Sales director discusses why the building society increased its proc fee
Last month, Nottingham Building Society increased its procuration fee, with the intention of providing support and value to brokers and their clients.
However, why has the lender chosen now to increase it, and what are brokers’ views on procuration fees across the market at present?
Mortgage Introducer reached out to the building society and brokers to find out.
Why did Nottingham Building Society take this step?
Alison Pallett (pictured), sales director at Nottingham Building Society, said it put the broker at the very heart of it mortgage business, which is why it was an 100% intermediated lender.
“This is based on a firm belief that delivering comprehensive mortgage advice across the market is instrumental in achieving the strongest customer outcomes, and this is why we have taken the decision to increase our procuration fees,” she said.
When a mortgage review took place, Pallett said the lender believed that the possibility or opportunity to transact a product transfer formed a significant part of the mortgage review process.
The building society, Pallett said, also believed that brokers should be fairly remunerated for the vital work and research they undertook as part of the advised process.
“The uplift in fees, in our view, is a logical step to better acknowledge and compensate brokers for the advice they provide,” she added.
Is this something brokers have been pushing for?
The decision to increase procuration fees, Pallett said, was informed by valuable feedback from its intermediary partners.
“Their response so far has been positive and welcoming, which justifies the steps we have taken to ensure that fees align with the service brokers provide,” she said.
Pallett added that this approach reflected the lender’s commitment to fostering strong partnerships and adapting to market dynamics.
“We are conscious that a significant number of products are reaching the end of their term, and our adjustments in procuration fees are, in part, a response to the challenges this will create for brokers navigating this period,” Pallett said.
Brokers’ view
Michelle Lawson, director at Lawson Financial, said the latest news from Nottingham Building Society on procuration fees was great for brokers and consumers.
“The decision from The Nottingham supports brokers and our clients as it ensures our customers get the best financial outcome; the research is the same whether we recommend a change of lender or a change of product with their current lender,” she said.
The work involved, Lawson added, is also increasing with the frequent rate changes, which she said brokers effectively did free of charge.
Graham Cox, founder at SEMH, said that low procuration fees had been a bugbear for brokers for years.
“It is understandable to a degree, as loan sizes compensated when mortgage rates were at all-time lows, but with house prices falling and mortgage rates back to ‘normal’, albeit painful levels, lending just got a whole lot more profitable for the banks,” he said.
Cox added that it was only right lenders should pass some of that on to brokers when loan amounts were shrinking.
Gareth Davies, director at South Coast Mortgage Services, would like to see a review of procuration fees across the board from lenders.
“Many lenders have not budged on what they pay brokers for well over a decade if not two; yes, average loan sizes have increased, but so has regulation and the amount of work that goes into every submission,” he said.
Davies added that he would not be against procuration fees being paid across two years to help brokers build real value to their businesses.
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