Fees fees fees - borrowers suffer most

You probably knew it, or suspected it, already, but research has confirmed that the financial product that has more fees attached to it than any other is the mortgage.

In spite of the supposed clampdown by the Financial Services Authority on exit fees, lenders simply rename a fee that has been frowned upon, and in this case, they are renaming it a ‘core fee’.

Borrowers face the most swingeing off fees for the most straightforward administrative tasks. For example, simply asking for a copy of their title documents can result in a charge of £40. Requesting a change in repayment method can cost a charge of up to £75.

Just this week Cheltenham & Gloucester, having scrapped its £225 exit fee, has announced the introduction of a £99 up-front fee for mortgage applications.

Credit card holders suffer too. The Office of Fair Trading (OFT) imposed a £12 cap on penalty fees, but that hasn’t stopped providers bombarding card users with fees. There may be no fee that exceeds £12, but the number of different charges has gone up from 17 to 19 in the last 12 months.

Personal loan customers now face up to 11 different charge types, ranging from early settlement penalties to late payment fees. These can be up to £30, and an unpaid direct debit or returned cheque can cost up to £35 each.

People with savings accounts get off lightly with only four different types of penalty. Anyone with a current account has seen the number of charges actually reduce in the last year, but don’t get too excited – the number has gone down from 29 to 27! Fees on current accounts can be as high as £35 for a single “offence”.

The OFT is seeking a High Court judgment on the legality of such fees.