The Australian government's decision to ban mortgage exit fees remains as contentious today as it was when it was implemented in 2011. Submissions to a Treasury review of the ban show that views on the issue remain polarised.The government banned mortgage exit fees to address concerns that some lenders were using exit fees to lock customers into their home loans, and that high exit fees would negate the savings to be made by switching to a cheaper mortgage with another lender.The Consumer Action Law Centre's submission said available evidence indicated that the ban was achieving its objectives. However, it was concerned that the policy was being undermined by clawback provisions in broker contracts.CALC's evidence for the effectiveness of the policy is that the Reserve Bank's most recent report on bank fees attributes a decline in fees earned on housing loans, in large part, to "falls in exit fees charged by banks for the early termination of variable rate mortgages".CALC said: "This strongly suggests to us that the ban on exit fees has achieved its objective of improving competition in the home loan market."However, CALC is concerned that some borrowers are being charged exit fees in the form of broker clawbacks. What this means is that brokers will charge borrowers any establishment fees that have been discounted or foregone if the loan is paid out within a certain number of years. In other cases, the lender will claw back some commission from the broker if the loan is paid out early, and the broker passes this cost on to the borrower.The Mortgage & Finance Association of Australia said in its submission that the ban had reduced competition by making it harder for "non-balance sheet lenders" to compete.The MFAA's view is that the big banks use cross-subsidies to waive establishment fees, which is something that mortgage companies and small banks cannot do.It said: "Some lenders have re-introduced establishment fees because they no longer have the protection of exit fees. And lower interest rates are not available to consumers because lenders cannot afford to provide honeymoon rates on low long-term rates because of the risk borrowers will take advantage of the lender and then move on."MFAA's chief executive, Phil Naylor, said there was no evidence that more borrowers were taking advantage of the ban on exit fees to refinance, suggesting there was no great demand in the first place.Naylor said: "For all the inducements to switch home lenders, through honeymoon rates, cash-back offers and discounts to standard variable rates, refinancing is only running between two and three per cent annually. If anything, it has been edging down in the last two years."Anecdotal evidence from a number of MFAA members was used to support CALC's contention that more lenders have imposed clawbacks since the ban took effect.The chief executive of the Australian Bankers' Association, Steven Munchenberg, said the ABA's submission had expressed concern about the impact of the ban on small lenders, but did not recommend any changes to the arrangement.Like Naylor, Munchenberg said