Under the PMPA Intermediary Payment Protection plan (PIPP), the packager collective will provide a verifiable guarantee that, in the event of a member ceasing to trade, it will settle any outstanding procuration fees on completed packaged cases and which are due to FSA-registered brokers.
The plan will cover all regulated and also buy-to-let mortgage products and is expected to be fully operational throughout the entire PMPA membership by 1 July this year.
Jon O’Brien, operations director of the PMPA, said: “This plan means our brokers (and network partners) can deal with us confident that their procuration fee payments will be met even in the event of a member ceasing to trade, as long as the packaged case has completed.
“Equally, and for the same reason, our lenders know that they will not be placed in the position of having to pay procuration fees twice in the very unlikely event that a packager fails to honour their obligations.”
John Rice, managing director of RAMP, said his organisation had no intention of introducing a similar scheme. “It is not something we have felt the need to think about. It is the sort of thing you might do if one of your members was on shaky ground, and all RAMP members are doing very well.”
O’Brien responded that the PMPA scheme was tailored to reassure the industry following the negative publicity that currently surrounded the packager sector. “It will also help differentiate PMPA members from other packagers in the industry,” he said.
