Any lender that still refuses to pay retention proc fees should bear in mind the potential impact on its reputation
Is anyone else amazed by the fact we are still debating retention procuration fees in the year 2017?
This is an issue that should have been settled long ago. Brokers must undertake the same amount of work to determine whether a borrower should stay put or remortgage as they do when dealing with a brand-new client. Anyone who argues they do not must surely be suggesting they are flouting regulation.
It is only fair that brokers be compensated for this work accordingly, so it was encouraging when Santander announced it would pay proc fees on retention cases from March. Coventry Building Society and TSB followed suit, joining the likes of Barclays, Halifax and Virgin, which have already come out on the side of the intermediary community.
I am sure those lenders yet to change their stance will do so in the coming months. If not, brokers should at least be given a valid reason. It is also interesting to speculate about the impact on the lenders themselves of not paying such fees.
The UK mortgage broker market is made up of some of the most hard-working and conscientious people I know. They always put their clients first. With this in mind, whether or not a lender pays a proc fee for retention business will have no impact whatsoever on the recommendation made to the client.
However, what could be affected is how that lender is viewed; the reputational damage this could cause among brokers is substantial. I wonder what the PR departments at these companies are making of all of this.
Quite simply, lenders need brokers and alienating them is a bad move.
Take this scenario: what if there was very little to choose between two lenders but one had always been a supporter of the broker community while the other had shown itself to undervalue their input? It is worth bearing in mind.
In other news, I was pleased to hear Paragon has launched into the residential market. Having long been a major player in the buy-to-let world, the lender has proved itself innovative and flexible to the needs of customers in an ever-changing landscape. This sort of approach is exactly what the residential mortgage world needs.
The lender sector is still some way behind where it needs to be when it comes to non-standard borrowers – yet the definition of such a borrower is broader than ever. People are looking for lenders that will lend into retirement, cater for the self-employed and take a more flexible approach.
Specialist players such as Paragon, which are used to dealing with buy-to-let and more complex clients, will be able to do all this. This is an exciting development for the residential sector and, with Foundation Home Loans following suit, it should make for an interesting year.
Finally, by the time this article is published the much-anticipated white paper on housing will have been released. Announced in the Autumn Statement, the paper sets out the Government’s plans for tackling the ongoing crisis.
One thing is certain: it is time we had a fair and open debate about building on green-belt land. Such a debate will undoubtedly bring comment from the ‘not in my back yard’ crowd, and I can see their point. Who would not want to preserve the countryside that surrounds their home?
But we are in the midst of a genuine crisis and, as the saying goes, desperate times call for desperate measures.
Phil Whitehouse is managing director at MCI Mortgage Club