C&G has led the way and by doing this it has proved that the real cost of closing a mortgage account is very small. Defaqto calculated that the real cost of closing a mortgage was £35 – the average cost of processing a mortgage in the Vertex/Council of Mortgage Lenders (CML) study for 2006 was an average of £132.85.
This now puts pressure on other lenders to come clean and remove this carbuncle from the reputation of the mortgage industry and fits in with TCF.
Lenders have been building a ‘war chest’ over the past year with higher arrangement fees to compensate for what they knew was the inevitable – that eventually they would have to give way to pressure or the FSA would act, as would the Office of Fair Trading and the Financial Ombudsman Service. The mortgage exit fees were unfair by any stretch of the imagination and a poorly disguised penalty for leaving a lender.
After campaigning hard on this issue since the beginning of 2005 and making a prolonged nuisance of myself, I am delighted that lenders are starting to realise that you simply cannot defend the indefensible.
I hope that now the CML, will also concur and retract its statement in its ‘News and Views’ in May, which was not in accord with the joint statement it was party to with the FSA of 26 January 2007.
Once we have come through the re-adjustment into a fair and transparent market, and lenders stop the mark up in arrangement fees to recoup the cost of complying with the FSA’s directive, with a competitive level playing field for the industry we can move forward.
But no doubt those clients who have been charged over the top fees over recent years will still have a case, as a breach of the Consumer Credit Regulations of 1999. Under ‘unfair terms’, prima facie has been breached, so it is unlikely to be the end of it until these have unwound and maybe the courts have made a ruling.
Regards
Danny Lovey
The Mortgage Practitioner
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