Portman Building Society is reassessing the way it pays procuration fees by looking at paying in relation to the type of product the intermediary has sold.
Group development dir-ector Matthew Wyles says there is a “bizarre illogicality”, with lenders paying a fixed procuration fee irrespective of the margin and duration of the product.
The society is talking to brokers about a plan to tailor procuration fees to the shape of the product.
Portman argues that a broker selling a five to 10-year fixed-rate mortgage should be rewarded for bringing in better business than a broker selling a two-year fixed-rate mortgage.
The society has also been granted board app-roval for a sub-prime mortgage and is developing systems and underwriting procedures to support the product. It believes a med-ium-sized lender cannot remain competitive with just a prime offering.
Wyles says Portman is looking at other mutuals with a view to consolidation. The society consolidated with Staffordshire Building Society last year.
Wyles says: “The most objective commentators cannot fault the logic. Cur-rent proc fees are not logically correlated.”
Savills Private Finance IFA Tom Bland says: “It is totally understandable from a lender's point of view as they have to make sure the books balance and make sure that the business they are doing is worthwhile.”