Lenders drop MEAFs after FSA review

The FSA says most mortgage lenders have dropped controversial mortgage exit administration fees (MEAFs) in response to their Statement of Good Practice released in January.

The FSA expected firms to examine how they treat future customers and provide a platform for past customers to seek compensation by the end of July.

A sample of some of the biggest firms in the market such as Abbey, Mortgage Express, Barclays and Northern Rock, found that most lenders had either dropped exit fees or opted to charge a fee which cannot change during the lifetime of the mortgage, according to the FSA.

Other lenders chose to charge a MEAF which only reflects the administrative cost of exiting a mortgage and which can only be changed for reasons clearly explained at the outset.
Clive Briault, of the FSA, says the regulator had achieved its main goal of making the costs clear to consumers.

He added: "Customers will know when they sign up for a mortgage what fee they will pay on exit, or should be given a clear idea of how the fee might be varied fairly. We will continue to monitor closely how firms treat their customers in this area."

The FSA told customers who have been charged a higher exit fee than stated in their mortgage contracts, to contact their lender for a refund. The FSA also said that customers should examine all fees and interest rates when choosing their mortgage to ensure exit fees are fully transparent.