The Financial Services Authority (FSA) has called for lenders to justify, and refund, their increased mortgage exit administration fees (MEAF's).
MEAF's are charged by lenders when borrowers pay off their mortgage early, or switch to another lender. The theory is that the MEAF covers the administration costs of closing the mortgage early. However, the FSA and others are becoming increasingly suspicious of the recent MEAF increases being foisted on mortgage holders by some lenders.
The FSA stated that, with regards to current customers, lenders must decide by February 28th 2007, whether they will charge no MEAF, the original or revised lower MEAF or their current increased MEAF.
Those that decide to charge the latter will be required to justify their decision.
The FSA also stated that past customers, who are unhappy with their MEAF charges, must be treated in the same way as current customers. Those who complain about an increased MEAF, should expect a refund of the difference between the actual MEAF paid on exit and the original MEAF.
"This is Money" claims that some lenders, such as Alliance and Leicester, have trebled their original MEAF (Alliance and Leicester's now being £295).
No doubt the possibility of being able to make claims for excess MEAF's will bring about the creation of a whole new claims industry, who will live off other's misfortune.