It has taken a long time, however. After a number of lenders took the opportunity to reduce their procuration fees after the credit crunch there is now a well-received readjustment and I now expect to see further rises again during 2014.
I am disappointed we may once again have missed the opportunity to introduce trail commissions on products that go beyond an initial two years, whether it was a revert back to a competitive tracker rate, an offset mortgage or a longer term fix.
In fact we are now seeing higher procuration fees on longer terms from Santander being withdrawn from the market, just in case there is too much product bias at point of sale.
The good news is we are moving toward a standard 40 basis points for prime business and 50 basis points for buy-to-let – a significant shift upwards, however I do expect to see more sliding scales introduced where quality is rewarded.
This will mean some brokers falling short on lender metrics such as packaging the case incorrectly or having too many cases show early arrears on payments.
This move upwards addresses some of the income brokers lost after 2008. I hope it’s also an acknowledgement of the extra work brokers have to do now to place the business. so much more work now needs to go into the case and a rise in proc fees is an acknowledgement of the extra work the brokers have to do in terms of networking, giving the client advice and collecting all the information the lender now needs to underwrite the case.
The controversial area will continue to be the differential paid for business from directly authorised intermediaries against those paid to appointed representatives that belong to a network. I fully expect this to be a continuing debate during 2014 and beyond.
David Copland is director of LSL mortgage services
