Alliance & Leicester "administration" (!?!) charges

pdm_2 · 10 October 2005 at 11:15AM

I've just reached the end of my discounted period with the Alliance & Leicester lender.

When I originally took the product I was assured that there were no extended redemption penalties - so as soon as the discounted period expires you can leave them without any charges.

This to some extent is true but what the A&L failed to tell me was that is a £295 administration (rubbish!) charge - which they didn't inform me of when I originally took the product. I was assured that it was charge free - that's why I took the product.

I'm going to contest the charge and I'm about to write a letter to exhaust the A&L complaints procedure. I will then approach the Financial Ombudsman with my case - obstruction of facts / hidden charges - in a nutshell.

Has anyone else done this and been successful in getting the A&L to wave the charges totally or at the very least significanlty reduce them?

Thanks in advance.

pdm

dunstonh · 10 October 2005 at 11:28AM

AFAIA, A&L have never hidden the fact that this charge exists. Its a fairly common charge which many lenders have. It has been increasing in recent times from what used to be a £25-£50 charge to the current £200-£300 mark.

lisyloo · 10 October 2005 at 11:30AM

but what the A&L failed to tell me was that is a £295 administration (rubbish!) charge

You would almost certinaly had been told about this.
I think what you mean is that you didn't read the entire terms and conditions (who does?) and you missed it.

which they didn't inform me of when I originally took the product

I am 99.9% sure you are wrong.
Did you read the entire terms and conditions from cover to cover? (I'm not saying anyone ever does, I'm saying you are wrong to say you weren't informed).

However it has gone up substantially since you joined them and you are correct that it is "out of propertion" to their administration charged in my opinion.

Has anyone else done this and been successful in getting the A&L to wave the charges totally or at the very least significanlty reduce them?

I got mine waived entirely (I'm an awkward bu**er). Many people have got them reduced.
Basically it costs A&L some money if you go to the ombudsman so they want to avoid this.
If you put a coherent letter together you are likely yo get yours reduced. I don't know whether you will get it waived entirely (my individual circumstances were taken into account).
Be prepared to sent 3 or 4 letters.
First one will say no, second one will say reduced to £195.
Depends how far you want to take it.

pdm_2 · 10 October 2005 at 11:39AM

Thanks for your replies folks.

Yeah ok you're all right. I was probably "told" but people should be informed of this in a discussion over the phone when they're deciding whether or not to take the product. Not when they've pretty much decided to take the product and they're 90% the way there - when they receive the terms and conditions through the post. That to me is a very simple case of abstracting away charges - and that can't be right + who cares if everyone makes an administration charge - still doesn't make it right...

Anyway thankyou all again and I'll be sending a letter off asap. I know how the ombudsman works - I work for the insurance industry and therefore have access to our engineers department etc... I believe they get charged £500 approx by the ombudsman to simply begin an investigation. If they win - they still incur the cost. If they loose - they still incur the cost. Either way I'll try and "charge" them through using the ombudsman :0)

Mortgages seem to be a legal way of screwing the public :mad:

dunstonh · 10 October 2005 at 11:54AM

The charge also appears on the credit agreement/contract letter.

I have one in front of me as I type and its very clearly marked. In addition, you would have needed to sign it to say you understood the charge and agreed to it.

If you used a solicitor, they would usually point out the charges to you. If you did it yourself, its your own responsibility to do it.

I'm not agreeing or disagreeing on the size of the charge. I am saying though that you have to take some responsibility for failing to realise the charge was there.

lisyloo · 10 October 2005 at 12:06PM

That to me is a very simple case of abstracting away charges - and that can't be right + who cares if everyone makes an administration charge - still doesn't make it right...

I'm not sure of the exact point you are making here.

If you are saying that it's wrong for them to charge you for doing work then I disagree.
If you are saying they didn't tell you then I disagree. Putting it harshly - you either need to pay for a solicitor or broker or take responsibility for checking he details yourself. These days there are regulations about making things clear and they are normally very clearly pointed out.

However I do agree that the charge is disproportionate to the costs involved and has escalted way above infaltion in recent times that cannot be justified.

Please take these comments in the spirit that they are intended try and learn a lesson from this.
If you are doing a financial transaction without taking advice from a professional then you need to be more thorough.

pdm_2 · 10 October 2005 at 12:21PM

It always makes sense to go to a mortgage advisor - I agree - the same reason why I don't take my M class apart when I feel like doing a bit of DIY on my car.

I'm just using this forum to tell other people - who may I add aren't probably financial advisors to be careful if they use a service provided by a lender such as A&L - you phone up and discuss a mortgage with them and then decide generally there and then.

I'm sorry but I still keep my initial point that the person on the other end of the phone should have said - yes we will charge you £25 / £200 / £250,000 when you leave us as a lender - nothing to do with the product - they didn't say that and it's that which I'm complaining about.

I'm not a financial person by any stretch of the imagination - hope some people recognise this. I'll take responsibility - of course - how can I not - but the situation still sucks.

There should be regulations in place that stop lenders from increasing their administation charges. You are tied in - early redemption penalties etc. So you can't leave in the discounted period - but when you do leave after the discounted period - they've inflated the administration charge so much you might as well have payed an early redemption penalty anyway and got out sooner before they raised the administration charges (!)

There moan over.

Thanks again.

pdm "I'm not a financial advisor" - just a simple developer...

c_smith · 10 October 2005 at 12:25PM

pdm wrote:

I've just reached the end of my discounted period with the Alliance & Leicester lender.

When I originally took the product I was assured that there were no extended redemption penalties - so as soon as the discounted period expires you can leave them without any charges.

This to some extent is true but what the A&L failed to tell me was that is a £295 administration (rubbish!) charge - which they didn't inform me of when I originally took the product. I was assured that it was charge free - that's why I took the product.

I'm going to contest the charge and I'm about to write a letter to exhaust the A&L complaints procedure. I will then approach the Financial Ombudsman with my case - obstruction of facts / hidden charges - in a nutshell.

Has anyone else done this and been successful in getting the A&L to wave the charges totally or at the very least significanlty reduce them?

Thanks in advance.

pdm

I done exactly that a few months ago and they dropped the charge from £295 to £150 as a "gesture of goodwill". I didn't write directly to A&L though, I sent my complaint straight to the Financial Ombudsman who forwarded it to them and monitored the outcome.

I pointed out the fact that the original "administration" fee was only £75, and that a £220 increase in just over 2 years was tantamount to extortion and did not reflect the insignificant amount of work involved in closing a mortgage account. I also requested that the Financial Ombudsman monitor these charges in the future to ensure that mortgage providers could not keep increasing them exponentially, thereby forcing customers to stay with them because of the high costs involved and thus impeding competition.

pdm_2 · 10 October 2005 at 12:28PM

c_smith wrote:

I done exactly that a few months ago and they dropped the charge from £295 to £150 as a "gesture of goodwill". I didn't write directly to A&L though, I sent my complaint straight to the Financial Ombudsman who forwarded it to them and monitored the outcome.

I pointed out the fact that the original "administration" fee was only £75, and that a £220 increase in just over 2 years was tantamount to extortion and did not reflect the insignificant amount of work involved in closing a mortgage account. I also requested that the Financial Ombudsman monitor these charges in the future to ensure that mortgage providers could not keep increasing them exponentially, thereby forcing customers to stay with them because of the high costs involved and thus impeding competition.

c_smith - you're a gent - thanks for the positive feedback - I'll try that first and see what the outcome is... :A

eml_3 · 10 October 2005 at 12:43PM

There was a previous thread about this - I wrote objecting to the massive increase in the penalty charge and threatened the ombudsman. They offered to reduce it to £195. I wrote again, still threatening the ombudsman so they dropped it to £140. I decided that was fair enough and accepted.

As others have said, you may need to write a couple of times and make sure you keep all replies - they conveniently "forgot" about the agreement to reduce the charge to £140 I actually moved mortgages so then I had to chase up a refund!

Good luck - there are some sample letters to A&L on the web - I'm afraid I no longer have the link but you could try google.

pdm_2 · 10 October 2005 at 12:55PM

Cheers eml - I'll have a scout about for a sample letter - would be good as I'm not the most articulate person

Alliance & Leicester "administration" (!?!) charges

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