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UK consumers could make claims for unfair mortgage charges

A recent investigation carried out into unfair charges levied by mortgage companies when consumers close their mortgages has resulted in many consumers in the UK being able to claim up to £220 each for unfair charges that were applied them by mortgage companies. 

Millions of consumers in the UK could be entitled to the refund, after the FSA determined that the charges were unfair and unjustified.

The fees charged by these mortgage companies when a customer closes the mortgage account is referred to as a redemption administration fee, and can vary from on mortgage company to another.

However, the Financial Services Authority intends to tackle the issue because many of these mortgage companies are charging up to several hundred pounds when the costs incurred by the company are actually only around £50, which means that the charges that they make are unjustified and unfair.

Further to the investigation carried out by the Financial Services Authority, many mortgage companies may be forced to cut their fees. Over the past couple of years the fees charged for mortgage closures by these mortgage companies have rocketed, and some have added over £100 to the fee in the last year or two, taking some of these redemption administration fees to several hundred pounds.

These companies may also be forced to repay fees and compensation to a large number of consumers who have already been charged unfairly.

According to reports a number of complaints have been made in the past by consumer groups in relation to these rising fees, but no action has been taken until now. This is one in a long line of band and card related charges that have come under close scrutiny from the Financial Services Authority.

Tom Smith
12th March 2007


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