Packagers are complaining about increased professional indemnity (PI) premiums as a result of insurers interpreting the Mortgage Code Compliance Board’s (MCCB) PI rules to include brokers’ procuration fees in calculating income, writes Paul Roberston.
Victor Jannels, managing director of All Types of Mortgages, said: ‘When we package a case for a client, we receive a packaging fee and a procuration fee from the lender. However, the procuration fee is given out to the introducer. At the moment, the PI insurer is charging the packagers for PI insurance on the procuration fee, they also charge the brokers for the same fee ‘ the PI companies are charging twice. I question whether the PI premiums should hit both the packager controlling the procuration fee and the broker.’
He added: ‘Our PI premium for this year has gone up by more than 400% and we know that we are not unique.’
Brad Baker, communications manager at the MCCB, said: ‘Our PI rules have not changed since we introduced them in 1999. This is between the packagers and their providers of insurance.’
Not all packagers have noticed a rise in their PI premiums. Stuart Glendinning, marketing director at Mortgage 2000, said: ‘We have had no change at all in our insurance premium, although it is possible that next time we negotiate it, it will go up.’