The FCA has threatened to intervene in the mortgage market if it believes rising procuration fees are influencing which products brokers recommend for their clients.
Several mortgage lenders, including NatWest Intermediary Solutions, Skipton Building Society, Accord Mortgages and Leeds Building Society, have recently raised the fees paid to brokers for completed mortgage deals.
Last week, Virgin Money increased its procuration fee by 10 basis points to 0.5 per cent gross – significantly higher than the average fee paid by Lloyds Banking Group subsidiary Halifax for Intermediaries, which currently sits around 0.35 per cent.
Start Financial Services manager Tom Cleary says: “Before the crisis, there were a lot of brokers directing clients to some of the sub-prime lenders – and their higher rates – simply because of the massively higher proc fee they paid out. We’re not in the same market anymore but the FCA should be looking out for such activity to make sure clients are always being treated fairly.”
A FCA spokeswoman says the regulator will investigate if evidence emerges suggesting rising procuration fees are leading to bad consumer outcomes.
She says: “We regularly monitor market developments and would certainly want to investigate further into this area if we feel increasing procuration fees are influencing product choice.”