Kensington has a strict policy of allowing packagers to only pass on a maximum of 1 per cent of the proc fee to the broker. It says its policy is designed to create a fair and level playing field among its packagers and brokers.
However, BDS’ new non-conforming proc fees, for cases received by BDS between 1 July and 30 September 2005, details that the packager will pass on 1.40 per cent of the proc fee to the broker on certain Kensington deals.
These include light, medium and heavy adverse deals, and right-to-buy.
Keith Street, director of sales at Kensington Mortgages, had informed Mortgage Introducer that it was in talks with BDS about the issue.
He said: “This came to our attention last Friday. We are adamant that the broker should only receive 1 per cent of the proc fee and we are taking this up with BDS. The full fee we pay BDS can be up to 2.75 per cent which includes a fee for all the processing and distributing BDS undertakes.”
“But we recommend that the broker gets paid 1 per cent to enforce a level playing field for packagers. Paying out more is not something we encourage,” Street added.
However, Stephanie Redshaw, head of sales and marketing at BDS, said Kensington has since given permission for the packager to pass on the increased proc fee.
She said: “It is Kensington’s policy to restrict the fee to 1 per cent but it has lent its support to the 1.40 per cent fee. This is a limited promotion to celebrate our 15th anniversary and is only open to our loyal brokers.”
But Wayne Smethurst, partner at The Finance Centre, commented: “If we have to stick to the fee rates set by Kensington, then why doesn’t BDS? It will cause a lot of confusion among brokers if it turns out the advertised rates aren’t available
