The FSA says it does not intend to rap mortgage lenders that have failed to cut exit fees.
HBOS became the latest lender to announce it is scrapping exit fees for new customers this week, following similar recent announcements from Northern Rock, Royal Bank of Scotland, Cheltenham & Gloucester and Standard Life Bank.
The regulator’s deadline for lenders to decide their exit fee strategy for new customers passed this week. But the FSA claims its report was never intended to be critical but rather to detail what lenders’ policies should be regarding exit fees for future customers.
Many have backed down but a number of major lenders have refused to axe fees although they say they will not raise them during the course of a contract.
Alliance & Leicester, which charges the highest fee at £295, and Barclays/Woolwich say they will keep their fees. Other lenders, including Abbey, have replaced the exit fee with a mortgage account fee. Abbey will charge £225 from August 14.
But brokers say they could avoid lenders that charge excessive exit fees.
With the real cost of an exit charge estimated at £35, brokers have questioned how lenders such as A&L can continue to charge such high amounts.
The Mortgage Practitioner sole practitioner Danny Lovey says: “Lenders must remember that they are not more powerful than market forces and intermediaries may well try to avoid dealing with those lenders.”
An FSA spokesman says: “The tone of the report has been exaggerated in the media. This will not be a critical report, it was never intended to be. It will not be the FSA rapping banks over the charges, more an analysis of what lenders have told us they will be doing.”