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Moneynet.co.uk issues fee warning

17 March 2007

With the Financial Services Authority deadline to reform exit fee strategies having expired, Moneynet.co.uk indicated that lenders would be looking for other ways to make up the shortfall.

Richard Brown, chief executive of Moneynet.co.uk, said: “Much has been made of lenders having to reduce their exit fees – now they will be looking at other ways to make up the shortfall.

“As this lucrative revenue stream dries up to a trickle and sizeable sums are handed out in refunds to former customers, I believe that we will see an increase in arrangement fees being charged at the outset and that more lenders will adopt dual pricing policies.”

Hugh Nichols, partner at Badbury Berkeley Financial Services, added: “Lenders seem to be dropping their product rates, but increasing the fees attached to them. How is this treating customers fairly?”

Moneynet.co.uk indicated that Alliance & Leicester (A&L) had a large arrangement fee of £1,499 attached to some of its fixed rate. However, Sally Lauder, senior press manager at A&L, said: “Our range is simple, straightforward and offers choice to borrowers. Some may wish to opt for higher upfront fees but enjoy a leading headline rate, while others may prefer to take advantage of minimal fees but pay a slightly higher rate – it’s down to their individual needs. Borrowers who aren’t confident should consider seeking professional advice.”