Consumer rights: Don't expect up-front fees to be refunded

A first-time buyer needed several extensions to a mortgage offer, but was third time unlucky / Are bosses under a legal obligation to provide staff pensions?
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Q. In September 2008, as a first-time buyer, I took out a mortgage with HSBC at the fee of £999.

Unfortunately, the purchase fell through. I asked HSBC if it would extend the period of the mortgage offer and it agreed. I struggled to find another property and HSBC extended my offer again, for which I was grateful. However, the death of a relative forced me to change the location of my search. I pleaded with HSBC to allow me one more extension. HSBC refused. I eventually bought a property and took out an HSBC mortgage in 2009.

I've been banking with HSBC for 14 years and was told I was an excellent customer. That loyalty appears not to count. The only reason I asked for an additional extension was due to the circumstances at home, but the bank's attitude was appalling. I have appealed twice to HSBC, but it won't budge. Please don't ask me to go to the financial ombudsman. I have already done this and have been told it could take months to resolve.



A. The fee you paid appears to have been a non-refundable booking fee of £999. The fee is used to secure and reserve funds at a particular interest rate. Initially you had six months but this time period at the discretion of the bank was extended twice. When you complained to the bank in the first instance, there was an internal investigation by the bank's service recovery team. Your letter to the financial ombudsman prompted the ombudsman to ask the bank to look again and a second investigation was carried out.

I've talked to the bank and it said: "HSBC has a range of fee and fee-free mortgages and it is clear at the outset of any mortgage sale that our fees are non-refundable. These fees in part subsidise the rate we are offering. An advantage of HSBC mortgages is that customers can book mortgage deals and have six months to draw on the funds; the industry standard is just three months. In this case we were very sympathetic to the personal situation and extended the drawdown limit twice to over nine months. Interest rates had fallen and better deals were available. Indeed, a couple of months later the borrower took an HSBC mortgage 0.81 per cent cheaper than the original mortgage. This saved the borrower almost £2,000 in interest."

I've also spoken to Ray Boulger at mortgage broker John Charcol. He says these fees are common practice and can be confusing as they come with different names. Some are payable up front and some on completion. He says if you're applying for a loan and have to pay a fee up front, you should assume that the fee isn't refundable.

There seems to be little dispute that this was a non-refundable fee. That should have been made clear to you at the beginning. If you think that's not the case, you should pursue your complaint again with the financial ombudsman.

Q. My firm employs 30 staff. Am I legally obliged to provide a pension and, if so, how do I go about it?



A. Employers have no legal obligation to set up a pension scheme, but if you have more than five staff you have to provide access to a scheme run by a third party, usually a stakeholder. In your case that's the least you can offer unless all 30 of your staff are what's called non-relevant for pension purposes – been with you for less than three months, under 18, earn too little, etc.

There's a list of pension providers you can get from the pension regulator. Discuss the various options with your employees and choose a scheme. You then make deductions from employees who want to join and forward those to the firm that's providing the pension. You'll find information about stakeholders pension at or on 08457 143143; there's advice from the Pensions Advisory Service at but it's probably best to talk to a specialist adviser. Try the Association of Independent Financial Advisers at

Do you have a consumer complaint?

Write to Julian Knight at the Independent on Sunday, 2 Derry Street, London W85HF

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