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Banks that charge unfair exit fees on mortgages can expect to feel the wrath of the corporate regulator.
An ASIC representative told a parliamentary committee that it was gearing up to enforce laws that would protect consumers from unfair contracts, including bank contracts.
Under the new regulations, which come into play from 1 July, a term will be regarded ‘unfair’ if it causes significant imbalance in the parties’ rights and obligations arising under that contract.
ASIC chairman Tony D’Aloisio said there will be “additional rights that will exist in dealing with mortgage exit fees where consumers feel there has been unfairness or unconscionability”.
But Nationals senator John Williams said the new laws did not go far enough and should be prohibited outright.
Mr Williams told the Australian Financial Review, that customers were being handcuffed to their bank.
“While you have an exit fee, the bank might have a monthly charge…but you are not going to pull out because you have got to pay a $1,000 exit fee so you are actually handcuffed to their product,” he said.