EXCLUSIVE: The Loans Engine faces backlash over proc fee changes

Ryan Fowler

October 19, 2016

The Loans Engine has been removed from a number of lender panels after attempting to significantly increase the proc fees it is paid for introducing second charge business.

Back in July The Loans Engine started providing free second charge advice and sourcing whilst charging a £295 application fee in lieu of a master broker fee.

The application fee is then payable once the customer decides to proceed with the loan and after the lenders DIP is confirmed.

Proc fee levels need to reflect the work involved

The change represented a significant fee saving on traditional master broker models – for example a customer taking out a £30,000 loan could, under other models, be paying approximately £3,000 in fees.

Speaking at the time Steve Harness (pictured), commercial director at The Loans Engine, said: “By changing to an application fee model we are leading the field in our sector and this move should sit much more comfortably with first-charge mortgage intermediaries.

“We are trying to reach out to the intermediaries who have historically shunned second charges with a proposition they can trust.”

According to sources The Loans Engine has approached numerous lenders asking them to double proc fees to between 3.5% and 4%.

This move has led lenders to remove the master broker from their panels. Last week saw Precise remove The Loans Engine from its Premier Panel.

Unsurprisingly lenders are reluctant to speak about contracts on a one-on-one basis due to confidentiality reasons.

But the fact that The Loans Engine is being removed from panels implies that lenders are unwilling to play ball.

When asked about the changes Robert Owen, managing director, mortgages and bridging, United Trust Bank, said: “As you’d expect, the contractual agreements we have with our introducers are confidential.

“However, we maintain a clear and transparent remuneration structure which includes a standard introducer commission level which we apply to our entire second charge product range.

“This is clearly detailed within our introducer-facing product guides and on the customer-facing mortgage illustration and offer documents.”

The depaneling by lenders could come as a major blow for The Loans Engine which claims to be responsible for one in 10 of all UK second charge loans.

When approached to explain the change The Loans Engine declined, adding: “No-one is available to comment.”

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