The United Kingdoms Financial Services Watchdog has ordered the Finance Industry to refund to clients upwards of £300m in over paid Home Loan redemption charges. And no one saw this coming?
If you ask most experts, they estimate the eventual cost of the whole exercise being around £300 ($550m) and couldn’t happen soon enough. Part of the problem lies with potential conflict of interest scenarios whereby the conveyancing quite often is carried out by the Finance Houses own appointed “Panel Solicitor” who is unlikely to question too deeply any of the Finance Houses 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 or Paralegal to work for you in transactional cases like these.
To put it simply, the problem is as follows. At the outset of any agreed Home 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 usually conspicuous by their low profile when you embark upon this process from the outset and usually only come out into the open when you are “hooked onto their line.”
Anyway to get back to the point, these charges cover a great many issues and one of which is the cost of redeeming the Home Loan 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 issue at stake here is that if the Lenders have tried to raise the early settlement figures beyond the previously agreed levels then you should complain to the Financial Ombudsman.
The considered opinion upon finding out that you may have been charged one of these fees is to immediately check your paperwork (as if you hadn’t done that already) and see what the charges listed are. If they are demanding more then contact your lender to complain. If they refuse or give you some sort of lousy explanation that we all know smells then complain and threaten them with the Ombudsman. This usually is enough to get them to cough up the money as at the end of the day none of our glorious financial institutions likes the bad publicity of being dragged through the Courts and also the papers!
The chances are at the outset that if they have not cooperated or are reluctant to review their procedures then the first offer of compensation will be derisory and so refuse it. I have a client who has just settled a matter with the UK’s largest Home Loan 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!
Be very careful about any document you sign and make sure that any advice received is only from those Professionals qualifies to give it. I know this might sound very basic advice and something that should be considered very much as a given but you would be surprised by peoples actions. A week never goes by in this business that some case doesn’t arrive on my desk that leaves me with the unanswered question of “who gave this advice in the first place?”
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Scott writes on Financial matters for
Debt Consolidation Services
and also for it's sister site
Personal Bankruptcy. Commenting on how these can also have side effects, he
also contributes regularly to
High Blood Pressure
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