkinson 18th September 2012 at 5:02 pm

    @ Jonathan Miller – Its an interesting point regarding arrears, as once interests rates start creeping up the arrears figures will be going up even sharper.

  • James 18th September 2012 at 10:02 am

    Again people looking in a negative light. If you look at Abbeys proc fee structure, if your network is performing better than average, you get paid a higher proc fee. So it works both ways! Whether this is something Lloyd’s will do I don’t know, but I welcome the changes. I’m sure you all pay more for better quality leads???

  • Lee H 17th September 2012 at 7:11 pm

    I agree with the first comment where not talking shoddy brokering here where talking good old fashioned service levels from application to completion from accepting enquires to just simply knowing what products you offer in your own bank! They have been dreadful from an administrational standpoint and they are not the only ones, I think Clydesdale have to be ranked up their too left hand doesn’t know what right is doing their is simply too much going on In terms of PR politics FSA strangulation and pandemic regulatory input way too late and the wrong time. Horse bolted 15 years back. Those responsible are now employed in the private sector! The 8000 brokers left who are probably the best Uk has ever had through natural selection of hard times and paperwork churning are now bottom feeding because the FSA still can’t make purchasing financial
    Products simple. I remember being at one network and the compliance team told me I had to issue the client 6 KFIs lending past retirement interest only with and with put fees and repayment versions. My customer packed up left and went to Lloyds!

  • Jonathan Miller 17th September 2012 at 6:47 pm

    I’m quite happy to receive a fee based on the quality of submissions as long as it reflects your own work and not that of a network or indeed large firm you work in. Abbey used it to trim the rates it paid brokers citing national issues rather than anything you as an individual had done.

    Interesting that one of their metrics was future arrears! That’s positive thinking for you.

  • colin 17th September 2012 at 5:33 pm

    Chris….brokers will always be required and if you service your clients well no reason you cannot survive……as the Abbey BDM told me today…they ve undercut brokers and tried to drive it via the branches but the volume was pants……….things will change but for now its hard graft!!!

  • Chris Gardner 17th September 2012 at 3:57 pm

    sorry guys and girls but they are simply going to keep going until brokers are no longer required.

  • James Lindon-Travers 17th September 2012 at 2:37 pm

    OK – so let’s get this right! 30,000 brokers in 2007 and now ony 8000 – do Lloyds seriously think that those responsible for very poor quality business even remain in the business at all? Furthermore we should not forget the officers within the Lloyds/HBOS stable who used to regularly encourage brokers to submit in a way that now would be seen as Mortgage Fraud – oh how times have changed!

  • a 17th September 2012 at 1:54 pm

    Given MMR and RDR (forget all the acronmyns and what they all mean!!!) on the horizon will we have proc fees for much longer anyway??

  • Tom 17th September 2012 at 11:42 am

    Wonder when the first….

    ‘When will they get their service right postings hit’ ?????

  • shock horror 17th September 2012 at 11:25 am

    surprise surprise.
    i think this was a great idea by Abbey in the first place, some brokers didn’t (which I still don’t understand if you are submitting quality business anyway?!) but good to see others following suit. Quality over Quantity.
    Another example of how more advanced lenders like Abbey are with 7-day exclusives (copied), interest only (copied) and now this. Well done Abbey – all we need is lenders now to follow suit on service and BDM quality and it will make for a better industry.

  • Lee H 17th September 2012 at 11:24 am

    They have some cheek.. How about I start linking my cases to the best performing banks…which? survey? I tell you what Lloyds have some neck self policing with brokers, I think they should get there own ship in order first what a statement to make, I used them last year including Lloyds international, they could not organise a cake fight at Kiplings. Disgusting service levels.