Banks still charge too much penalty interest for early repayments. This is apparent from an investigation by the AFM regulator. Customers from 9 banks may be disadvantaged.
The AFM investigated penalty interest in 150 files
Research by the Netherlands Authority for the Financial Markets shows that 9 banks have calculated a penalty interest that is too high for early repayment. The regulator investigated 150 files at 15 banks.
For 32 files it turned out that ‘a few USD to an outlier of more than 15,000 USD’ was calculated too much in penalty interest. View the research here (PDF)
As of July 14, 2016, the amount of the penalty interest is regulated by the Mortgage Credit Directive (MCD). This European directive stipulates that banks may not charge more than the actual financial disadvantage for early repayment. The penalty interest partly determines whether transferring is interesting.
Banks have been at fault with penalty interest before
Last year, AFM research also showed that banks charge too much penalty interest. In total, there were then tens of thousands of disadvantaged homeowners. They have since been compensated by the relevant banks.
This was also a reason for the AFM to publish the guideline ‘Compensation for early repayment of the mortgage’ with principles for the calculation of the fine.
Calculate the penalty interest here according to the guideline.
Where did banks go wrong?
So now banks are once again going wrong with the calculation of the penalty interest. The supervisor mentions 3 reasons for this:
- Individual errors such as incorrectly entered data.
- Systems incorrectly unfocused, for example for the processing of interest surcharges.
- Remaining fixed-interest period rounded up, to the disadvantage of the customer.
It was also found that the specification of the installment note still does not comply with the directive of the regulator. 1 or more data was missing from all the banks examined. At 3 banks so much data was missing that the repayment bill cannot be understood by customers.
Fines calculation adjusted and customers compensated
The AFM now requires that the errors in the calculation are corrected quickly and that customers who have paid too much penalty interest are compensated. The information on the installment note must also improve.