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Lenders face court action over Meafs

The FSA is warning that lenders which continue to vary the terms of the charges within their mortgage contracts may face enforcement or court action.

The regulator has released a statement saying it is disappointed by the findings of its latest research which shows that a third of lenders are still varying the terms of their charges.

Letters will be sent to these lenders demanding that their fee terms are frozen and that they alter current contracts to ensure there are no more changes.

In January 2007, the FSA released a statement of good practice on mortgage exit admin fees which demanded that lenders stop varying the terms of the fees but it says many lenders have not met its orders.

The Mortgage Practitioner principal Danny Lovey, who is a long-time campaigner against Meafs, thinks the FSA action is not enough. He says: “Lenders think they can get away with everything and this is just toothless enforcement from the FSA. I welcome any action against lenders which charge Meafs but we need to address the lenders, such as Halifax and Abbey, which have merely re-labelled their Meafs. It is the principle of it. It is naked profiteering.”

Halifax and Abbey claim their charges are valid admin fees covering the length of the mortgage.

London & Country mortgage expert David Hollingworth says: “A third is a pretty sad statistic as the FSA gave pretty clear guidelines last year. I think this review has gone further than Meafs and probably will include all tariffs in a mortgage that are subject to change.”

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