This challenge was timely as the Board of Ipswich Building Society met to discuss our short and long term plans for the intermediary sector. In some ways the debate about proc fees is a distraction. We need to focus on developing a fair supply chain (think supermarkets and farmers), so brokers can offer high quality advice for consumers and lenders can process applications to help more people own their own homes.
Let’s be clear; brokers need building society lenders and many building society lenders need brokers. There is no point one party trying to supposedly win on proc fees. If one overpowers the other, the result will be a failure for both parties. In a time where brokers are meeting the demands of MMR and lenders are meeting the demands of capital requirements, the level of proc fee needs to work for both broker and lender.
At Ipswich we’ll be discussing the future of proc fees with our brokers. I imagine that this will include lively debate about the level proc fees should be at as the housing market recovers and the use of quality to define future proc fee levels. I cannot predict its outcome, but I do believe this is a discussion worth having. How about the case of the broker who spends time (and hence money) to package cases well and is clear on the quality of the case from the outset, versus the broker who doesn’t. Is providing both the same reward the right thing to do? As a business that prioritises being a good corporate citizen we’d also like to explore rewarding our brokers who also behave this way in their level of proc fee. I don’t know the outcome of this debate, but the conversation is definitely worth having.
This leads me nicely back to the subject of fairer supply chains. I believe there are three simple steps to achieve this with brokers:
1. We all need to keep the wolf from the door and perhaps take him on holiday. So a sensible and straight forward approach to proc fees that provides a proportionate positive return for the broker is essential
2. No one wants to be messed about.
A consistent and reliable approach to underwriting and service delivery is vital to ensure a great customer experience all round; furthermore quality of cases in return bolsters this approach
3. We all like to feel part of something. This may seem a bit soft, but in the same way we focus on membership, we also want our brokers to feel they are an important part of Ipswich Building Society; effective communication and gaining feedback from our brokers is crucial to achieving this.
2013 and 2014 will be slightly strange years for us as we replace our IT systems and our lending volumes reduce as a result. This makes it more important that ever to ensure we have a positive relationship with our brokers, discussing proc fees, service levels and how together we can have a sustainable future.
Paul Winter is the CEO of Ipswich Building Society
