Darling warns banks over arrangement fees on mortgages
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Written by admin on July 16, 2008 – 5:27 pm
The Chancellor of the Exchequer, Alistair Darling, has been warning banks to stop ripping off consumers by charging hefty arrangement fees on mortgages. He also said that he is currently in talks with the UK’s financial regulator, the Financial Services Authority, to determine what sort of loans arrangement fees and charges can be classed as justified. Darling said that he wants customers to be treated fairly by banks, and wants to see banks reduce these arrangement fees, which have rocketed over the past year.
Darling stated: ‘I’m very concerned that people ought to be treated fairly, especially people coming off fixed rates and going onto different rates. We have met the Council of Mortgage Lenders to try to reach an agreement to ensure that people are treated fairly, but if that isn’t happening I will ask the FSA to pursue the matter.’ He went on to state: ‘Everybody accepts there are costs that have to be met when they change over, but I think we have to make sure people are treated fairly and are not taken advantage of.’
The Council of Mortgage Lenders has stated that there are still some mortgage deals available with lower arrangement fees or in some cases no arrangement fees. One official from the CML said: ‘There is still a wide choice between mortgages with lower arrangement fees (and a potentially higher interest rate), and those with higher fees (often with a lower interest rate). What it is important to understand is the overall cost of the mortgage, taking into account both fees and rates - and the key facts document, given to all customers before they apply for a mortgage, provides this.’
