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Virgin Money to roll out product switching with proc fees from July

  • 20/06/2016
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Virgin Money to roll out product switching with proc fees from July
Virgin Money is poised to launch an intermediary product switching service, designed by brokers, which promises to pay a ‘fair and competitive’ procuration fee for retained residential and buy-to-let customers.

From early July, products, tailored to the existing borrower’s loan-to-value, will be transferred through to the sourcing system so brokers can compare them to other lenders’ mortgage deals. Existing customers will have access to all front book deals as well as additional back book mortgages no longer available to new customers.

Virgin Money has yet to announce its proc. fee for retention business but said it would not be set at the 50 basis points it pays for new business. It intends to announce its retention proc fee at the start of July.

Peter Rogerson (pictured), mortgage director, Virgin Money, said: “We will be paying a fair and competitive proc. fee and while it will be less than our payment for new business because there is less processing involved, it certainly will not be an insult to the broker as we are told some lenders’ retention policies are.”

Rogerson said Virgin wanted to reward the broker for giving full advice so the payment will be representative of the work which has gone into the service.

In line with the Financial Conduct Authority’s Transitional Arrangements, borrowers will not be subject to an affordability assessment if no further borrowing is being taken out. However, the broker will be required to indicate an assessment of the client’s circumstances has been completed.

The lender has spent the last nine months working with intermediaries to build its client retention system.

Gary Howe, business owner, Independent Mortgages Direct in Sunderland, worked with Virgin on the project.

“We were given a blank page to bring together the great parts of other lenders’ systems, leaving out the bad. We wanted to weed out all the unnecessary steps like filling in several pieces of client information the lender already has because it is their client, the data is in their system. Basically all you really want to have to use is the client’s account number.”

Howe said that while Virgin Money had a strong brand, until now its systems had lagged behind. “They invited us in to tear it to pieces, break it down and rebuild it,” he added.

Last week, the lender launched a national advertising campaign to tell customers to speak to a mortgage broker at mortgage renewal, unless they preferred to go directly to Virgin Money.

The lender plans to grow its market share faster than the rate of growth of the mortgage market and sees broker-designed systems and processes as the way to achieve this target. It currently has around 3.5% of the total market and 4.5% of the broker market.

To complement the changes, Virgin Money will roll out a digital intermediary portal which will host its policy rules, decision-in-principle and application system. It’s portal can be accessed on any type of device. The technology is currently being trialed on 100 brokers with plans to release the service to its 14,000 brokers over the next three months.

Intermediary exchange, a separate website, has been created to act as a forum for brokers to share ideas and client solutions as well as allowing them to rate Virgin Money, which promises to publish the results. The exchange will offer brokers tools to help build their businesses.

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