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Mortgage exit fees - Watchdog is watching
City watchdog, the Financial Services Authority FSA, has set out its views on recent increases in mortgage exit administration fees MEAFs, and how it expects mortgage lenders to address the issues raised.
The FSA is responding to recent concerns that MEAFs had been increased unfairly, so consumers were being charged higher exit fees than they had expected to pay. Lenders often charge MEAFs when borrowers pay off their mortgage or switch to another lender to cover the staff and other costs involved.
Clive Briault, FSA Managing Director of Retail Markets, said: "We expect that these measures, agreed with the Council of Mortgage Lenders, will stop borrowers from being surprised by unexpected increases in these fees. People will now know when they sign up for a mortgage what fee they will pay on exit, or should be given a clear idea of how the fee might be increased fairly."
The regulator has given lenders until February 28th to decide which of the following outcomes they will adopt for their current customers: Charge no MEAF; charge the original MEAF; charge a revised MEAF; or charge their current increased MEAF.
The FSA says it's unlikely to investigate further any lender which adopts one of the first two options, or the third option if the revised MEAF is lower than the original MEAF. However, it says it will require lenders that adopt any other option to justify their position. For purposes here the original MEAF will usually be the MEAF that was disclosed to the customer when they entered the original contract, took out a further advance, or changed their mortgage product.
In addition, the regulator says it expects lenders to treat past customers who complain about the level of the MEAF they were charged when they exited their mortgage contract in the same way as the firm will be treating comparable current customers. So, for example, if a firm will only charge its current customers the original MEAF, then if a past customer who has paid a higher MEAF to exit complains, he or she can expect a refund of the difference between the actual MEAF paid on exit and the original MEAF.
Moneyextra.com recommends you take independent financial advice before acting on any article
Back2007-01-26 10:47:58 © Moneyextra.com
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