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A&L fixes exit fees as FSA action looms

Alliance & Leicester has fixed its exit fees, raising hopes that the rest of the market will follow suit to stave off regulatory action.

The firm says it will not raise the exit fee during a customer’s term and has capped its redemption fee at 295.

The move follows a similar decision by Northern Rock earlier this year although A&L insists its decision has nothing to do with the FSA’s threat of legal action against lenders and that it agreed to the concession after feedback from customers and brokers.

The FSA says the results of its investigation into lenders that raise their fees during a contract should be published by July and it is prepared to take legal action against providers which refuse to comply with any crackdown.

London & Country head of communications David Hollingworth says: “It is a positive move and we might well see more lenders following suit, just as many followed when others were putting their charges up in the first place. The question remains whether 295 reflects the true cost of closing down a mortgage account.”

A&L spokeswoman Sally Lau-der says: “The fees will be fixed although if a customer went onto another of our products and the fee had gone up or down during their contract, they would then be on the new fee.”

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