The Financial Services Authority (FSA) has issued mortgage lenders with new guidance on mortgage exit administration fees (MEAFs) imposed when borrowers pay off their mortgage or switch to an alternative lender, amid concerns that they have risen to unjustifiable levels.
In conjunction with the Council of Mortgage Lenders (CML), the FSA devised measures to ensure that borrowers are given clear indications of the level of MEAF they will be asked to pay.
By the end of February, all lenders will need to indicate to the FSA whether they intend to charge a revised MEAF, retain currently fee levels, or no MEAF at all.
If lenders revise their MEAF upwards, the FSA will demand that they "justify their position" by explaining how the increased fee relates to staff and administrative costs.
"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," FSA managing director of retail markets, Clive Briault, stressed.
"Transparency in fees and charges is unequivocally a good thing in terms of ensuring that consumers understand what they will need to pay," added CML director general Michael Coogan.To look at our mortgage glossary, click here.
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