In response to concerns that mortgage exit administration fees (MEAFs) were being increased unfairly, so consumers were being charged higher exit fees than they had expected to pay, under the Unfair Terms in Consumer Contracts Regulations UK regulator the Financial Services Authority last month issued a statement of good practice on administration fees and press release on what they expect from mortgage lenders. It's been agreed by the Council of Mortgage Lenders too, which is the trade association for mortgage lenders in the UK.
People ought to be told when they sign up for a mortgage what mortgage exit administration fee they will pay on exit, or should be given a clear idea of how the fee might be increased fairly.
Current customersLenders must decide by 28 February 2007 what they will do in relation to their current customers:
- charge no MEAF;
- charge the original MEAF;
- charge a revised MEAF; or
- charge their current increased MEAF.
The FSA is unlikely to investigate further a lender which does one of the first two, or the third if the revised MEAF is lower than the original MEAF. (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.)
But the FSA will require lenders that do anything else (i.e. charge the current increased MEAF) to "justify their position".
Past customersNow this may be of particular interest to some. The FSA 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 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.
So if you've repaid or transferred or changed mortgage providers in the not too distant past, and been charged a higher exit fee than you expected, you might want to consider your position and maybe complain to your original lender.