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Santander’s proc fee cut raises questions about lender’s adviser strategy, brokers say

  • 09/07/2018
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Santander’s proc fee cut raises questions about lender’s adviser strategy, brokers say
Santander has defended its decision to cut its minimum procuration fee to £250, but the move has led brokers to question the lender’s strategy towards mortgage intermediaries.


Not all lenders operate a minimum proc fee, but Santander’s change, announced on its website this morning, brings the lender more into line with those lenders who do so.

Explaining the decision, Santander told Mortgage Solutions: “As a prudent lender, we are constantly reviewing our offering to ensure we are providing customers with the best possible products and services.

“Today, we announced a move to paying a minimum new business procuration fee of £250 to brokers (which along with another major lender makes us the highest in this space).

“Alongside this, we recognise the work brokers do on loans below £25,000, so have completely removed this minimum loan amount, in support of their efforts,” it added.


Confusing position

However, the move has prompted puzzled responses from brokers.

Lentune Mortgage Consultancy managing director Stuart Gregory said: “The announcement from Santander to reduce the minimum procuration fee shows a confusing position to the broker.

“On one hand, they tried to lead the way initially with a policy to improve broker remuneration – however, I can only assume that since no other lenders followed their lead, this is why they’re backtracking.

“Brokers have long memories,” he added.


Higher fees for bigger loans?

New Leaf Distribution mortgage and protection adviser John Azopardi (pictured) said he was relatively relaxed about the change as he estimated it would only affect house purchase and remortgage loans between £75,000 and £115,000, based on a usual procuration fee of 0.34%.

“It’s difficult to imagine doing a house purchase loan for £115,000 in my neck of the woods and one is unlikely to do a remortgage to Santander for an amount less than £115,000 given the competitive nature of the product transfer market,” he told Mortgage Solutions.

“Santander may have worked out that, with a £400 minimum fee they were attracting smaller loans that were expensive to administer. If this change means that they can pay higher fees for slightly bigger mortgages – we would all be happy,” he added.


Don’t appreciate brokers

However, the move also agitated brokers who said it reminded them of other past practices which appeared to be anti-broker.

White Financial Services managing director Daniel White admitted he was reluctant to use the lender for a variety of reasons and felt the change was a poor move.

“What they’ve done this morning by reducing the proc fee probably doesn’t have a huge effect on a lot of brokers, although depending which area they are in it will have a larger affect on some,” he said.

“But it kind of shows they just don’t appreciate the broker community; they don’t appreciate the work the broking community does to place the cases with them and I think that’s evident in their actions.”


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