Banks continue to overcharge customers says Assembly Member

1.29.57pm BST (GMT +0100) Tue 7th Aug 2007

Despite a ruling by the Financial Services Authority (FSA) that banks should cease to charge exorbitant mortgage exit fees to their customers some are continuing to find other ways to recoup lost revenue, the Welsh Liberal Democrat Social Justice Spokesperson, Peter Black, has said.

Last January the FSA ruled that it was unfair of banks to slap on exit fees that were higher than the figure stated in the original small print when the mortgage was taken out. Many have responded by simply increasing their other charges to customers in order to make sure that the money continues to roll in.

"Exit fees are charged when customers switch lenders at the end of a deal and the banks have been happily raising them for years," said Mr. Black. "Once they were told to stop abusing this provision many lenders put up their fee for taking out a mortgage; some by up to £1000, which is far more than any exit fee. Some have just scrapped the exit fee and introduced another fee with a different name for exactly the same amount."

"All of this adds to the cost of buying a home and leaves many of those who have a mortgage more vulnerable to rising interest rates. If banks restrict people's ability to shop around for the best deal then quite a few will be left with an unaffordable mortgage package and the possibility of repossession."