Mortgage arrear fees excessive

MarkLawrence

We are coming to the end (one monthly payment left) of paying off our mortgage and have about £3000 in fees owed. Most of them are £40 arears admin fees for suposed work by them when I was unable to pay the monthly.ammount fortunately the arrears are now paid. These fees seem extemely excessive considering the 2010 ruling stated that they must only charge how much it cost them to deal with the arrears. I can imagine that if the process is not already automated that there is very little in the way of admin. For an adverage person £40 would be over 3 hours work.. How can they justify this? For me it is only adding one line to a database or spreadsheet which would take 5 minutes at most. I have lodged an SAR under GDPR to find out exactly what they do or if indeed it is automated. I have an open complaint with my mortgage company over the fees that they have officially closed. Can the mortgage company try to reposess the house to optain the fees? If so would taking the complaint to the Finanical Obiudsman stop them taking us to court? I think that a precident should be made that it is 10 years later from the original ruling. that with advances in IT £40 is too much. Is it case of rip of Britain?

[Deleted User]

How much did that database or spreadsheet cost to make? IT contractors for large multinational companies may be charging hundreds and hundreds of pounds a day.
What about the lawyers to draft the conditions for when people go in to arrears?

Sending a letter automatically and dealing with unpaid direct debits probably cost a few quid. Developing the system to allow them to do it easily and automatically probably cost millions. This cost is passed on and recovered through the fees.


What would be a more reasonable cost to you?

ACG

Having worked for a bank (admittedly we are talking about 10 years ago now) you have people whose job is to pick up on late payments and find out what is happening, is it a one off, is it likely to continue, does some sort of agreement need to be made or a payment plan? I assume you had to fill out an income and expenditure form?

There will be regulatory forms and paperwork to fill in. There will be internal paperwork to fill in - so that they can defend a complaint as lets face it, they are dealing with the rough end of the whole home ownership side of things (mortgage brokers typically get the nice end by comparison).

They dont just open a spreadsheet and put Mr Mark Lawrence - late.

How many times were you late? How many months in arrears did you go in to? Were you just paying late each month or were you missing payments and going 2-3 months in arrears? (I do not need an answer to that btw), but the work carried out is more the more you get in to arrears.

In fairness, banks cant win. They automate it and people complain that it is like dealing with a robot. They keep the human touch and they complain the charges are excessive.

They are a bank, they have hundreds of complaints going to the ombudsman every year. Threatening them with that is not going to get you far - I used to work in complaints and we would hear it a few times a day, we just had to carry on doing our job as normal. You cant really be seen to be doing something UNLESS it goes to the ombudsman - that is not TCF.

I am not here to justify their fees, it makes no odds to me whether it is right or wrong, but I think you need to understand there is more work involved than what you think. You know your mortgage inside out, the person at the bank needs to make it clear for the next person who picks up your case what is happening.

csgohan4

MarkLawrence wrote: »

We are coming to the end (one monthly payment left) of paying off our mortgage and have about £3000 in fees owed. Most of them are £40 arears admin fees for suposed work by them when I was unable to pay the monthly.ammount fortunately the arrears are now paid. These fees seem extemely excessive considering the 2010 ruling stated that they must only charge how much it cost them to deal with the arrears. I can imagine that if the process is not already automated that there is very little in the way of admin. For an adverage person £40 would be over 3 hours work.. How can they justify this? For me it is only adding one line to a database or spreadsheet which would take 5 minutes at most. I have lodged an SAR under GDPR to find out exactly what they do or if indeed it is automated. I have an open complaint with my mortgage company over the fees that they have officially closed. Can the mortgage company try to reposess the house to optain the fees? If so would taking the complaint to the Finanical Obiudsman stop them taking us to court? I think that a precident should be made that it is 10 years later from the original ruling. that with advances in IT £40 is too much. Is it case of rip of Britain?

Is there anything regarding late fees in your T+C in your mortgage?

Ultimately it's not their fault you didn't pay your mortgage on time. 40 pounds seems reasonable and certainly not extortionate.

Alot of car insurers charge that amount just to change your details.

You can certainly continue with your complaint, but ultimately it stemmed from your own issues.

As above it is more than just an automated system. Are you well versed in using their IT system, training, complaince checks, mandatory training, qualifications?

It's not like entering a barcode at the local checkout supermarket is it?

MarkLawrence

Thank you for your coments. I did not realise that the admin fees were there to subsidise Mortgage lenders software,IT systems and training. They have already paid for this system; that is the cost of running a mortgage lending company NOT an additional cost because I have not paid on time. I have a SAR in to find exaclty what they do and how much automation is involved. There may be less involvement than entering a barcode at a supermarket. I work in IT and we are automating systems all of the time. I was charged £40 for being £25 short of the monthly mortgage charge? Do you think that is fair? As regards solicitor fees they charge for those separately. I should know it is on my bill. I understand and accept that there should be a penalty for not paying on time but it should be more like £25 rather than £40. I am self employed and cash flow is always difficult. I do however pay the money back when I am able to. I will take your advice and take the complaint further to the Financial Obudsman as you say that are alot of complaints. Hopefully a precident will be set as to what is a fair fee for 2020 is and we will all should be able to reclaim these charges aka the PPI scandal. There was a ruling in 2010 that they should be only aquiring costs from fees and I will make sure that they only do that.

phillw

MarkLawrence wrote: »

Thank you for your coments. I did not realise that the admin fees were there to subsidise Mortgage lenders software,IT systems and training. They have already paid for this system;

Maybe they borrowed the money to pay for the IT system and are still paying it back? Maybe they have employee turnover which requires new training? I don't know if it's considered fair to make the people in arrears pay towards that part of their company (which will also have rent etc), or whether the people who aren't in arrears are supposed to subsidise it for you.

You might get somewhere with the financial ombudsman.

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/mortgages/mortgage-arrears-charges

You don't say how much of the £3000 is £40 arrears fees, but you said most which puts it between 3 and 6 years. Did you explain to your lender your situation? How did they respond?

I think that is more interesting than whether £40 is too much or not.

ACG

Forget the IT side of things or even training staff. The OP is right, those charges are not allowed to subsidise the running of the bank.

You ask if a £40 fee is fair for £25 shortfall. The same work is involved if you are £2 short of £200 short on your monthly repayments in the first month or 2.

I am not for or against the bank on this issue, I left the bank because I did not agree with their sales practices for PPI which you mention, but I do still do think that there is more work involved than you seem to think. You say you work in IT, you must realise that there are certain jobs that either can not be automated or are not cost effective to automate - especially if the customer is paying for it.

I think if you ever get explained what is involved you would be surprised. We work in one of the most heavily regulated industries, there are so many rules and regulations which need to be followed.

Also I did not say you should proceed with the complaint, I said Threatening them that you will go to the ombudsman is unlikely to get you anywhere.

ec9wrr

£40 seems fair to me and I feel would be covering the cost.
I wouldn’t hold out much hope on your complaint. At all.
If you didn’t think it was fair maybe a zero interest credit card / adjusting your spending / using savings / borrowing elsewhere on a lower rate would have been more appropriate.

davidmcn

The fee presumably also covers any related correspondence or phone calls, monitoring the account until it's out of arrears, etc. It's not unreasonable for there to be a flat fee irrespective of whether you immediately settle the arrears or it involves half an hour talking to you on the phone about it.

You also appear to be confusing "employee's salary" with "the costs of employing that person", let alone "the overall costs of running the arrears department".

Thrugelmir

Cost of employing someone is far greater than their hourly pay rate alone. People take holidays and are off sick. Receive a pension. The employer also has to pay national insurance. Then there’s the overheads. Rent,rates, insurance, telephone, equipment, etc etc. On top of which people have supervisors and managers.

norsefox

As a general rule of thumb, 30% on top of salary needed to just cover a company’s costs, never mind overhead etc.

And that’s for those paid at near the NLW. Those paid more will be far north of 30% extra in employment costs.