Watchdog could insist on mortgage exit fee refunds
Watchdog the Financial Services Authority (FSA) has ordered mortgage lenders that charge high exit fees to cut them, with borrowers who were stung for charges after switching loans in line for possible compensation.
Refunds of up to £200 could be ordered for millions of mortgage customers who have paid £295 for ‘admin charges’ that are actually as low as £50 in many cases. Many borrowers were not informed of the charges when they took out their loan to make their UK investment in property.
But the FSA has nailed its colours to the mast and said that lenders intending to continue charging high fees must justify themselves by the end of February.
Clive Briault, FSA managing director of retail markets said: “We expect that these measures, agreed with the Council of Mortgage Lenders (CML), 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 could be fairly increased.”
With so many people in the UK making a substantial saving and investment into property, the regulator is keen to see fair play in the mortgage market.
The Council of Mortgage Lenders (CML) agrees with this approach. “Lenders will ensure that in future their exit fees, and the terms on which they may be varied, are absolutely clear to borrowers upfront,” said director-general Michael Coogan.