Govt to outlaw exit fees
The federal government has released a draft consultative paper outlining its plans to ban all exit fees.
The National Consumer Credit Protection amendments regulation paper calls for a blanket ban on exit fees for all lenders, not just banks.
In addition, the ban will apply to any fee payable at the time of repayment other than fixed rate break costs and discharge administration fees.
Gadens Lawyers partner Jon Denovan said the drafted regulation was “very worrying”.
“This will ban the collection of deferred establishment fees, capitalised account keeping fees, LMI recovery and interest equalisation fees to recoup honeymoon rates,” Mr Denovan said.
“This means that borrowers will have to pay many costs up front that are currently carried by lenders. It will make refinancing much harder because of the cost. Flexible product design will not be available in this country.”