Over 6,400 consumers will be refunded more than $3.3 million by RHG Mortgage Corporation after ASIC raised concerns about discharge and early termination fees on home loans terminated since 1 July 2010.
RHG, formally RAMS, has also agreed to reduce its discharge fees on existing loans and to the staggered removal of early termination fees for thousands of customers going forward.
ASIC was concerned some of RHG’s fees were unconscionable or unjust under the National Credit Code in circumstances where early termination fees on RHG’s Interest Saver products were increased for existing clients from $1,400 in the first year (reducing to $700 in the third year), to a flat fee of $2,000 in the first three years.
In addition, ASIC was concerned about how RHG calculated their early termination fees and the fact that they did not reduce over time.
“ASIC has been active in monitoring early termination fees. In 2010 we published regulatory guidance on how we would apply the National Credit Code restrictions on fees, and we have been conducting an industry review of early termination fees and will publish a report with detailed findings before the end of the year,” ASIC commissioner Peter Kell said.
RHG has started notifying customers who may be entitled to a refund as well as those current customers who will have their fees waived or reduced.
This will include refunds to customers of the portion of any discharge fee or early termination fee paid since 1 July 2010 above the originally contracted amount that was applicable before the fee increase.
This will also include partial refunds of early termination fees paid since 1 July 2010 on a number of other loans.
Affected customers will receive refunds ranging from $50 to over $10,000, with the most common refund being $400.
Customers eligible for a refund will be contacted by RHG in the coming weeks.
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