The confusion came after a client reached the end of their mortgage term and overpaid the mortgage balance by £6,000 using a redraw facility. The mortgage was switched to another product offered by Northern Rock on the basis that this facility was available so the funds could be withdrawn at a later date to finance a deposit on the clients’ son’s house. However, when the broker contacted Northern Rock to release the funds, he was told the £6,000 and the redraw facility were not available.
A broker, who wished to remain anonymous, explained: “As a result of Northern Rock’s error, my clients were forced into taking out a secured personal loan with the lender for £3,000 in order to give their son the deposit. They were also charged £349 for this, for administration fees.”
He continued: “After further investigation however, the lender admitted that it had made a mistake and that the £6,000 and redraw facility were available after all. They agreed to refund the £3,000 loan as a result, which was good, but kept the £349 charge. This is baffling as they have admitted it was their mistake, which I except, but the fact remains that the whole ‘fee’ and admin charge lenders refer to is just a form of greed. Why can’t my clients have that back too if the whole thing was a result of disorganization by Northern Rock?”
Jaqualyn Gill, press officer at Northern Rock, said: “The fee applied is a standard product fee levied for all personal secured loans and we make this very clear at the outset. However, we are very keen to get the matter resolved and we will contact the broker directly to discuss the case in greater depth to determine whether the fee is applicable in this particular case.”
