David Prosser: Cynical Abbey makes grand exit fee

Abbey's recent efforts to shake off its unfortunate nickname amongst long-standing critics of the mortgage bank are welcome. But there's not much point in an expensive rebranding - from staid Abbey National, to colourful Abbey - if "Shabby" then reverts to the same old tricks.

Abbey's recent efforts to shake off its unfortunate nickname amongst long-standing critics of the mortgage bank are welcome. But there's not much point in an expensive rebranding - from staid Abbey National, to colourful Abbey - if "Shabby" then reverts to the same old tricks.

The bank's decision to raise exit fees on its mortgages to £225 - its second increase in four years - is a cynical one. Abbey has launched some really good-value short-term mortgage deals in recent months, but if borrowers have to pay a fee to move elsewhere once the best rates expire, a large chunk of that value is eroded.

Lenders are within their rights to charge penalties if borrowers jump ship during the first few years of their mortgages, when they're on a special deal - such as a fixed or discounted variable rate - for example. But once these deals expire, borrowers generally move on to their lenders' standard variable rates, which are almost always expensive. To penalise people who then decide to take their business elsewhere is totally unfair.

Not that Abbey is the only lender to behave this way, though it is just about the most expensive on this issue. Market analyst Moneyfacts says more than 50 lenders have raised their exit charges during the past year. They include Alliance & Leicester, Cheltenham & Gloucester and Royal Bank of Scotland.

There's some rank dishonesty going on here. At first sight, the market for mortgages has never been more competitive. But beneath the surface, many lenders are making desperate efforts to claw back what they're losing on cheap interest rates through higher fees and charges.

Abbey's penalty is particularly pernicious. If you stay loyal to the lender beyond the term of a special offer, you will pay through the nose on the bank's standard variable rate. This is currently 6.75 per cent, around 2 percentage points more expensive than the cheapest deals available - the equivalent of £120 extra each month on a typical £100,000 mortgage.

If, on the other hand, you don't want to put up with subsidising low-cost deals for Abbey's new customers, you must now pay it a fee of £225 to take your business elsewhere.

This is a straightforward disincentive to remortgagging: this fee is simply designed to put people off seeking a cheaper deal from one of Abbey's rivals.

To add insult to injury, many borrowers will now find that Abbey's exit fees - and the charges at the other 50 lenders who have raised penalties - are now higher than what was set out in their original contracts when they first borrowed the money.

Aren't lenders going back on their word?

Well done Which?. It has won its battle with Fifa over the unfair ticketing arrangements for next summer's World Cup in Germany. Until now, Fifa has insisted fans buy tickets on plastic issued by sponsor Mastercard, or via a German bank account.

Which? rightly pointed out that fans outside of Germany, including thousands of England supporters, would face bank fees of up to £35 for the second option. And those with Visa-issued cards would be barred from the free credit-card service.

Now Fifa has set up bank accounts in 16 European countries, including Britain, so that fans can pay for tickets using free bank transfers within their own countries. One-nil to Which?.

d.prosser@independent.co.uk