Abbey may be forced to overhaul its mortgage exit fee policy amid concerns that its charge is likely to fall foul of the FSA’s new code.
The lender’s intermediary arm states in its tariff of charges that a mortgage administration fee of £225 is “charged to cover the costs of providing, maintaining and closing your mortgage, including a proportion of our overheads”.
As part of the FSA’s crackdown on lenders increasing their charges during a contract term, the regulator says that it does not believe such costs should legitimately apply to the arrangement of the mortgage or the running of the account.
This has prompted speculation about whether Abbey may be forced to cut its £225 charge as it currently relates to more than just closing the account.
Spokesman David Stewart says: “Abbey notes the publication of the FSA statement of good practice on mortgage exit administration fees on January 26, 2007. Abbey is reviewing the FSA statement and its application.”
West Brom last week cut its fee from £300 to £200 while Portman cut its charge from £199 to £145 in the week before the FSA announcement.
London & Country head of communications David Hollingworth says: “I would hope we will see more lenders chop their exit fees as some have already done.”