ERCs- Early Repayment Charges - early exit fees. (merged).

malchish

My posts generate so much personal attention from the IFA poster, it is more intense than a personal relationship I see... :beer:
How bothered you must be about my posts so you spend so much time dissecting them... Mortgage exit fees already fell (off), now the time for ERC!!!

:money:Consumers! The information I want to carry through the resistance of paid posters: ERC are not always fair, and not always reasonable,
Do complain, ask for ERC to be refunded or not paid,
they (lender) will fob you off, take their final response (do not wait beyond 8 weeks!, if they are late, they are late) , then take a good legal advice from a solicitor registered with Law Society, they will draft you the letter to the Ombudsman (if you have no money and no legal aid either - Citizen Advice Bureau will help), send off by recorded delivery, and on the advice of your solicitor start legal proceedings, if he finds your case to be more than 50% strong.
If the solicitor says that the case has no prospect, pay ERC and think you have been mugged on the street -forget it.
The lender will settle every good case. They cannot afford any case to go to a court room - for a fear that all ERC will be deemed unfair contract terms!!!!! :rotfl::T

malchish

From Ombudsman:

unusual or onerous terms

There is a legal rule that a term which is particularly unusual or onerous – and would not be generally known to the customer – is only binding on the customer if the firm has brought it fairly and reasonably to their attention before the contract is made.
We often need to consider this rule in the context of early repayment charges on mortgages. But it also applies to any unusual or onerous contract terms, including those in business banking contracts.
unfair contract terms


FOS also never published any case where they did NOT upheld complaint ERC. So if YOU know about such case, please you provide evidence!
FOS says that this will be ultimately decided by court whether ERC represent an unfair term of contract. Unfair term is the one the consumer is not in a position to negotiate. Ever tried to negotiate with a lender about mortgage terms? Take it or leave it, contract heavily weighted in favour of lender.
~

MarkyMarkD

ERCs are not "unusual". They apply to almost all discounted or fixed rate mortgage products.

Nor is it true that they "would not be generally known to the customer". Since mortgage regulation, they are set out in a standard way, in the (not particularly long) Key Facts Illustration document.

FOS will not rule that an ERC which is correctly disclosed, in the way the FSA demand, in a KFI, is "unusual".

As to "particularly onerous", a 3% (typical) ERC is not onerous compared to the risk to the lender presented by early repayment of a (say) 2, 3, or 5 year mortgage which the lender has hedged out at (say) 5%. When rates fell to 0.5%, lenders whose customers redeemed early suffered losses of up to 4.5% for each remaining year of the mortgage - which could have been 18% if there were 4 years left. And the customer typically paid just 3%.

That's not onerous on the customer, let alone "particularly onerous".

A case will only be "ultimately decided by court" if a complainant chooses to take it to court. Just because nobody appears to have done so doesn't mean, as you insinuate, that all such cases have been settled out of court by the lender. Maybe, just maybe, no customer has bothered to take such a case to court, because they've all already tried the (free to them) FOS route and had their complaint kicked out?

I know that you won't listen to any common sense, malchish, so go ahead - go to court and try to reclaim your ERC. Or are you so bitter about it because you've already tried and failed to do so?

dunstonh

FOS also never published any case where they did NOT upheld complaint ERC. So if YOU know about such case, please you provide evidence!

FOS have published cases where they have not upheld complaints about the ERC. Indeed, its harder to find any where they have upheld them and as already said, those ones were down to where the ERC was not disclosed on the contract correctly.

FOS says that this will be ultimately decided by court whether ERC represent an unfair term of contract.

That is correct and a court has never made any decision on that front as they have not been asked to.

My posts generate so much personal attention from the IFA poster, it is more intense than a personal relationship I see... :beer:
How bothered you must be about my posts so you spend so much time dissecting them... Mortgage exit fees already fell (off), now the time for ERC!!!

I'm not bothered at all. You clearly lack knowledge and understanding as everyone can see in your posts. You come across as someone that reads the daily mail and thinks they are an expert. You are a bit of joke to be honest.

podgeylad

Im no expert on this but ive got a question, what is all the money these banks lend to people backed by? gold?,
No its made out of thin air, and all us sheep have to work our balls off all our lives while the elite are playing golf. makes me sick

malchish

[
ERC is an onerous term.
To prove that it is not, a lender has to present the breakdown cost.

My lender settled with me half-way to Ombudsman decision, full sum - my solicitor was very good. He also told me that other claims have been successful.
So, lenders DO SETTLE. And stop your scare tactics.
". Just because nobody appears to have done so doesn't mean, as you insinuate, that all such cases have been settled out of court by the lender. Maybe, just maybe, no customer has bothered to take such a case to court, " -

because lenders paid up, exactly. Remember, there are people with enough money to afford legal action against a greedy lender.
And I am not bitter, it is you who is bitter - look how desperately you try to sow pessimism! Stop. It is obvious that it is expensive to take your case to court - but it is far more expensive for the lender to have the court day, because if they lose- this is end of their unfair profits. They are disgusting - look SVR are 4% above Bank of England! Nobody would want to defend them unless they are one of them!
And leave my posts alone. I will help consumers who want to repeat my successful experience, and I will stop scarecrows from persuading people that they have no recourse against this daylight robbery.

malchish

. "You are a bit of joke".[/QUOTE] dunstonh is so concerned that my posts may encourage some other consumers to stand up for justice, so he resorts to personal abuse

Just to quote this as evidence of your personal attack - this is a usual tactic of forum trolls. You are a paid poster who sits there all day to fob off any experience consumers waht to pass onto each other.
Unless court case shows ERC as fair, you cannot state that they are fair. End of story. They are unfair from a consumer point of view, very very often. A contract which can not be negotiated individually by both parties very often contains draconian terms.
#
Stop your disgusting personal attacks. If you have nothing to help consumers- just disappear. If I am a joke- you are a conman under cover.

chryami

Has not the European consumer credit directive been transposed into national law in the UK? Member States were supposed to comply with it by the 11th of June 2010.
Article 16 says:
"The consumer shall be entitled at any time to discharge fully or partially his obligations under a credit agreement. In such cases, he shall be entitled to a reduction in the total cost of the credit, such reduction consisting of the interest and the costs for the remaining duration of the contract.
2. In the event of early repayment of credit the creditor shall be entitled to fair and objectively justified compensation for possible costs directly linked to early repayment of credit provided that the early repayment falls within a period for which the borrowing rate is fixed.
Such compensation may not exceed 1 % of the amount of credit repaid early, if the period of time between the early repayment and the agreed termination of the credit agreement exceeds one year. If the period does not exceed one year, the compensation may not exceed 0,5 % of the amount of credit repaid early."
Thus any early repayment charges above 1% of the amount of early repayment should normally be illegal.

dunstonh

chryami wrote: »

Has not the European consumer credit directive been transposed into national law in the UK? Member States were supposed to comply with it by the 11th of June 2010.
Article 16 says:
"The consumer shall be entitled at any time to discharge fully or partially his obligations under a credit agreement. In such cases, he shall be entitled to a reduction in the total cost of the credit, such reduction consisting of the interest and the costs for the remaining duration of the contract.
2. In the event of early repayment of credit the creditor shall be entitled to fair and objectively justified compensation for possible costs directly linked to early repayment of credit provided that the early repayment falls within a period for which the borrowing rate is fixed.
Such compensation may not exceed 1 % of the amount of credit repaid early, if the period of time between the early repayment and the agreed termination of the credit agreement exceeds one year. If the period does not exceed one year, the compensation may not exceed 0,5 % of the amount of credit repaid early."
Thus any early repayment charges above 1% of the amount of early repayment should normally be illegal.

What has that got to do with an ERC? Thats in relation to the interest calculation (which mainly applies to loans that front load interest).

MarkyMarkD

My understanding is that first charge mortgages are exempt from that legislation.

For all the reasons previously explained by Dunstonh, the restriction of ERCs for mortgages to 1% or 0.5% of balance is unreasonable and would only result, over time, in the non-availability of attractive fixed or discounted rate mortgages.

Lenders are not simply going to absorb the reduction in profitability resulting from an imposed reduction in maximum ERCs. ERCs also help lenders by tending to reduce to a small level the percentage of customers who redeem early or make substantial overpayments, both of which upset the economic case for making the original loan.

Retrospective legislation on ERCs is, like any retrospective legislation, unfair and simply involves a transfer of money from lenders to borrowers - which whilst it might make borrowers happy, isn't just.