latest news - Consultation on mortgage early exit fees

ASIC has released a consultation paper on new laws regulating mortgage early exit fees which are unconscionable or unfair. The consultation paper supports an announcement by the Government on 27 June 2010 giving ASIC the power to take action against any bank which charges an early exit fee which is considered unfair or unconscionable to a consumer.

Under the National Credit Code, early exit fees which are unconscionable can be annulled or reduced by a court. Under the Australian Consumer Law, an unfair term requiring an early exit fee to be paid can be declared void. ASIC also has a number of new enforcement powers under the new consumer law provisions in the Australian Securities and Investment Commission Act 2001 (ASIC Act). 

ASIC's Consultation Paper 135 Mortgage early exit fees: Unconscionable fees and unfair contract terms (CP 135) contains proposals about our expectations for compliance with provisions in the National Credit Code and ASIC Act that apply to setting the price of and explaining mortgage early exit fees.

Submissions should be sent to policy.submissions@asic.gov.au by 9 August 2010.

For further information or assistance, please contact: 

Paul Lutvey | Partner
Mullins Lawyers
t +61 7 3224 0240
f +61 7 3224 0333
plutvey@mullinslaw.com.au