Danny Lovey, sole trader at The Mortgage Practitioner, claims that its statement was pathetic and was a classic example of the FSA talking tough and giving nothing.
Lovey said: “How can the market take the FSA seriously, when it insists on treating customers fairly and the FSA ducks out? When are we going to see some action? Half of the industry are taking it seriously and the rest are laughing at it. This goes to show why the ‘market’ has little faith in the FSA and although given many chances, fails to get the respect that it should earn.
“The lenders who have clearly not taken the FSA’s guidance seriously and either retained their excessive exit fees or tried to hoodwink the public in changing the name of the fee, should incur the wrath of the market. I call on the Association of Mortgage Intermediaries to summon a council of war of a representative section of brokers to plan how we can bring these errant lenders into line in order that customers are treated fairly.”
The update was created following concerns over how MEAFs have been increased unfairly, and its original statement over Good Practice in January highlighted that consumers were being charged higher exit fees than they had expected. This was aimed at stopping increases on MEAFs and to provide a basis on which past customers could seek compensation.
It also set out the FSA's expectation for how future customers should be treated and that lenders should review their approach to this by the end of July. Following a review, most major lenders have opted either to charge a fee that cannot be varied during the lifetime of the mortgage, or to remove the MEAF altogether, while other lenders will charge a MEAF which reflects the administrative costs when the customer exits the mortgage.
Clive Briault, FSA managing director of retail markets, said: “What we are seeing achieves our principal aim of stopping customers from being surprised by unexpected increases in these fees. Customers will know when they sign up for a mortgage what fee they will pay on exit. We will continue to monitor closely how firms treat their customers in this area.”
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