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Keep exit fee ban in place, says action group

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Australian Broker | 07 Apr 2014, 08:55 AM Agree 0
A consumer advocacy group has recommended maintaining a ban on exit fees and that macroprudential tools are examined to keep the market in check
  • Scott Beattie - Cube Home Loans | 07 Apr 2014, 09:36 AM Agree 0
    Why not this option for client - (as an example) - I haven't done maths on the rates, it's purely an example.....
    Option 1 has no exit fee and the rate is 5.1%
    Option 2 has an exit fee of up to 4 years and the rate is 5%
    Which would you prefer?
    A clawback applies with Option 1 to introducers
    No clawback would apply to Option 2
  • The Sage | 07 Apr 2014, 09:38 AM Agree 0
    So a consumer group that specialise in reviewing whitegoods thinks they are qualified to make comment on the Financial Services industry.

    What is their qualification, experience and expertise in this area.

    Last time I looked, issuing media releases and reviewing products wasn't a qualification for anything, let alone trying to guide a Financial Services review!
  • Albert Waldron | 07 Apr 2014, 09:48 AM Agree 0
    Loan setup costs add to the cost of funds. Exit fees helped recoup those costs when a loan discharged in the first 2 years. The continued banning of exit fees causes direct to Bank branch customers to have to suffer a higher interest rate to spread the loan setup costs across the life of the loan. And gives lenders the excuse to punish brokers for clients who are unhappy with the quality of the lenders service via clawbacks. I thought we lived in a free capitalist country, let the markets and customers decide if they want cheaper interest rates and an exit fee or higher rates and no exit fee.
  • Brisbane Broker | 07 Apr 2014, 09:54 AM Agree 0
    I love reading about solicitors comments and they always accidentally forgot about things that will actually go agents them. Here is one;

    “Everyone agrees they shouldn’t have banned exit fees. The reason the banks have clawback is there’s no exit fees. No-one would need to ‘bash up’ anyone else if there were exit fees,” Denovan said."

    We had exit fees and we had clawback now we do not have exit fee and we still have clawback. Which one is right Jon?
  • Giles | 07 Apr 2014, 10:11 AM Agree 0
    Lenders continue and lawfully charge Exit Fee's on each loan to recoup reasonable costs with terminating the contract. Fees paid to brokers should be included instead of clawbacks. Its mostly the deferred establishment fees that were banned, not exit fees. Deferred establishment fees were a GOOD idea and requested by the consumer. Most lenders used to charge an establishment fee, and the consumer argued that since they are going to be with that lender for many years, that the fee should be waived as long as they remain with that bank for a reasonable time. Unfortunately some smaller lenders charged a ridiculous high deferred establishment fee for up to 5 years, and these smaller lenders wrecked it for us all. There is nothing unreasonable with waiving the upfront fee if the client keeps the loan going for over 3 or 4 years.
  • Steve McClure | 07 Apr 2014, 11:19 AM Agree 0
    If the coalition government is true to their principles of a free market system, they will remove the ban on exit fees. The fee is clear and reasonable for a consumer and it's removal disrupted market forces.
  • Aarong | 07 Apr 2014, 11:40 AM Agree 0
    Funny how choice doesn't realise its place in this arena after its One Big Flop. Go back to telling us which ultra cheap camping tent wears the best....
  • Albert Waldron | 07 Apr 2014, 11:48 AM Agree 0
    Couldn't agree more Steve
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