Following the FSA’s announcement in September 2005 that it was looking into the increases in exit fees, it has now asked lenders to supply evidence to support the way price hikes were calculated.
However, despite adhering to the FSA’s demands, many lenders have stood firm over exit fees.
Rob Davies, spokesperson for RBS Intermediary Partners, said: “We are aware of the FSA’s investigation and we will be responding accordingly. But we’re not planning to review the way we calculate our fee as we’ve just carried out work in this area.”
Joe Wiggins, a spokesperson for Abbey, also confirmed it had no plans to review its exit fee calculations. He said: “We fully believe our fee is legitimate and there are no plans to review it or change the way it is implemented.”
Despite making a promise to keep its exit fee stable for the length of the term, Alliance & Leicester (A&L) has still come under attack for its £299 fee. Sally Lauder, spokesperson for A&L said: “The exit fee is to cover the cost of administration and we have no plans to review it.”
Drew Wotherspoon, head of communications at John Charcol, said: “Exit fees fly in the face of the FSA’s ‘Treating Customers Fairly’ regime and are ripe for review. How can a fee that is entirely moveable by a lender during a mortgage contract ever be described as fair?”
Darren Cook, head of mortgages at Moneyfacts.co.uk, added: “Exit fees may be used by lenders to reclaim any income they miss out on by not charging up front, in the hope of attracting new business with fee free deals.”
Details of the FSA’s findings are due in the Autumn.
