LENDERS TOLD TO REPAY UNFAIR EXIT FEES
Mortgage lenders will have to hand over millions of pounds to homeowners after the City watchdog ordered them to refund “unfair” mortgage exit fees.
In a report published yesterday, the Financial Services Authority criticised lenders for increasing charges levied on homeowners who come to the end of their mortgage term or who switch their loan to a rival lender. Some borrowers have to pay fees of more than £290 to leave their lender.
The FSA’s ruling could cost the mortgage industry more than £200 million. Northern Rock, the fifth-biggest mortgage lender with a 6.5 per cent share of the market, was the first lender to admit that it was putting aside £15 million to cover the cost of the action.
Darren Cook, head of mortgages at Moneyfacts, the financial website, said: “This is good news for the consumer. It certainly wasn’t right that you were expected to sign up to agree to pay an unknown fee at a future date. Exit fees have effectively allowed the banks to print their own money.”
Clive Briault, managing director of retail markets at the FSA, said: “We expect that these measures, agreed with the Council of Mortgage Lenders, will stop borrowers from being surprised by unexpected increases in these fees. People will now know when they sign for a mortgage what fee they will pay on exit, or should be given a clear idea of how the fee might be increased fairly.”
Lenders have until the end of February to revise their exit fees.
Northern Rock said it would guarantee that all customers would pay only the original exit fee in force when they signed up to their home loan. It estimated that past customers would be in line for an average refund of about £60.
Alliance & Leicester also said that it would honour all original exit fees. Other lenders were slower to react. Halifax, Abbey and Nationwide said that they were reviewing their policies.
How to claim your refund
You can reclaim some of your mortgage exit fee only if it was increased during the term of your loan and you were forced to pay a new, higher charge at the end of the deal.
If you think you have a claim, write to your lender as soon as possible. Include your name, address and mortgage account number, and if possi- ble, the date on which your mortgage started and state the sum that you would like to reclaim. (For example, if the exit fee was £85 when you took out the mortgage, but you were forced to pay £185 when the deal ended, you can claim back £100.)
Your lender has eight weeks to deal with your request
+ News Source: TIMES ONLINE
+ Link: http://business.timesonline.co.uk/article/0,,9063-2569064,00.html
+ Last Updated: 2007-01-27 14:06:21
+Subscribe
[ Back ] - [Home]