Lenders ignore FSA exit fee warning
13 October 2006
Demands by the Financial Services Authority (FSA) for mortgage lenders to justify the large exit fees attached to many home purchase loans have gone largely unheeded, according to financial comparison site Moneysupermarket.com.
The FSA demanded lenders give greater transparency to the exit fee market earlier this year but there has since been little or no change since, with some lenders even increasing their fees in the face of criticism.
Britannia and Standard Life have upped the fees they charge in a move that Louise Cuming, head of mortgages for Moneysupermarket.com, calls "appalling".
"No providers have yet responded positively," Ms Cuming said. "The FSA needs to get tough and should urge all lenders to guarantee exit fees will remain at the level at which borrowers enter the contract.
"This will ensure there are no nasty surprises when people decide to terminate the contract - a stance that I hope to see in the FSA's announcement at the end of this month."
ING was singled out for praise after it entered the mortgage market with a two-year fixed-rate "no frills" product that, although not offering headline-beating rates, had no hidden charges or fees.
Ms Cuming noted this was "a step in the right direction and is to be applauded".
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