Lloyds Banking Group is reducing the agency fees it pays for product transfers so that they no longer match those for new contracts.
Advisers were told in an update this week that fees will fall across all of the bank’s lending brands from January 5.
The amount of commission paid on first-time buyer, shared ownership and shared equity deals will increase, plus new minimum commission charges will apply for some product types.
Sebastian Murphy, director of the JLM Mortgage Services group, says LBG has been “something of an outlier” in maintaining parity between proc fees for new contracts and product transfers to date.
According to Murphy, this move will undoubtedly be disappointing for brokers, especially after other recent decisions by the bank.
He says: “Make no bones about it, this has been an excellent policy – one that has shown real commitment to the advisers and the work we do.
“When announcing this new structure for proxy costs, there are a number of positive points, such as an increase in proxy costs for starters.
“However, to say that the decision to reduce PT litigation costs is disappointing would be a massive understatement as it comes after a number of other decisions by LBG that appear to show a reduction in its commitment to advisors and the value of advice.
“For example, BM Solutions – until now a fully intermediary-focused lender – has communicated that it will deal directly with existing borrowers.
“In addition, Halifax has used its banking app to market its mortgage offering directly to customers, with no mention of advice or the original advisor when it comes to existing borrowers.
“Instead, communications have urged customers to contact them directly about their next mortgage, or look at price comparison sites.
“Combined, it appears LBG’s direction of travel is concerning.
“Finally, two points about the timing. Firstly, LBG has decided not to announce this directly, but to do this through mortgage clubs.
“Second, it chose the week of the budget to do so, which is akin to choosing a ‘good day to bury bad news’, no doubt anticipating how deeply unpopular parts of this announcement, particularly the PT proc fees, would be among advisors.”
A spokesperson for Halifax for Intermediaries said: “We annually review our full range of brokerage fees to ensure they reflect the complexity of the business advice and the value brokers provide.
“From January 5, the new rates will do this and ensure we continue to provide fair value to mortgage customers and competitive guaranteed minimum rates to brokers.”
Following this announcement, Paradigm Mortgage Services has launched a new product transfer calculator for its member firms.
The calculator allows businesses to see the difference between the PT revenue they currently receive from LBG lender Halifax, compared to what it will be next year.