The time for prevarication on retention proc fees is over. Those that continue not to pay risk looking like dinosaurs
My colleague, John Coffield, recently made headlines when he appeared on the expert panel at last month’s FSE Wales exhibition.
John was asked to talk about the payment of procuration fees by lenders, especially their level in relation to retention products. He gave a common-sense answer: we’re still not at a point where the industry norm for fees is commensurate with the work that advisers have to do.
The fact that such a comment made headlines is perhaps indicative that we are still some way from what one may call ‘fair pay for a fair day’s work’.
Indeed, as John also pointed out, even with the added complexity, the greater level of work involved and the fact that many lenders get an increasing amount of their business through the distribution channel, some are still paying the same proc fee they paid pre-Mortgage Market Review. The MMR was introduced more than three years ago…
When it comes to retention proc fees, we seem to be in a position where some lenders believe an intention to pay is good enough. Again, as John pointed out, it’s all very well announcing you will pay brokers at some point in the future, in order not to be the ‘last lender standing’ – especially as the industry tide moves against you – but there comes a time when you have to deliver.
Blaming systems, or suggesting you are still in a testing stage, smacks of proc fee filibustering – holding out for as long as possible and hoping that no one pricks your balloon of procrastination.
It’s even more disappointing when this is the approach adopted by lenders that are normally intermediary friendly but can’t seem to change their ways on this important issue.
The time for prevarication on retention proc fees is over and those that continue not to pay are in danger of seeming like industry dinosaurs.
Coupled with this, we need an industry debate about what constitutes fair payment for advisers across the board, regardless of product.
Given the anticipated increase in workload that buy-to-let advisers will be expected to shoulder for portfolio landlords from October this year, we are at a point where that extra work should be recognised and paid for by lenders.
We must not get left behind on this one.
Bob Hunt is chief executive at Paradigm Mortgage Services