It is rumoured that “good” quality fees will be rewarded 39bps, medium quality 37bps and “poor” quality cases 35bps.
The proc fees payable to some of Abbey’s key accounts will increase as a result of this change, while the proc fees payable to others will remain the same or decrease.
For ARs of networks and regulated accounts who are not part of the key account set, the proc fee terms will be 33bps for core residential business.
For directly authorised intermediaries who transact through mortgage clubs the gross proc fee terms will also be 33bps for core residential cases.
The assessment of business quality will be based on data collected from Abbey's existing mortgage business from the past two years.
Abbey will review the business quality of cases submitted by key accounts against a number of key metrics such as packaging of cases, the conversion rate of applications to offer, and the overall quality of the cases received from that key account.
A spokeswoman for Abbey for Intermediaries said: “We are making some changes to the proc fees we pay on our core residential business. This is in line with recent competitor changes in this area.
“We are committed to writing mortgage business that is good quality and to offering borrowers the right mortgage for their needs, and these changes support our commitment to working closely with our key account partners to achieve this.”
In April this year Nationwide and Lloyds Banking Group slashed procuration fees for directly authorised brokers by up to five bps.
Dev Malle, sales and marketing director at Personal Touch, said he believed much of the quality measure is based on the Expected Bad Rate which is based on numerous score based measures that will be partly driven by the quality of submission.
He explained: "For example, if the client has an account with the Abbey and the intermediary lists this on the application it will have a positive effect. If the intermediary leaves certain information off (such as work phone number) it will have a negative effect. This means it is not simply a post code lottery and the intermediary can have an impact on the quality of client and submission and that is what Abbey want to reward or conversely disincentivise.
"Other lenders are keeping a close eye on this to see in practice whether it works. A constraint for many will be the systems and processes they will need to have in place to monitor this and make it work. Most already differentiate fees based on perceived quality and control that one distribution channel has over another, this is taking it to the next level and must be driven by the need for lenders to know who they distribute through as MMR day gets closer."
