It’s not modest, it’s huge, as well as being the thin edge of the wedge. It’s also difficult not to consider it as profiteering.
Steve Aldous, general manager of Skipton, defended the fee by comparing it with even higher charges imposed by other lenders. But as they invariably relate to products that offer additional benefits such as being linked to the base rate, this doesn’t wash.
Regardless of how it positions the fee, the truth is that Skipton is taking advantage of the prevailing market turmoil to seize more cash.
This isn’t necessarily wrong – making profits is what lenders are about. But let’s call it what it is – if it looks, walks and smells like an elephant, it is an elephant and it’s in the room.
Skipton is taking a calculated risk. Enterprising competitors could make a virtue of the fact that their SVRs don’t come with sky-high extra costs. This is a strategy NatWest has tried with its telephony model linked directly to branches.
But I doubt the risk is that great. Given the speed with which lenders have increased fees over the past 18 months, the majority will see Skipton’s move as the ideal opportunity to get onboard the gravy train.
Presumably this was one of the comfort factors taken into account by Skipton’ board when endorsing its pricing strategy.
Aldous’ claim that the fee will stop its SVR product being used as a stopgap is fatuous. It won’t stop this practice any more than Home Information Packs have stopped gazumping or speeded up the property transfer process – it’ll just make it more punitive andprofitable, rather like HIPs.
The most disappointing part is that the decision flies in the face of everything being done to ease the burden of debt facing consumers and to make it easier for first-time buyers to make their first steps onto the property ladder.
The arrangement fee might be great for Skipton’s profits but what about its reputation?