Excess exit fees scrapped after consumer pressure
July 24, 2007 by admin
Filed under News, News-Mortgages
Excess exit fees for mortgage holders looking to switch, which had previously been levied by mortgage providers, are to be paid back, after consumer pressure and a ruling by the Financial Standards Authority (FSA).
Providers had presided over big increases in exit fees – with some doubling them in the last three years – for little extra cost incurred. This was seen as unfair by consumer groups.
The FSA, agreeing with customer complaints, had demanded that providers either justify the extra charges or return the difference, and set yesterday as a deadline.
Providers, after strongly resisting the ruling initially, have now decided to pay up on deadline day. Millions of customers will now get their money back.
Melanie Bien, at broker Savills Private Finance, told the Times that “Anyone who has remortgaged in the past few years… will be able to make a claim, depending on their lender’s stance.
“Lenders are concerned about the scale of claims they are likely to see regarding exit fees, which may be why borrowers will have to make a claim themselves, rather than wait to be contacted by their former lender”, she added.
Consumer groups will now look to their next battle, which will concern what are perceived as “excessive” overdraft charges from banks. A judgement from the Office of Fair Trading (OFT) is expected later this year.
