John Coffield of Paradigm Mortgage Services told an audience at Financial Services Expo (FSE) Glasgow that he believed procuration fees paid by lenders to advisers were still too low.
While panel members welcomed an increasing number of lenders paying procuration fees for retention business introduced by advisers, Coffield argued that their overall level was not high enough. “I do believe that procuration fees should be higher,” he said. “I don’t believe most lenders have kept pace with the extra work brokers are now having to carry out for lenders.”
Gary Salter of Nationwide, a lender that announced last month it now intends to pay procuration fees for retention business, said he believe its decision had been “the right thing to do”. However, when pressed on what the next step might be, he argued that further improvements in procuration fee levels might not be forthcoming.
He said: “Where do fees go next? I think you’ll see some tactical changes from certain lenders, and you may well see some change from new lenders.”
The panel members were also asked to give their opinion on so-called ‘robo advice’ and the impact it might have on the mortgage advice market. Salter said: “Robo-advice has to be one of the daftest phrases ever invented. For direct customers there could be a significant change coming, and therefore from a broker’s view, it needs to be embraced. They should dismiss it at their peril.”
Coffield agreed that advisers need to be aware of ‘robo advice’, the advice firms who are practising it, and the business they might take, however he was uncertain whether it was a major threat. “I think it’s a long way off from being a straight-through process,” he said. “Advisers should embrace it, but if you have a good brokerage, I don’t think you need to fear it.”