Financial institutions overcharging in contract fees
Financial planners would do well to advise their clients to challenge exorbitant break fees on mortgages, a specialist lawyer has warned.
Financial Redress, a Perth-based law firm specialising in recovering compensation from financial institutions for excessive charges or mis-selling, has reported an uptick in claims of unfair charging in recent months.
Managing director James Middleweek said financial institutions are making very substantial profits in fees and charges on mortgages, banking transactions and credit cards, with many customers paying in the tens of thousands.
Middleweek said banks are overcharging, with break fees having “an air of penalty” about them and also noted the often poor disclosure on break fee terms.
If, for example, a client wished to move from a fixed to a variable rate in their mortgage plan, they could be charged a “massively exorbitant” penalty, Middleweek said.
“Penalty fees are a consumer issue and financial planners should be telling their clients, I believe, that they’re challengeable,” Middleweek said, noting financial institutions were often charging “radical rates” and that fees could vary from week-to-week.
“People need to understand just how banks calculate these terms.”
He added that unfair contract terms laws soon to be enacted will enable consumers to challenge these terms.
In terms of successful recovery of clients’ money, Middleweek said some banks are “being more progressive and reasonable than others”.
Financial Redress will also be casting its eye over the insurance sector in the near future.
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