Exit fee deadline day for lenders

Today marks the deadline, set by the FSA, for providers to announce their decision regarding mortgage exit fees.

Commenting on this Louise Cuming, head of mortgages at moneysupermarket.com, said: “Today is crunch time as lenders make their exit fee charging structures clear – and early news is good for borrowers.

“So far all of the decisions announced have been in favour of the consumer1, representing a significant change from the earlier lacklustre response to the FSA’s call to action on exit fees in June 2006. This also demonstrates the power of the regulator and the fact that treating customers fairly (TCF) has become embedded in the lending process.

“However, I believe that a note of caution is still needed. Although providers are now saying the right thing this is not the same as actually delivering on their promises. I urge borrowers to keep a watchful eye on these fees to check that these guarantees are honoured.

“It is also worth noting that this move will only serve to help customers in the future and will not recompense the hundreds of thousands of borrowers who have redeemed their mortgage in the past few years. If, for example, someone took out a mortgage and redeemed it in the last 10 years they could have been charged more than three times as much in exit fees than they were expecting at the outset.

“So far only one provider has declared it will be making efforts to address this issue - Northern Rock has set the benchmark by openly making a provision of £15 million to compensate borrowers who have left the lender and already been penalised. Most other lenders are saying they will review each case individually if former borrowers make contact. Time will tell as to whether or not the response will be universally favorable.”