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Broker calls for quality-based proc fees as lenders track adviser efficiency

  • 06/06/2023
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Broker calls for quality-based proc fees as lenders track adviser efficiency
A mortgage broker has proposed that lenders offer proc fees based on quality after being recognised for submitting well packaged cases.

Malcolm Davidson, managing director of UK Moneyman, has received praise from both Aldermore and Accord Mortgages for sending through cases which either reached the offer stage quickly or raised the fewest queries. 

In a note seen by Mortgage Solutions, Accord thanked Davidson for the speed of offer for his cases, noting that his turnaround time was “impressive”. 

The lender said it was now tracking cases of brokers who had submitted at least five applications in a quarterly period, with an average application to offer timeframe of seven days or less. Accord informed Davidson that he had made the shortlist. 

Aldermore gave Davidson priority access to its underwriters, for being one of the brokers that saved the lender time by submitting all the required documents upfront. 


Recognising quality

Davidson said the current proc fee system rewarded brokers who were able to submit large volumes of applications, but not smaller and directly authorised (DA) firms who handled fewer cases. 

He said: “The differential between what an AR [appointed representative] gets, compared to what a DA gets is linked to volume rather than quality which doesn’t always seem fair. 

“In the AR space, because of the size of the organisation they would command a higher proc fee. That’s not me saying the standard of cases submitted by ARs is any better or worse – there’s good and bad in both spaces – but it feels like something that’s a bit antiquated now.” 

Davidson said it was “heartening” to be recognised by Aldermore and Accord for the quality of his work. 

“It’s good to get that recognition and it’s good that lenders are thinking in that way because we’re packaging cases properly, not taking up as much of their hours and not clogging up their services, which means we’ve been rewarded with this enhanced service with Aldermore.” 

Davidson said as lenders were now able to identify firms that had good quality cases, “wouldn’t it be great if they could tailor the block fees in line? 

“I’m not saying volume shouldn’t be a measure. I think it should be and it’s reasonable,” he said. 

However, he added that the resources required to provide the additional admin support was “very expensive”. 

Davidson said: “We have a ratio of approximately one adviser to one adminstrator. Whereas some firms have one to seven. That’s an expense we incur because when you’re DA it’s your name above the door. You live and die by these Google reviews and you want the customer to have a good experience, but it’s not cheap.” 

He noted that good quality cases were not as common as one would think, as one major high street lender that processed mainstream cases told him that 80 per cent of his firm’s applications were right first time. 

The lender told him that this was measured against an industry average of 55 per cent ‘first time right’ cases.  

Davidson said he was surprised that the number of cases submitted right on the first attempt was low for such a lender, but suggested this might also be down to the speed that mortgage products were being pulled off the market and changed, which may have led some brokers to submit “half baked” cases which he said was “understandable”. 

“At least lenders are now finding ways of identifying this and recognising the good from the not-so-good,” he added. 

Davidson said it would be nice for there to be an annual payment or reward, as it created a smoother journey for clients, saved time for lenders and meant higher due diligence among brokers meant fewer fraudulent cases. 

Overall, he said the structure of proc fees needed updating and added that if lenders were checking this information, they should do something with it. 


No preferential treatment 

Jeremy Duncombe, managing director at Accord Mortgages, said the lender did not offer extra access to underwriters or proc fees as it offered a lot of things as a standard, without segmenting it to specific brokers.  

“We don’t have a selective policy, we try and offer the best possible range of products and service to everybody.” 

Accord began tracking cases as the country came out of lockdown out of a desire to acknowledge intermediaries. 

Duncombe said: “At the time, things were really busy. What we found was because products were being pulled regularly and there were queues, and we had to keep repricing, we found one of the best ways to keep products out for longer was to get the quality of packaging to be the best that it could be. 

“We spent a lot of time talking to brokers about what good quality packaging was and then we started tracking our averages such as how quickly cases reached offer. Then we looked at the brokers who had consistently performed better than that.” 

Now, Duncombe sends an email out each quarter to brokers who consistently demonstrate a high quality of packaging. 

“We pride ourselves on our service. We look at new cases within 24 hours of receipt generally and we’ve been able to maintain over the last 12 months. Service is really important to us, so it’s important to recognise brokers who are able to support us with the quality of business they send us,” he added. 

Accord does not track how many times a case is returned to a broker for more information but said cases which were completed within seven days were typically well packaged. 


Forming a stronger partnership 

Jon Cooper, head of mortgage distribution at Aldermore, said the lender held a strategic review when it stepped out of the market last year and looked at the pain points brokers had when submitting cases. 

“Of course, price and having a presence in the market is really important. But service is key in the specialist space,” Cooper said. 

Coming from a mainstream bank, he said his mantra was offering a high street level of speed and certainty with a specialist offering. 

Cooper said packaging stood out as one of the main pain points, as the lender discovered that its underwriters were asking for clarification and documents around seven or eight times per case. 

Which from a broker’s perspective, as you can imagine, is very frustrating. Because they thought ‘I’ve submitted everything here, please make a decision’,” Cooper added. 

He said it also impacted an underwriter’s ability to do work. As a result, the lender stripped down the amount of information it requested for applications. 

This includes a signed application declaration form and direct debit mandate, as well as income verification depending on the borrower. 


Maintaining high standards

This change was brought in last August. The lender then decided that it would not pass a case through to an underwriter until this was done. 

Cooper said brokers were already given 10 days to secure a rate, leaving enough time to get the right information together. 

He added: “We’re the gatekeeper, our business development manager (BDM) team. We’ve put that gatekeeper role in to ensure that when we send it over to the underwriter, all the minimum standards are ticked off.” 

Cooper said Aldermore’s underwriters were able to make a decision on more cases this way and the lender could do more business. 

He said 45 per cent of cases were correct the first time, and he wanted to see that rise to 60 per cent. 

Aldermore’s underwriters now have more capacity to support brokers with a “human touch”, Cooper said, and added that brokers had reacted positively. 

The lender also tracks how quickly cases go to offer in line with its platinum broker proposition which was launched in February. This rewards intermediaries who give the lender “volume and better quality” business with prioritised access to underwriters. 

He said less than 10 per cent of firms who work with Aldermore qualified, and cases within this cohort reach offer within 13 days, which is faster than the standard 17 or 18 days the lender sees. 

Cooper said all brokers still received the same service regardless of whether they had platinum status or not, but those who are rewarded gain a stronger relationship with the lender. 

As for how Aldermore does its part in making sure cases go through, Cooper said the lender had learned from the instability of recent years and built trigger points into its systems to alert it of potential hindrances. 

He added: “Whether it’s the number of phone calls we get on a daily basis, or the decision in principle pipeline, we review the volume of business coming through and pull on levers which mean we may need to do something like amend our pricing or policy. 

“Ultimately, we don’t want that underwriter being completely washed away again and not being able to give the decisions and speeds that are articulated earlier which we’ve now got into a good habit with.” 


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