Transparency of mortgage fees and charges
Last updated: 16 January 2017
At a glance
The CML recognises the importance of consumers understanding the differences between different mortgage deals, including the fees and charges that apply, and in light of this we have been working with Which? to produce a standard tariff of mortgage fees, to ensure that fees and charges are as clear and understandable as possible.
Tariff of mortgage charges
It is envisaged that this industry initiative will improve the transparency of mortgage fees and charges and will help consumers understand them better. This project is supported by Which? and we believe it will make a significant substantive contribution to helping customers choose the mortgage that suits their needs.
- During May and June 2016 the CML economics team undertook an audit of the scale and nature of firms’ participation in the joint CML-Which? Transparency initiative
- In January 2017, the CML transparency review steering group began steps to agree a suitable approach to the research for Theme 3 (helping customers compare).
Why this is important for lenders
Transparency is important in helping consumers shop around for their mortgage. Prior to this initiative the Money Advice Service produced a "key facts" document which set out fees and charges in a prescribed form, however, there had been no concerted industry-wide approach to trying to adopt common terminology or common approaches to the delivery of the "tariff" of mortgage fees and charges.
This new initiative has sought to introduce a common sense set of measures on a voluntary basis to bring greater consistency to the language and visibility of mortgage fees and charges, to help consumers and reduce the risk of inadvertent confusion.
Specifically the initiative aimed to:
- Introduce a common approach by lenders to make their "tariff" of fees and charges available to customers to avoid confusion and make it easier to find information about mortgage costs;
- Establish a wider use of consistent terms to describe the same types of fees and charges that currently have an array of different names;
- Provide better explanations of whether fees are compulsory or avoidable and when they will be charged;
- Encourage clearer ways of presenting information to help borrowers compare the cost of particular mortgage deals over specific periods, not just the upfront costs.