The move followed an annual review of the building society’s fees and charges. The reduction has come less than a year after it raised its exit fees, which was said to have reflected increased administration and compliance costs following mortgage regulation.
Rob Procter, deputy chief executive of Kent Reliance, said: “This year we have been able to abolish some fees altogether and reduce others as a direct result of the lower cost of administering our mortgage accounts through our wholly-owned Indian subsidiary company, Easiprocess.”
James Cotton, mortgage specialist at London & Country, noted the move bucked the general trend of the market. He said: “I believe no other lender has ever reduced their exit fees. The common theme for exit fees in the last few years is to go up, so it’s interesting precedent-wise. But there is a general pressure to reduce them and the Financial Service Authority (FSA) is now looking into how exit fees are charged and how lenders justify them.”
Procter commented: “I suspect other lenders are unable to leverage the cost savings we have made through the successful offshoring of many of our back office processes. I doubt they will be able to afford to follow our lead even if they had the inclination to do so.”
Robin Gordon-Walker, spokesman for the FSA, declined to speak about individual lenders, but said exit fees did cause some concern. He said: “We have been looking at exit fees for some time, as we believed some were not explained as clearly as they could be. The FSA has asked some lenders to consider whether their exit fees are unfair and show evidence behind their decisions for raising them. We have been receiving responses from lenders and will make a statement in the Autumn.”
