Lenders drop MEAFs after FSA review

The FSA says most mortgage lenders have dropped their controversial mortgage exit administration fees (MEAFs). This is in response to the FSA Statement of Good Practice issued back in January.

The FSA wanted mortgage lenders to examine how they treat future customers and provide options for past customers to gain compensation by the end of July.

According to the FSA, a sample of some of the biggest firms in the market such as HSBC, Mortgage Express, Barclays, Alliance & Leicester,Abbey, and Northern Rock found that most lenders had either dropped their exit fees or opted to charge a fee which cannot be changed during the lifetime of the mortgage.

Other lenders chose to charge a MEAF which only reflects the administrative cost of exiting a mortgage and that can only be changed for reasons clearly explained at the outset.

Clive Briault, of the FSA, says the regulator had achieved its main goal of making the costs clear to consumers.
He said: “Customers will 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 varied fairly. We will continue to monitor closely how firms treat their customers in this area.”

The FSA advised customers who have been charged a higher exit fee than stated in their mortgage contracts, to contact their lender for a refund. They also said that customers should examine all fees and interest rates when choosing their mortgage to ensure exit fees are fully transparent.