View more on these topics

Boulger calls for end to redemption confusion

John Charcol senior technical director Ray Boulger says lenders should only call redemption penalties exit fees in their literature to avoid confusing consumers.

His call comes as the FSA is set to rule on whether lenders unfairly increase their fees during the term of a contract.

Boulger says: “The FSA’s requirements could be met by lenders dropping the pretence that their exit fees reflect the cost of redeeming a mortgage and giving the fee a different name, say, exit fee, instead of, say, redemption administration fee, provided they stated clearly how much it was and stuck to this.”

“There would be no problem with a high exit fee if, overall, the deal offered good value. Just as arrangement fees vary from nil upwards, exit fees could also vary. For example, an interest rate below the cost of funds subsidised by a transparent high exit fee instead of a high arrangement fee might appeal to some borrowers.

“It is difficult to believe lenders’ costs on redemption have increased substantially over the same timeframe, especially as they no longer need to physically hold property deeds, which will have reduced costs.”

Recommended

HBOS is set to follow Rock with FTB deal

The UK’s biggest lender says it is interested in replicating the product but is not comm-itting to any timescale for launch and has not finalised under which brand it would be offered. Brokers stress that when-ever the HBOS offering is launched, it may force rates down due to the increased competition. Together has been a […]

M&G inflows up 78% in first nine months

M&G has taken in more net new money in the first three quarters of the year than in the whole of 2005, which was a record-breaking sales year for the firm. Gross fund inflows in the first nine months are up 78 per cent, hitting £9.98bn, compared with £5.6bn over the same period last year […]

Axa buys Thinc Destini for £100m

Axa UK has confirmed it will acquire the whole of the Thinc Destini business for £100m.The deal, as first revealed by Money Marketing in July, was confirmed this morning. It sees Axa’s formal offer to shareholders for £70m based on financial performance of the business during 2009. Axa has agreed another £30m to refinance Thinc […]

Paymentshield reassures intermediaries over MPPI advice

Paymentshield is warning intermediaries to apply due care with MPPI products following the latest reviews of PPI.The provider insists that the same rules must apply when dealing with mortgage-related products as do standard loan repayment insurance. The recent results of OFT and FSA investigations into PPI propose to refer the PPI market, including MPPI, to […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment