Currently brokers are not paid a proc fee by The Woolwich if they advise the clients to stick with the lender.
Martin Smith, product marketing manager at L&G Mortgage Club, commented: “The pilot scheme was originally available to a few selected business partners at L&G and then rolled out to all appointed representatives (ARs) in the Mortgage Club from November last year. It has proved very popular and a quite simple process.”
Smith said the pilot is due to come to an end mid-February when The Woolwich will then review whether to extend the scheme to other intermediaries.
John Stewart, director of PMI Independent Financial Advisers, welcomed the pilot scheme and said other big lenders should adopt the same principle. He commented: “Normally the best advice for clients is to stick with the current lender but obviously we lose out on big income streams by doing this and some brokers will be tempted to tell the client to go elsewhere in order to receive a proc fee.”
“This move by The Woolwich could prevent these dangers and it will allow the lender to hold on to a lot more of its business,” he added.
Sally Laker, managing director of Mortgage Intelligence, said: “If it’s the best thing for the client to stay with the current lender, then it makes sense for the broker to be paid. But it is much more advantageous for the lender. It can retain the customer and it also costs a lot less in terms of administration to keep a customer than get a new one. More lenders will want to adopt this practice.”
