The signals are that its belated discussions with lenders have got them nowhere on the subject. The FSA is now threatening lenders with possible legal action if they refuse to comply with its crackdown on exit fees. It seems that a full report on its investigation is likely in July. Even the Council of Mortgage Lenders (CML) is now saying, ‘mortgage lenders have to justify extra fees and they cannot charge extortionate fees to make money’.
My view has always been that what has happened is in breach of principle six of the FSA’s set of principles on customers interests where a firm should ‘pay due regard to the customers interests and treat them fairly’.
In October 2005 the Marlborough Stirling study in consultation with the CML, involving some 18 lenders, was published. The average cost of processing a mortgage application was £146.49. So, as I have said before, how can the deeds release fee be anything other than a scam, which is anti-competitive and drives a coach and horses through ‘Treating Customers Fairly’. It bears no resemblance to the costs of discharging a mortgage. If anything, the costs are less now because so much is done electronically with the Land Registry. It is designed as both a money spinner for lenders, who have client’s captive because they ‘move the goalposts’ under their tariff of charges and as a ‘client retention tool’. It is the biggest and most blatant example you could ever imagine of not ‘Treating Customers Fairly’ and so far the FSA has only talked with lenders on the subject whereas strong action should have been taken to bring the lenders to heel and impose heavy fines for not ‘Treating Customers Fairly’ – there has to be transparency of costs of a mortgage and not have these costs added willy nilly by the backdoor in such a contemptuous way.
Danny Lovey
The Mortgage Practitioner
