Moneyfacts.co.uk welcomes the FSA statement on MEAFs

Darren Cook, Head of Mortgages at Moneyfacts.co.uk comments: “This is good news for the consumer, and it certainly wasn’t right that you were expected to sign up to agree to pay an unknown fee at a future date.

“Fees have increased sharply over the last couple of years, at a rate much higher than inflation, so we welcome the move by the FSA to introduce greater transparency in this area.

“With lenders using exit fees as a means to deter customers switching to better mortgage deals, it is encouraging to see the regulator acknowledging the problem and dealing with it in an effective manner.

“Most consumers are agreeable to paying fees if they are able to see a return, for example by way of a lower rate, but exit fees have offered no tangible benefit to the consumer and have often been tucked away within the small print of the application, leaving many consumers completely oblivious to their future obligation.

“Even worse still, exit fees have effectively allowed the banks to ‘print their own money’.

Some lenders had already reacted to unfavourable media comment surrounding the variable nature of exit fees. For example, Alliance & Leicester and Northern Rock already agree that the customer will pay an exit fee at the level it was when the mortgage agreement was originally signed. Other lenders such as the One Account will only charge an exit fee during the first five years of a mortgage, but the FSA intervention will add some much needed transparency and make matters simpler and fairer for consumers.”

Some lenders have been quick off the mark in reacting to this FSA statement with Portman BS & The Mortgage Works reducing their exit fees from £199 to £145 with effect from Monday 29 January.