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Helping clients through the fees maze

Last month, the exit fees issue came to a head. On February 28, the Financial Services Authority forced lenders to own up to charging too much – as most if not all had been doing – and reduce their fees. It’s thought that this has opened the door for millions of mortgage customers to reclaim fees of between 100 and 200.

Consumer watchdog Which? has wasted no time in advising consumers to make sure they haven’t been overcharged so it’s likely lenders will be swamped with compensation claims.

How many complaints the Financial Om-budsman Service ends up having to handle remains to be seen. And no win, no fee recovery firms can smell the money already. They have already targeted people who feel that their banks’ penalty overdraft charges are too harsh, so the fees issue could prove to be highly lucrative for them.

One such company said it was receiving about 150 inquiries a week about bank charges simply by advertising in one free London newspaper. But if your clients are thinking about using one of these firms they should be aware that nothing comes for free. The companies take 25% of whatever money is awarded. And while exit fees may be on their way out, other mortgage charges might increase as lenders try to recoup the money they have lost. Analysis by moneyexpert.com, an online comparison site, has identified seven types of mortgage fees.

These charges relate to anything from valuations to reinspections, releasing property deeds to solicitors and administration. Average fees vary from 29.90 for transferring funds to bank accounts to 344.59 for surveys.

It estimates that the combined average cost of these fees is 917, not including the application fees levied for fixed rate or discount deals.

Of course, there are still some lenders that won’t charge borrowers but they are few and far between, given the fact that they are all competing for the lowest rate.

All this confusion over hidden charges should play into the hands of brokers. They are in the best position to guide clients through the fees maze.

The chances are that if consumers went into their local high street bank branch for a mortgage they wouldn’t realise that they could have saved hundreds of pounds simply by going next door. Brokers could show them the way.

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