An IFA has slammed lenders for charging consumers for transferring mortgage funds from their bank account to the solicitor, stating that it should be free of charge as the majority of internet banking is.
Most lenders charge £25-35 to transfer funds from the a consumer’s bank account to a solicitor, as they use a Chaps Sterling system, which is a same-day automated payment system for processing sterling payments made within the UK. However, Bob Riach, proprietor of Lincolnshire-based IFA Riach Independent Financial Advisers, does not believe implementing this charge is treating customers fairly.
Most banks use Chaps as it is guaranteed to be transferred in the same day, however Mr Riach believes lenders should give consumers an option and allow they to use Bacs Payment Scheme if they wish, which means the funds will be transferred within three days.
Skipton Building Society and Natwest told FTAdviser that the charge covered administrative costs, as did the Building Societies Association, whereas YBS blamed the charge on the “company that runs the service”.
A BSA spokesperson said: “Some lenders may change a small administrative fee for transferring mortgage monies to a solicitor. This sum covers staff time, particularly in relation to anti-fraud/money laundering procedures which are a regulatory/legislative requirement (FSA/Proceeds of Crime Act), particularly whenever large sums of money are moved.
“In addition, the fee may cover the cost of telegraphic transfer of the monies - yes the faster payments system may be available for some transfers, however the maximum limits for a transfer may not be high enough (we believe that they are currently up to £100k but do change from time to time).”
However, Halifax and Nationwide told FTAdviser that in the vast majority of cases there is no fee for mortgage fund transfers, but said that if the solicitor has failed to provide sufficient notice for release of the funds, it may be that they need to instruct a Chaps payment.
Mr Riach believes Nationwide stance is “fairer” as it gives consumers an option to use either Chaps or Bacs. However, The Mortgage Works, which is owned by Nationwide, only offers consumers the Chaps fee and does not give the Bacs option, Mr Riach said.
Mr Riach said: “I doubt this operational fee as lenders just have to push a button as it is just a transfer of funds. What used to happen before Chaps was that the solicitor requested the money by cheque 7-10 days before completion, to ensure they would receive the cheque and put it in the bank to make sure it was on time but interest would be charged once the funds were released. I don’t think lenders should charge for it now as it is just a normal bank transfer.
“Is this treating customers fairly? I can understand they would pay a premium for a guaranteed quicker completion and, if it is last minute, they can charge a fee for but it shouldn’t be standard practice.”