Overdue Refunds Now Provided by Banks

By: Stephen Morgan

In the UK, Banks have been ordered by the financial watchdog, the Financial Services Agency (FSA) to refund Mortgage Exit Fees to clients they have overcharged when they redeemed a Mortgage. This is of major significance to those involved within the areas of Debt Management, Debt Settlement and Bankruptcy in general as these figures could be quite substantial overall.

Long overdue, this affair could cost in excess of ?300 million at the end of the day. Part of the problem lies with potential conflict of interest scenarios whereby the conveyancing quite often is carried out by the Banks own appointed "Panel Solicitor" who are unlikely to question too deeply any of the banks own imposed charges. The Lawyers don't want to offend the Lending Institution by questioning the validity of the charges as they don't want to be removed form the Lenders Panel of approved Solicitors - it's an incestuous business and if you can always try and get an independent Lawyer to work for you in transactional cases like these.

Simply put, this situation arises from the following. At the outset of any agreed Mortgage or Loan there is always the fine print that entails what additional charges there are that need to be settled in the event of early settlement. It's funny this (actually it's tragic but that is another issue) but these issues are very rarely to be seen when they are busy trying to prostitute themselves into trying to get you to do a deal with them in the first place.

Anyway to get back to the point, these charges cover a great many issues and one of which is the cost of redeeming the mortgage and the paperwork cost. This last fact is quite ludicrous as if they haven't made enough out of you during the term of the deal but that is another issue. The bottom line is that your lender shouldn't make alterations to your agreed amounts without your prior acceptance of these changes. They make changes and think that they can get away with it but if you find out that this has happened to you without your knowledge then complain loudly to anyone who will listen, preferably the Financial Services Watchdog!

If you have been charged an exit fee to get out of a deal then the first thing to do is to check your paperwork in the original contract and see what they say they would charge. If they are insisting on more and have dreamed up some spurious excuse for this and you don't agree then threaten them with the Watchdog and don't take this lying down! If they refuse or give you some sort of lousy explanation that we all know smells then complain and threaten them with the Ombudsman. Very few Financial Services Managers want the world to find out exactly how they treat their customers. We all know how they do but the last thing they want is the media to find out and by default even more people - it's bad for business!

The other thing to remember in all of these matters is very rarely accept their first offer of compensation. I have a client who has just settled a matter with the UK's largest Mortgage lender (you know who you are) over a dispute over interest charges and they initially offered him a derisory ?25 compensation figure and when the agreement was finally settled it end up at ?379!

The lesson to be learnt from the entire exercise is? Make sure that you or your appointed representative is thorough about their pre signature checks and if the lenders think they can try and slip something past you without your attention? The sooner that you disabuse them of this notion, the better for you and for some of the other silent borrowers that these institutions have either "ripped off" over the years or are trying to rip off now! Howl and complain as loud as you can!

Banking
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