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IFAs warn they could drop A&L loan over procuration

Mortgage intermediaries are warning that they will either have to charge a fee or stop selling Alliance & Leicester&#39s newest discount loan because the procuration fee is too low to make it profitable.

On A&L&#39s two-year discount product fixed at 3.7 per cent, the brokers&#39 fee is £150 for arranging a £250,000 loan compared with the £1,000 they would get if the payment was calculated as it is on other lenders&#39 products.

National broker Park Row Independent Mortgages says it is left with no choice but to drop the product or charge clients a fee.

Managing director Kevin Paterson says: “We just cannot afford to do it for £150. It does seem a little perverse to try and increase your distribution by penalising your distribution channel.

“We do not usually charge our clients a fee but with A&L&#39s move, we will either have to include a fee or drop the product.”

A&L spokesman Andy Homer says: “This product was originally launched in August as a branch and direct mortgage.

“In response to IFAs saying they wanted to offer it to clients, we introduced a procuration fee but we have to build profitability into products.”

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