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ISCOVER
Jessica Darnbrough
The future of exit fees has become a burning political issue but brokers are divided as to whether they should remain.
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According to the latest The Adviser straw poll, 49.3 per cent of brokers feel exit fees should be banned. The remainder believes that they should remain or were undecided.
And it is clear that the lending industry is also at odds when it comes to exit fees. Both NAB and ANZ abolishing their fees last week and the expectations were that others would follow suit
However, Westpac and CBA have since made it abundantly clear that they will not be making changes to their fee structures.
Earlier this week a Westpac spokesperson told The Adviser that the major’s $700 exit fee would remain in place for the foreseeable future.
Westpac’s chief executive Gail Kelly was quick to defend the bank’s decision, stating that the major would be forced to recoup these costs elsewhere if the exit fee was removed.
Ms Kelly went on to say that exit fees ultimately provided customers with greater home loan choice, because they could avoid paying the fee altogether if they remained with the bank.
Citiwide Mortgage Services’ Shane Lalor agreed with Ms Kelly and said removing exit fees would force the banks to push the fees onto borrowers in other ways.
“This could possibly be done with up front charges and will force clients to choose products more carefully,” Mr Lalor said.
“That said, if the broker and client worked effectively to choose the correct product initially there should be no need to change products later on.”
But not all brokers are happy to side with Mr Lalor.
Many feel exit fees should be banned, including Ballast’s Laurence Pace.
Mr Pace said that banning exit fees would give consumers the ability to change lenders when they wish.
“A client is not charged a fee when they swap telecommunication companies, so why should a home loan provider charge a fee?” he said.
“While removing exit fees may ultimately impact a broker’s bottom line, through reduced commission, I still believe a client should have freedom of choice when it comes to their mortgage.”
