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‘Proc fee changes embarrass advisers and confuse customers’

Mortgage intermediaries are exposed to embarrassment in front of their clients when lenders indiscriminately change their procuration fees, says Mortgage Portfolio Services mortgage planner Simon Chalk.

Chalk says significant changes in payments not only go against the initial KFI seen by the client but also result in the client being overbilled or underbilled by the intermediary, creating consumer confusion.

In a recent application with the Halifax, Chalk says his fee was reduced from the minimum fee stated in September of £150 to £70 when the mortgage reached the completion phase.

A KFI must disclose to the client all fees, commissions and earnings. Procuration fees, which intermediaries are required to input manually, are often estimates which have to be within reason and as accurate as possible.

Halifax says intermediaries are paid based on completions and not applications and the fee can change accordingly.

Chalk says: “The basis of a KFI is to be accurate for the client. We should get paid exactly what is displayed on the KFI so we can be sure we have disclosed the correct fee. This is the principle maintained within MCOB on disclosure.”

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