The article is about an ‘arrangement fee’ charged at application, yet the intermediary sales director of C&G defends levying an ‘application fee’.
Sorry, Mr Champion, but unless you have been misquoted, you have failed to explain to the readership of MI why your company should retain an ‘arrangement fee’. My advice would be to refund the clients’ money as soon as you can write the cheque.
At a time when the average mortgage lasts only a few years and lenders try to entice clients from their competition, surely upfront fees that are added to a loan are no more than ‘exit charges’? If the lender adds £700 to a mortgage of £100,000, the loan is now £100,700. Having paid off, for example, £4,000, you have to pay back £96,700 in order to change lender. Hence it is only when you leave that you find out you are £700 out of pocket. I wonder how many clients think of an upfront ‘arrangement fee’ in those terms?
But why can we not be totally honest? Why can’t lenders admit, ‘The several hundred pounds we add to your otherwise fees-free re-mortgage pays the valuation and legal costs, and also makes a contribution to the fee we pay to the introducer’?
Treating customers fairly? I think a good place to start would be to outlaw misleading and meaningless jargon.
Your etc.
Roy Taylor
Lymm Manor Finance Ltd
John Champion, intermediary sales director, C&G, says: “In all our literature – including our Key Facts Illustration (KFI) and intermediary mortgage guide – we make it very clear that our product fee is non-refundable. However, where an application has very recently arrived, and we have made no funding commitment and no significant work has been carried out, we would, of course, consider an exceptional refund.
“In common with other mortgage lenders, we greatly value the help of intermediaries when it comes to explaining the size and nature of our fees to clients, supported, of course, by our point-of-sale material.”
