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FSA to force lenders to justify increases to exit fees

The FSA is to force lenders to justify exit fee charges above the amount charged when the customer originally entered into the mortgage, took out a further advance or changed products.
The move also paves the way for past customers to recieve a refund when they have paid a higher exit fee than originally agreed as the FSA says it expects lenders to treat past customers in the same way as current ones.
The clampdown comes after concern customers were being treated unfairly by being charged higher exit fees than they expected and is set out in the regulator’s statement of good practice.
Lenders will have until 28 February to decide whether to charge no exit fee, charge the original exit fee, charge a revised exit fee or charge their current increased exit fee.
The FSA says it is unlikely to investigate further a lender which charges a revised fee the same or lower than the original fee, however the regulator will force lenders to justify any other option.
FSA managing director of retail markets Clive Briault says: “We expect that these measures, agreed with the Council of Mortgage Lenders, will stop borrowers from being surprised by unexpected increases in these fees. People will now 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 increased fairly.”

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