RHG Home Loans, formerly known as RAMS, is facing consumer action over excessive exit fees and uncompetitive interest rates.
According to The Australian Financial Review, The Consumer Action Law Centre in Victoria has received hundreds of calls from consumers concerned about exit fees.
The Centre has launched a test case against RHG on behalf of Emily Hamilton who faced an exit fee of more than $12,000 when she sought to refinance her low-doc loan.
The case will argue the exit fee is unconscionable as it exceeds the reasonable costs incurred by RHG from the early end to the loan.
Ms Hamilton will also argue that her interest rate was unconscionable after it was advertised the rate would remain competitive. Her rate is 0.99 percentage points higher than when she took out the loan in July 2007 despite the significant reduction since then in the official cash rate.
Spokesperson for RHG Matthew Horan said the case had no merit at all as all fees were fairly disclosed at the time of contract signing.
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