In some high profile cases lenders have been easing back and reducing what they are willing to pay intermediaries. There have been suggestions in some quarters that procuration fees should be linked to the quality of submission.
In fact, rumour has it that, one major lender is developing a metric to assess procuration fees in exactly this way. Elsewhere, there is anecdotal evidence that some lenders are willing to pay higher levels to attract volumes of higher margin business.
Understandably, concern has been expressed that major changes to procuration fees will transform the way the intermediary market operates and may force some intermediaries out.
Whilst it makes a good headline, there is nothing particularly new here: procuration fee schemes have varied over time as the market has expanded and contracted. However, it is important to note that procuration fees in the mortgage sector, proportionally, have never been particularly high outside the sub-prime market. And with business in this area currently at a low, along with the on-going general concerns in the mortgage market, it might explain why fees are a hot topic.
In the current market there is no evidence to suggest that procuration fees cause any sort of distortion to how business is carried out. Nonetheless, what I firmly believe is required, is a sustainable approach that does not engender lender or product bias. Both lenders and brokers should be free to explore different approaches to their procuration arrangements.
The priority however, for both parties, has to be the provision of unbiased advice for the consumer and a reward structure that does not impinge this. A structure that supports a mortgage advice industry that remains as affordable and accessible to consumers as it is today.
John Heron is chairman of the Intermediary Lenders Association (IMLA)
