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

raeble

I wouldn't have thought so. If you are moving soon, you'll have to pay the fee though and then attempt to get part of it back.

I haven't contacted them as yet. I was looking at changing the rate of my mortgage as it has gone onto the standard rate. There is a fee to do this £75 with abbey and their tracker rate isn't that good base rate plus 1.49%. But as my mortgage is under 30k it isn't looking like it is going to be worth my while to move elsewhere.

teb_2

My sister has just paid off her A&L mortgage last month. It said on her paperwork the redemption fee was £195 and that's what they charged her.

MarkyMarkD

teb - A&L charge £195 if the mortgage balance is below a certain amount (£10k IIRC); otherwise it's £295.

raebel - I believe that you can get rates better than that without switching fees and with free legals & valuation, as long as your mortgage is over £25k. You should check a bit harder before deciding to stay with Abbey IMHO.

Jay1b

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'm quite sure you just havent read the small print, or even the large print in this case.... Perhaps that would be a good idea in future?

MarkyMarkD

pdm

I think they probably told you that there were no PENALTIES if you left after the end of the discounted period. Charges and penalties are different things.

The administration charge would definitely have been included in your illustration, and the APR calculation, at its rate at the time your mortgage started. If it was two years ago from now, that amount was already at least £195 and might even have already been £295.

The charge was also on each annual mortgage statement you've received.

marlot

From the FSA website this morning:

Mortgage Exit Administration Fees ("MEAFs") - an update
Briefing Note BN021/06
15 June 2006

The Financial Services Authority announced in September 2005 that it was looking into the issue of recent increases to MEAFs as some people had argued that these increases were unfair.

Since then the FSA has been discussing with mortgage lenders how they can vary these fees in a way that is fair for consumers. This Statement sets out what work the FSA has carried out since then and outlines the work it will be doing in the coming period.

When consumers pay off their mortgages or switch their mortgages to another lender, lenders often charge a MEAF. These fees cover costs such as changing the registration of the property at the Land Registry. Like many other fees and charges for financial services, in most mortgage contracts firms state that they can change these fees over time rather than keep them fixed over the whole life of the contract.

The FSA does not set prices for financial products and firms can often vary the amount they charge for services, such as mortgage administration. However, a variation clause which gives a firm the power to impose a level of change to the contract (for example, to increase the MEAF) which the consumer has not explicitly agreed to in advance and which does not require the consumer's agreement must comply with the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) and the general law. In the FSA's May 2005 Statement of Good Practice on 'Fairness of terms in consumer contracts' we explained that a variation clause is less likely to be regarded as unfair if the variation can only be made with a 'valid reason' which is specified in the contract. The FSA are of the view that a 'valid reason' may be one which reflects legitimate cost increases associated with providing the particular service, provided that the change is proportionate.
After examining a number of mortgage contracts, the FSA considered that some were not as clear as they could be in explaining which costs would be charged to the consumer at what time or event in the life of the contract (e.g. default, early repayment or exit), and that it was not clear that increases in MEAFs were proportionate to any increases in associated mortgage exit costs incurred.

The FSA has asked some lenders to consider whether their terms might be unfair, and to provide it with evidence of how decisions to increase their MEAFs were taken. The FSA expects to receive responses in the next month or so and it will make a further statement on this issue in the Autumn.

Craig_A

Craig_A wrote:

I'm also with the Abbey and have been looking through my paperwork but I am unable to find any mention of the redemption fee on the paperwork I received at time of taking the mortgage out. The first mention was on a 'tariff of charges' included with my first mortgage statement. I do not ever recall this being mentioned by the broker either, although I never specifically asked as this was my first mortgage and I had no idea. Do I have a case, do you think? I have committed to switching to the Woolwich when my special offer period expires with the Abbey on 18/8/06. Also, does anyone know what rate the Abbey were charging on 18/8/04? It'd be interesting to know that, quite apart from the fact I was never informed of the charge.

Thanks!

Well it's been some time since I did, but I'm glad I saw this thread! I wrote to the Abbey some time ago complaining that I was never told of the redemption charge and offering to pay the fee that was in place at the time (£95) as a sign of goodwill.

Within a couple of days I received a form letter back, as suggested above, stating that the complaint would be looked at. Within a couple of days I received another letter saying that my complaint had been looked at and they were, as suggested above, unable to budge for a variety of nonesense reasons. I then wrote back telling them my thoughts about their comments and, after a short delay, I received a final letter from them today offering me a cheque for a £225 refund!

So thanks to everyone for enthusing me to write a couple of letters and get this huge amount of money back

blondie7

pdm I am in the same position as you and you are right they dont inform you as they never informed me neither I am also going to contest this as it should of been in the mortgage offer according to another building society and it wasnt.

hollie.weimeraner

I have an A&L mortgage which I took out 4 years ago. At the time I paid £75 redemption charges but cannot find A&L's redemption charge quotation on any of the paperwork. I have now written 2 letters to them and had 2 replies. The first reply offered to reduce the fees to £225 and the 2nd letter has now offered to reduce them to £140 which is quite a good result from £295.

I'm tempted to accept this but this still represents almost double the charges of 4 years ago which when you look at it that way is still a massive increase. I have told them I'm willing to pay £100. Anyone think they will agree to this if I send them a 3rd letter? Lisyloo your thoughts would be appreciated as I've basically adapted your letters.

lisyloo

Personally I think they would reduce further especially if you threaten the ombudsman.
Basically it costs them money if you go to the ombudsman (I think it's £350) and all their staff time so they are very unlikely to want to let it go that far.
It depends how far you want to push it and how much time and effort you want to put in.

However there is a note of caution to add - read this article.

http://www.thisismoney.co.uk/news/columnists/article.html?in_article_id=409699&in_page_id=19&in_author_id=6

I'm not saying that you should be intimidated by this, but note that A&L could decide not to do business with you in the future if they think you are too much hassle as a customer.

I think this is certainly "bully boy tactics" and I wouldn't let it deter me, but it still has to be your decision because there may be consequences.