Insurance News Archive
Mortgage lenders asked to justify charges to the FSA
The Financial Services Authority (FSA) has asked mortgage lenders to justify the rates charged for Mortgage Exit Administration Fees (MEAFs), it announced on Friday.
MEAFs are intended to cover minor administration costs such as changing the registration of the property at the Land Registry, says the FSA.
However, these costs which are flexible during the life of a mortgage can be set as high as £295.
The FSA said it has been looking at accusations of unfairness since September and is concerned that some increases in charges were not always "proportionate to any increases in associated mortgage exit costs incurred".
"It is ironic that as lenders costs on a mortgage being redeemed are progressively reducing, as a result of property deeds being held electronically at the Land Registry, these fees are so large and, indeed, are getting larger," said Drew Wotherspoon, head of communications at independent mortgage experts John Charcol.
"It is hard not to draw the conclusion that lenders see existing borrowers as a soft target with little, if any, bargaining power."
"After all, how can a fee that is entirely moveable by a lender during a mortgage contract ever be described as fair?" he added.
The FSA has given some lenders a month to provide evidence of how the increases were decided.
19 Jun 2006