The regulator confirmed it had considered whether the charges were unfair, but backtracked because it was viewed as common business practice among mortgage lenders and stimulated competition in the market. However, it admitted that similar excessive charges have been banned in the investment market.
Commenting, Robin Gordon-Walker, spokesperson at the FSA, said: “We thought of looking into the excessive charges, such as HLCs, imposed on consumers and whether these were fair and in line with the TCF ethos. However, we cannot get involved in the charges levied by mortgage lenders because it is standard industry practice and there are a range of options available to consumers.”
However, Nick Gardner, director at Chase de Vere Mortgage Management questioned the regulator’s logic. He said: “The FSA is looking into exit fees and whether these treat customers fairly. But HLCs are charges too, so what is the difference? Do unfair charges not fall under TCF regulations? If the FSA cannot get involved then why say it was considering looking at them? It doesn’t make any sense. Lenders are imposing HLCs to make a profit and they have absolutely no benefit whatsoever for the consumer.”
Gordon-Walker added: “We cannot invoke an excessive charge ban as if we said a certain amount was excessive; then everything below that would be considered not excessive. This would cause problems as then the charges could be lowered to the ‘non-excessive’ category. However, while this is not something we are looking at under the current review, I wouldn’t rule anything out.”
