Mortgage Exit Fees successes and failures

dunstonh

Hundreds of people on here have been charged MEAF's when they did not agree to such a charge, and others have been charged an amount in excess of what they agreed to.

All of whom are entitled to get the money back (or the difference).

They are anti-competitive

No they are not because the ruling ensures that you only pay what you were told you would pay when you chose that deal. Therefore you cost it in to the cost of the deal. So, you may have one deal with £750 arrangement charge and £100 exit charge and another with £100 arrangement charge and £250 exit charge and so on.

If I pay £10 to go and see a movie at a cinema, I do not expect to be faced with a further levy of another £10 in order to get out of there.

Yes. but if you knew that you had an exit charge in advance of buying the tickets you would be able to make an informed choice. This is exactly what the FSA ruling insisted on.

Steve_xx

dunstonh wrote: »

All of whom are entitled to get the money back (or the difference).

The people who were charged when they did not agree to it shouldn't have to ask for their money back because it ought not to have been levied in the first place. The people who were charged in excess of what they agreed ought not to have to reclaim the excess because that too should not have been levied in the first place.

How is it that these banks are levying charges on people when they are not due? Do the banks not look at the contract when they wind mortgage up? Or, do they assume that everyone will pay a MEAF? Or is it the case that they're trying to pull a fast one in the hope that people will not examine their documentation too closely?

dunstonh

The people who were charged when they did not agree to it shouldn't have to ask for their money back because it ought not to have been levied in the first place.

I agree with you there. It shouldnt require requests.

How is it that these banks are levying charges on people when they are not due? Do the banks not look at the contract when they wind mortgage up? Or, do they assume that everyone will pay a MEAF?

Since the FSA ruling, they have charged what the original fee was at the point of the last deal purchased. Before that they saw it as a fee that they could increase over time and thats why it fell foul of the FSA.

Steve_xx

dunstonh wrote: »

Since the FSA ruling, they have charged what the original fee was at the point of the last deal purchased. Before that they saw it as a fee that they could increase over time and thats why it fell foul of the FSA.

So I agree to pay a MEAF at the start of the term of £100. When I get to the end of it I find that it has increased to £300. Of course, that is grossly unfair.

Even worse, I agreed to pay nothing at the start, yet the lender levies a £300 charge at the end of it for no other reason than they thought they'd try it on. In reality, that constitutes a theft.

MarkyMarkD

You are going over old ground, steve_xx.

The reason that you have to ask for a refund is that the lender does not necessarily know where you live. A large proportion of people redeeming mortgages have moved house and they don't tell their old lender their forwarding address. The FSA agreed with the lenders that it was impractical to send out refunds to unverified and probably incorrect addresses. That is why reclaiming is required.

As Dunstonh says, they only charged the "wrong" amount before the ruling was issued. Nobody after the date of the ruling should be overcharged. That is why claiming NOW is wrong - everyone is paying the right amount.

Your similes with cinema tickets do not wash at all. The KFI is required to show the exit fee. It is a clear term of the contract. It is completely stupid and fatuous to claim that a mortgage with a £500 up-front fee and a £250 MEAF is unfair, but an otherwise identical mortgage with a £750 up-front fee and a £0 MEAF is completely fine. The first is actually BETTER for the customer because the MEAF is only payable when they redeem. But you would somehow suggest the customer should choose it on the basis that it's a better overall deal, and then pretend 5 years down the line that the fee is excessive and "claim" it back? Get real.

That is exactly the situation that A&L - for example - were in. Their deals were the best on a true cost basis - even though the MEAF was the highest in the industry at £295. For anyone who chose an A&L deal, when the MEAF was stated up-front as £295, they got a good deal overall. And they didn't have to pay £295 until they redeemed. Win win.

I should declare an interest - I have had an A&L mortgage, and paid them £295. And I knew the MEAF was £295 when I took out the mortgage, and I was happy to pay it as a valid charge. I didn't try to scam them out of the £295 because that would simply have been WRONG. I had the benefit of the mortgage deal and I paid the agreed costs - up front, in interest during the term, and in the exit fee.

And I'm a Santander shareholder and it annoys me that (a) people are still scamming A&L and thereby stealing money from me and other Santander shareholders; and (b) people are still trying to pretend that scamming in this way is somehow OK.

Steve_xx

MarkyMarkD wrote: »

You are going over old ground, steve_xx.

Snap!

The reason that you have to ask for a refund is that the lender does not necessarily know where you live. A large proportion of people redeeming mortgages have moved house and they don't tell their old lender their forwarding address. The FSA agreed with the lenders that it was impractical to send out refunds to unverified and probably incorrect addresses. That is why reclaiming is required.

They'd be happy enough to try and find out where you had moved to if you left them with several months unpaid mortgage I guess.

Also, it is reasonable to assume that not everyone left their bank and so why were customers who stayed loyal not contacted by their bank and offered refunds?

If they were interested in refunding their ex-mortgagees they could make use of the media to do this, ie TV, newspapers. But they didn't, and the reason that they didn't was simply so that they could hang on to the cash.

As Dunstonh says, they only charged the "wrong" amount before the ruling was issued. Nobody after the date of the ruling should be overcharged. That is why claiming NOW is wrong - everyone is paying the right amount.

Some who are claiming now are doing so because they were either overcharged or were levied a charge that ought not to have been there at all.

Your similes with cinema tickets do not wash at all. The KFI is required to show the exit fee. It is a clear term of the contract. It is completely stupid and fatuous to claim that a mortgage with a £500 up-front fee and a £250 MEAF is unfair, but an otherwise identical mortgage with a £750 up-front fee and a £0 MEAF is completely fine. The first is actually BETTER for the customer because the MEAF is only payable when they redeem. But you would somehow suggest the customer should choose it on the basis that it's a better overall deal, and then pretend 5 years down the line that the fee is excessive and "claim" it back? Get real.

The point is that the public in general do not accept the fee as valid. They don't understand what it's for and they feel that they cannot get out of their mortgage without paying it.

That is exactly the situation that A&L - for example - were in. Their deals were the best on a true cost basis - even though the MEAF was the highest in the industry at £295. For anyone who chose an A&L deal, when the MEAF was stated up-front as £295, they got a good deal overall. And they didn't have to pay £295 until they redeemed. Win win.

Some A&L customers were charged £295 when they had agreed a lesser amount.

I should declare an interest - I have had an A&L mortgage, and paid them £295. And I knew the MEAF was £295 when I took out the mortgage, and I was happy to pay it as a valid charge. I didn't try to scam them out of the £295 because that would simply have been WRONG. I had the benefit of the mortgage deal and I paid the agreed costs - up front, in interest during the term, and in the exit fee.

Excellent.

And I'm a Santander shareholder and it annoys me that (a) people are still scamming A&L and thereby stealing money from me and other Santander shareholders; and (b) people are still trying to pretend that scamming in this way is somehow OK.

Look on the bright side, not everyone is claiming back what they are due to. So Santander will get to keep an amount that will probably offset the amount they have had to pay out.

Welshy81

I have today received a cheque from First Active (part of RBS) for £225. After complaining about their MEAF and asking them to justify it I have had success. This is despite the fact that the £225 fee was stated in the contract before we took out the mortgage. So there was no increase in the fee at all but after complaining about the excessive amount of the fee and requesting to see the cost breakdown they refunded the whole amount (I asume because they could not justify it to me).

This has only taken two letters to them and the matter has been dealt with from start to finish in less than two weeks!! I didn't even have to refer the matter to the ombudsman!!

A big thank you to Money saving expert

Once_bitten

This must be the little known "Boo Hoo it's not fair" clause. Sign up to product, take advantage of what's on offer and when it expires turn around and say I don't like it any more and refuse to pay. Sounds fair to me

dunstonh

(I asume because they could not justify it to me).

No. Its easily justifiable as part of a pricing package. Problem is the costs of dealing with you are higher than giving in.

Blackmail seems to pay at the moment. Although this is recognised as a problem and whilst no solution has come yet, it will only be a matter of time.

Steve_xx

dunstonh wrote: »

No. Its easily justifiable as part of a pricing package. Problem is the costs of dealing with you are higher than giving in.

Blackmail seems to pay at the moment. Although this is recognised as a problem and whilst no solution has come yet, it will only be a matter of time.

It isn't blackmail. The bank can say no.