Mortgage exit fees banned
Mortgage exit fees will be banned from 1 July 2011 after the Federal Government passed legislation outlawing the practice.
Exit fees, which are charged to the consumer when they change between lenders, can be anywhere up to $7000.
The Government hopes the law will allow for greater levels of consumer flexibility when choosing between financial institutions. The legislation also grants the Australian Securities and Investment Commission (ASIC) further authority to pursue banks over current mortgage exit fee's deemed 'unfair'. ASIC is also charged with ensuring that banks do not 're-badge' mortgage exit fees.
A number of banks have responded to the legislation by pre-empting the 1 July deadline and abolishing their current exit fee charges according to the Treasurer's website.