AFM publishes guidelines for early mortgage repayment charges: ABN AMRO’s response

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The new regulations for mortgage loans introduced on 14 July 2016 changed the rules for calculating the costs that mortgage lenders may charge retail clients for early mortgage repayments. The Netherlands Authority for the Financial Markets (Nederlandse Autoriteit Financiële Markten, ‘AFM’) has now drawn up a set of guidelines for mortgages lenders with principles for calculating the early repayment charge. These guidelines were published today (20 March 2017).

Banks sometimes require a charge from clients who wish to repay some or all of their mortgage ahead of schedule. Previously, the terms that ABN AMRO applied were those that were set out in the mortgage contract between the client and the bank. Click here for further details.

The AFM has drawn up these new guidelines with constructive input from various parties, including ABN AMRO, on how to interpret the rules that were introduced on 14 July 2016. The interpretation is set out in the guidelines published today.

This interpretation may impact clients of ABN AMRO who paid a charge between 14 July 2016 and 20 March 2017 for early mortgage repayments or for opting out of an interest contract. The bank will now review whether those charges were calculated in accordance with the principles of the new guidelines. If the charge was too high, the bank will refund the difference to the client. If the review shows that the bank’s charge was correct or too low, the previous calculation will stand and the previous charge will remain unchanged. No action is required on the client’s part.

ABN AMRO expects to pay out a total sum of around EUR 5 million to an as yet undefined portion of the approximately 15 thousand clients who paid a charge between 14 July 2016 and now.

Starting today (20 March 2017), the amounts charged to retail clients will at the minimum match the principles in the guidelines drawn up by the AFM. While this will most likely not cause any difficulties, the possibility remains that until 25 March technical issues will cause a very small number of incorrect calculations to go out to clients. We are aware of this problem and will immediately notify any clients who are affected and remedy the situation.

The principles set out in the guidelines also apply to loans to our own people. ABN AMRO is currently investigating how the guidelines impact the calculation of early repayment charges under employee schemes. It is important to us that we handle this matter with the utmost care.

Watch the video (Dutch only)

26 June 2018 update following AFM investigation into charges for early mortgage repayments

On Tuesday 26 June, AFM released a report on calculating early repayment charges as imposed by banks in the Netherlands. In our calculations, we typically put the interests of our clients first and opt for calculation methods most favourable for them – often the system agreed with a client in the first place. ABN AMRO applies the AFM guidelines where these are more beneficial to clients. 

A random sample of client records from October 2017 has led AFM to conclude that, for a number of clients, the AFM guidelines could produce outcomes more favourable to them than ABN AMRO’s own system. We had identified a large number of these clients well before receiving AFM’s feedback in June 2018 and had addressed the problem retroactively. A key remaining issue is the early repayment charge calculations for clients with straight-line mortgages, where the AFM guidelines produce either the same or a better outcome. Although these loans account for only a small percentage of our portfolio and although the random sample showed up only small differences, ABN AMRO will, of course, retroactively resolve the problem for this group of clients as soon as possible. Meanwhile, new early repayment charge calculations for straight-line mortgages reflect the guidelines. We have already approached and informed – or will do so in the next few months – the small group of clients for whom the charges they paid will be recalculated and who will be reimbursed. There is therefore no need for clients to get in touch with us, although ABN AMRO is always happy to explain its approach and calculations to clients.


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