Mortgage Setup Fee Reclaim Question

Tooley

I am in the process of reclaiming a mortgage setup/product fee, which was added to my mortgage without my agreement.

In summary, the first time this c£1,000 fee was made known to me in ANY format or communication, was in a 'reprinted' Statement of Facts (SOF) document printed less than 2 minutes before the final documents which arrived with the cheque (the SOF was in a second envelope & previous SOF's received do not detail the fee or make any suggestion of it).

This fee was not made known to me prior to this or even accompanied with and other document to at least say "BTW here's an additional fee we forgot to mention". As such I was not aware of it, did not have the opportunity to agree to it, or pay it upfront (the lender simply added to the borrowings, so I now have compounded interest ontop, which will be substantially more costs over the full mortgage term).

I had previously attempted to recover, but received a letter from the lender saying they found no wrong doing. I have lodged with the Financial Ombudsman (FO) and have a final meeting scheduled with the lender to resolve. If unsatisfactory, I will give them 'formal notice' and pass to the FO.

I understand such fees need to be made clear & upfront, though I would like to be more factually prepared regarding the law/regulation. Can anyone please direct me to a relevant public source for me to read up on etc and subsequently make reference to in my upcoming meeting?

Thanks in advance

dunstonh

I am in the process of reclaiming a mortgage setup/product fee, which was added to my mortgage without my agreement.

Interesting one. Especially when the fee should be on the mortgage KFI document and the offer letter you signed. It would normally appear on the marketing documents as well.

This fee was not made known to me prior to this or even accompanied with and other document to at least say "BTW here's an additional fee we forgot to mention". As such I was not aware of it, did not have the opportunity to agree to it, or pay it upfront (the lender simply added to the borrowings, so I now have compounded interest ontop, which will be substantially more costs over the full mortgage term).

The fact it was added to the mortgage is not an issue. You can pay it off any time. Fees go into sub accounts allowing you to pay them straight away or over a different timescale. With a lot of mortgages, it is best advice to add to mortgage as it can avoid the fee being charged if the mortgage does not proceed. Paying it up front is often non-refundable.

I understand such fees need to be made clear & upfront, though I would like to be more factually prepared regarding the law/regulation.

Since October 2004, all fees need to be on the key features illustration that is provided to you at application (often followed up with another in the post once mortgage accepted). The mortgage KFI is the key document and is laid out to a regulator set standard. If the fee is not mentioned on that then you have a strong reason for complaint. If it is mentioned on there then you would expect rejection. That is the only place is it required to be stated. Although typically the terms of the deal are normally printed on marketing literature at the time. If it was an advised mortgage sale, the mortgage adviser prepared report would also state the charges. If it was non-advised, you dont get that extra level of consumer protection where these things are pointed out.

Technically, it is not possible to go from KFI being issued to money arriving in the same week, let alone same day. There is too much work done in between that does not happen in 24 hours. More typically, 2-4 weeks on the quickest ones.