Mortgage Next’s ARs were given notice of the re-banding process in May this year with all members receiving notification of their fee bracket last month.
Mortgage Next has a four-tiered fee system incorporating a sliding scale depending on the number of mortgage cases submitted. One to four cases submitted per month incurs a fee of £50 per case; five to nine cases per month means a fee of £25 each; ten to 19 cases per month a fee of £15 each; and twenty or more cases per month a fee of £5 each.
Justine Tomlinson, marketing director at Mortgage Next, explained a review was written into its AR contracts to take place every six months but it has extended the time period by three months to allow brokers an extra opportunity to deal with the impact of ‘Mortgage Day’.
Tomlinson said: “I would estimate that around half of our ARs have shifted bands and that they have typically shifted downward. This isn’t particularly unexpected as I believe it’s indicative of how the market has been since regulation. Brokers came to us with their best-case scenario number of cases so all-in-all it’s little wonder there has been a downward shift.”
Andy Frankish, managing director of Mortgage Talk, an AR of Legal and General, said: “There has been a definite downward shift in all aspects of business which reflects the true costs of regulation.
I can see this re-banding could initially hack some people off but ARs must take a sensible approach and in terms of future outlook, depending on its business model, there are still many positives in being an AR firm.”
