The Council of Mortgage Lenders (CML) and Which? have unveiled a new “tariff of mortgage charges” that will introduce a standard format for how lenders communicate their fees, to make it easier for customers to understand charges and compare deals.
Following a Which? campaign to end the confusion around mortgage costs, the Chancellor asked the CML and Which? to work together to find ways to make it easier for consumers to understand and compare the costs of different mortgages with different lenders.
They have devised a new tariff to help make it easier for people to understand mortgage fees and charges.
There are two key improvements within the tariff:
- Standard terminology: Different lenders will now use the same names for fees, as Which? research previously found consumers find the existing range of names for similar fees too confusing.
- Common format: Each lender will list fees in the same order, and with the same descriptions, to make it easier to compare between lenders.
The new tariff has been tested on consumers, and results show that consumers found it much easier to understand and compare costs than when they used existing versions. Lenders representing 85% of the market have already committed to introducing this tariff and putting it on their website by the end of the year, and we anticipate that other lenders will also choose to adopt it.
The CML and Which? have submitted a joint report to the Chancellor of the Exchequer, outlining the work on the new tariff as well as progress towards making it easier for people to compare the total costs of different deals over different deal periods. They say they will continue to work together to help consumers and plan to agree a standard comparison method early next year for lenders to adopt in 2016.
Which? executive director, Richard Lloyd, said: “Thousands of people supported our call to end confusion around the cost of mortgages, so we’re pleased that our work with the CML has resulted in simplified fees and charges.
“This new approach should make it much easier for people to compare mortgage fees. We hope that all mortgage providers will make these changes as soon as possible.”
CML director general Paul Smee said: “Lenders have successfully pulled together to put in place some sensible measures to help consumer understanding. We very much hope that the new tariff and standard terminology will make it demonstrably easier to understand and compare mortgage costs. Working jointly with Which? has been invaluable.”