Lloyds Banking Group’s (LBG’s) procuration fee changes have some “positives”, but the product transfer reduction is a “disappointment”, brokers say.
Earlier today, LBG, the largest lender in the UK by gross mortgage lending, said it would be changing some of its proc fees from 5 January next year.
Some proc fees will increase, including shared equity, shared ownership and first-time buyer, while others like product transfers will fall.
Minimum fees of around £300 will be applied for further advances and £750 for shared ownership.
Sebastian Murphy, group director at JLM Mortgage Services, said LBG has been “something of a lender outlier when it comes to product transfer proc fees and maintaining parity with new business”.
He added that this had been an “excellent policy – one that has shown a real commitment to advisers and the work we carry out”.
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“In announcing this new procuration fee structure, there are a number of positives, such as an increase in proc fee for first-time buyer business. However, to say that the decision to cut product transfer proc fees is disappointing would be a huge understatement,” Murphy said.
He said it came after several decisions that seemed to show LBG opting for a more direct approach with customers.
Murphy noted that BM Solutions has said it will deal with existing borrowers directly, and Halifax has been using its banking app to directly market its mortgage proposition to customers and that it did not mention advice or advisers.
It is understood by this publication that BM Solutions added the option for direct product transfer applications earlier this month due to direct customer requests.
Furthermore, all mortgage customers receive an end-of-product-term reminder for possible product transfers and, depending on the circumstance, this would include the mention of brokers.
Daniel Bailey, mortgage and protection specialist at Middleton Finance, said it was “welcome news” that LBG was increasing proc fees on first-time buyer business but is “very disappointing” that product transfer proc fees are falling.
“Brokers carry out a lot of work when advising a client on a product transfer. The amount of work required for a product transfer seems to be growing each year.
“I hope we do not see this as a trend amongst other lenders; brokers carry out huge amounts of work on behalf of clients and lenders and should not be being paid less for more work that is required,” he said.
Ellis Shepherd, director of All About Mortgages, said LBG’s move was “surprising”.
He explained: “Brokers complete a large proportion of Lloyds Banking Group’s business, and product transfers are often the right solution for a client’s needs. While the application process is shorter for a product transfer, the compliance and due diligence requirements for brokers remain the same, so reducing proc fees in this area feels like a step in the wrong direction.
“The impact on brokers is likely to be significant. Product transfer business represents steady, valuable work, and for brokers who pride themselves on serving their clients’ best interests, a fee reduction without consultation can feel like a bitter pill. Although Lloyds Banking Group has increased fees for certain niche products, for the average broker, this will do little to offset the reduction in product transfer fees.”
Shepherd said that, overall, it seemed part of a broader trend in which “fee structures are being recalibrated, often leaving brokers to absorb the changes”.
“A good broker will remain focused on the right outcome for clients, rather than chasing lenders purely for remuneration. Still, the move highlights the ongoing challenges brokers face in balancing compliance, regulatory pressures, and fair reward,” added Shepherd.
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