ASIC conducts study on early exit fees
Approximately 75,000 early termination fees were issued to loan customers between July 1st 2010 and February 15th 2011, according to a new report.
The Australian Securities & Investments Commission (ASIC) has conducted a study to find out how many companies were handing out the charges before they were outlawed in July 2011.
It focused on 20 lenders – including banks, credit unions and non-authorised deposit taking institutions – and discovered that many mortgage holders who were looking to move elsewhere were overcharged by their previous supplier.
The ban on exit fees really did put the power back into home loan customers' hands, as it enabled them to find a more suitable deal without worrying about incurring a sizeable financial penalty.
ASIC also revealed that although less than one per cent of people who were handed an early exit fee made an official complaint, more than half of those who did air their grievances received a refund or had their fee reduced.
"While early termination fees have been prohibited on new loans from July 1st 2011, it is important that lenders comply with the law for old loans on which such fees are still payable," ASIC commissioner Peter Kell said.
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