Unfair mortgage fees could mean consumers can claim

Millions of consumers in the UK could be entitled to claim around two hundred and twenty pounds each in the way of mortgage fee refunds after the decision was made by the Financial Services Authority to tackle mortgage fees that have deemed unfair.

The fees refer to what lenders have called redemption administration fees, which are applied and charged to consumers when they close their mortgage account with a lender, which millions of people do each year in order to switch their mortgage and find a better and more affordable deal.

However, according to reports the costs incurred by the lender are actually more like fifty pounds rather than the two hundred and fifty pounds being charged to consumers. Consumer groups have been complaining about these unfair charges for years, according to reports, and concerns have been raised as there have been cases where consumers were not even informed about the fees, or were not informed until they had signed on the dotted line. According to reports lenders have been pushing up these mortgage fees for the past few years, despite the fact that they are now around five times the amount that the lender should charge to cover costs.

Following an investigation by the Financial Services Authority officials from the FSA have stated that many lenders are going to have to cut these fees to a more realistic amount, and have also said that a large number of consumers that have already been unfairly hit with such fees should be compensated with a refund. Over the past couple of years a number of major lenders have raised their closing fees on mortgages by between fifty and one hundred and twenty five pounds. The Alliance and Leicester and Northern Rock had amongst the highest closure charges, with Alliance & Leicester charging two hundred and ninety five pounds, and Northern Rock charging two hundred and fifty pounds.

Tom Smith
04.02.07

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