More industry experts have criticised the Gillard government’s drafted exit fee ban.
Earlier this week, the government announced it would put a blanket ban on all exit fees under the National Consumer Credit Protection Act.
Mortgage Choice chief executive officer Michael Russell said the government had completely dropped the ball on the legislation and that the blanket ban on exit fees would do more harm than good to competition.
“Forcing the second tier and non-banks to remove their exit fees means they will need to front-end a lot of these fees, which will have a negative impact on their customers,” Mr Russell told The Adviser.
“It is a bit like the fire brigade getting to the scene of the fire after it has already been put out. All that’s left is a smouldering mess.”
Mr Russell said it was unnecessary for the government to target exit fees because ASIC had already released a regulatory guide detailing what could be considered “unconscionable fees”.
“ASIC has stated that exit fees are not allowed to be unconscionable. That is to say a lender can only recoup the necessary costs. So I don’t know why the government is looking to further legislate this area when it is already under control.”
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