I believe the fixed rate exit fee with my mortgage broker is unfair and I would like to take legal action against them. Can you provide advice on this?

Q.

I have a fixed interest loan and am paying a rate 2.5% higher than the variable loan. I set up this loan for three years based on the interest projections mentioned on the fixed loan rates for five, seven and ten years on the bank website. I consider these as projections as the bank would not lose money if the interest rates were going to go down in these future years. World financial circumstances are now extraordinary and this situation has never happened in the past where the fixed interest rates are more than 3% higher than variable rates. The bank also does not provide exit charges online on its website so that one could exit when they wanted. The loan contract does not take into account these extraordinary circumstances and with no online exit information, the consumer is tied to his back and has nowhere to go unless they pay high exit charges. I have taken the matter to senior management of the bank and FSO but they work together. What are the other government/legal avenues to get out of the fixed loan contract without paying high exit penalties? I view the fixed loan contract a mechanism for banks to make money from helpless customers.

The banking ombudsman is the best avenue if you have complaints about banks, but provided the bank has been reasonable in its calculation of the exit fee you are unlikely to succeed with any claim. Banks will usually offer you an indicative exit fee when you make enquiries about paying the loan out but they reserve the right to change these fees if interest rates change before you terminate the loan.