You are here: Home - News -

TMPE 2015: Lenders grilled by Legal and General boss on retention proc fee failings

  • 12/11/2015
  • 0
TMPE 2015: Lenders grilled by Legal and General boss on retention proc fee failings
Mortgage lenders found themselves in the spotlight over their failure to pay brokers proc fees for product retention business during a panel debate at The Mortgage and Protection Event in Southampton.

Chairman Jeremy Duncombe, director of Legal & General Mortgage Club, demanded answers after a member of the audience asked if lenders planned to start paying out on product retention deals, a change he expected to see after the Mortgage Market Review (MMR).

Mark Collar (pictured second from left), national intermediary development manager at Leeds Building Society, and Jonathan Stinton (third from left), corporate relationship manager for Coventry for Intermediaries both said product retention proc fees were high on the agenda but admitted they had no immediate plans to make any changes.

Duncombe said he failed to understand why, if brokers were taking borrowers through a full advice process, lenders were not paying intermediaries for this work.

Stinton, while agreeing that Duncombe had a valid point, was unable to come up with a reason why Coventry did not offer brokers remuneration for this business.

“Different businesses have different ways of pricing products and different strategies in place for retaining new business and acquiring new business as well,” said Stinton.

He laid partial blame on not having the correct systems in place to allow it to make the payment and conceded that anyone trying to switch products with the Coventry would agree it did not have the easiest process.

Leeds said it had recently made the decision to pay proc fees for mortgage porting but given that its back book was not under pressure from borrowers leaving it had no current plans to look at paying proc fees to brokers who advised borrowers to stay with the society.

Duncombe challenged Kensington’s head of sales and distribution Steve Griffiths (pictured right) over the logic behind paying a broker a proc fee should a Kensington customer decide to move to its new brand New Street Mortgages but refusing to pay out if the broker advised the customer to stay put.

Griffiths said customer retention policies were different for specialist lenders. Griffiths said homeowners generally took out a mortgage with Kensington for a specific short-term reason which had barred them from the high street.

He said it was often the case that after two or three years that borrower would be in position to approach a mainstream lender which made the development of a product retention policy less important. Griffiths said if a broker took a borrower though a full advice process and the most suitable option was to remain with Kensington, it would pay the broker a remortgage proc fee.

Barclays, represented on the panel by Tony Fullbrook (pictured left), policy and regulatory manager, does offer product retention proc fees. “We are seeing a trend that, post MMR, more customers are choosing to stay with their existing lender,” said Fullbrook. “Perhaps the barriers to moving, in terms of what they perceive is going to be a difficult discussion or journey, is one thing but also lenders have made it far easier for customers to remain with their existing lender and we can incentivise them with cracking rates. We will continue to support intermediaries by sharing that with you as well.”

There are 0 Comment(s)

You may also be interested in