ASIC has announced that RHG Mortgage Corporation Ltd (RHG) has agreed to refund over 6,400 consumers more than $3.3 million, following ASIC concerns about discharge and early termination fees charged on home loans terminated since 1 July 2010 (when the National Credit Code commenced).
RHG has also agreed to reduce its discharge fees on existing loans and to the progressive removal of early termination fees for customers in the future.
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
- discharge fees were increased for existing clients from $590 to $990
- early termination fees were calculated by reference to the amount borrowed (e.g. a percentage of the amount borrowed); and
- early termination fees did not reduce over time.
ASIC took action in relation to RHG after receiving a significant level of complaint.
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.
RHG is in run-off mode following the sale of the RAMS brand to Westpac in November 2007. It still manages and services its loan book.
Background on early termination fees
