Lloyds Banking Group has angered some mortgage advisers after confirming it will slash procuration fees on product transfers (PTs) from 5 January 2026 – a shift brokers warn could undermine the value of advice and accelerate the bank’s push towards direct-to-consumer remortgaging.

Mortgage clubs were quietly briefed last week that Halifax and BM Solutions – the group’s two main intermediary brands – will no longer pay PT fees at the same level as new-business cases.

An email update to PMS members read: “Changes to LBG proc fees – what you need to know.

“As a valued customer of PMS, we are writing to let you know that from 5 January 2026, Lloyds Banking Group (Halifax, Scottish Widows Bank, BM Solutions) will implement changes to procuration fees across all product lines. These changes apply across the market, not just to PMS members.”

FAIRNESS AND SUSTAINABILITY

It went on to say: “LBG has introduced a new procuration fee structure that reflects their view of fairness and sustainability.

“The rationale is clear and consistent: fees should align with the advice risk and the time required to place business.

“While the headline change is a reduction in Product Transfer (PT) fees, there are also positive movements in other areas that provide meaningful support for advisers and clients.”

HUGELY DISAPPOINTING

The change ends a long-standing policy that had earned LBG a rare reputation for fee parity across purchase, remortgage and transfer business.

Sebastian Murphy, group director at JLM Mortgage Services, said the move “hugely disappoints” advisers and follows a series of signals that the UK’s largest mortgage lender is rowing back on its support for the intermediary channel.

He said: “LBG has been something of an outlier in maintaining parity with new-business proc fees. This has been an excellent policy – one that has shown a real commitment to advisers and the work we carry out. To say the decision to cut PT fees is disappointing would be a huge understatement.”

GROWING CONCERNS

Brokers say the fee cut comes on top of other adviser-unfriendly decisions. BM Solutions – historically 100% intermediary-only – has begun contacting existing borrowers directly about their options.

Halifax has also been using its banking app to promote mortgage deals to customers without referencing the originating broker and encouraging them to go direct or use comparison sites.

Combined, brokers fear the strategy is designed to divert recurring PT business away from advisers. PTs now account for more than 70% of all remortgages in the UK, according to UK Finance, meaning any reduction in intermediary share could significantly erode broker income in 2026.

WIDENING GAP

With average PT proc fees across the market already lower than new-business rates – typically around 0.20–0.26% versus 0.35–0.45% – LBG’s withdrawal from parity further widens the gap. For many firms, PT income is a vital buffer in a market where purchase volumes remain subdued.

Murphy said the timing of the announcement “raises eyebrows”, coming on the day of the Autumn Budget last week.

“LBG decided not to announce this directly, instead doing so via mortgage clubs,” he added. “That, coupled with choosing Budget week, smacks of a ‘good day to bury bad news’, anticipating how deeply unpopular the cut would be.”

MODELLING IMPACT ON REVENUE

Paradigm Mortgage Services has responded by launching a PT income calculator for member firms, showing the drop in income brokers will face next year.

Early modelling from clubs suggests some firms could see thousands in annual revenue wiped out, depending on their client bank and retention strategy.

The Association of Mortgage Intermediaries has previously warned that reducing adviser involvement in PTs risks poorer consumer outcomes, particularly for borrowers rolling off fixed rates into a more complex, affordability-driven market.

Many advisers now fear other major lenders – already under margin pressure – may follow Lloyds’ lead.

“The worry is that the UK’s biggest lender sets the tone for the rest of the market,” one broker told Mortgage Soup. “If parity goes at LBG, others may view it as permission to follow.”