The Financial Services Authority (FSA) has recently announced that they are to take action against unfair mortgage exit fees. This follows almost three years of campaigning by Financial Mail, and now millions of home-buyers could benefit.

The habit of changing mortgages to save money has been heralded as one of the causes of fees of up to £295 being imposed by lenders. These "redemption administration fees" are far higher than the estimated cost of closing a mortgage which has been worked out at about £50. Many borrowers also raised their fees after borrowers already committed to a mortgage product, and in some cases the customer was not even notified.

The FSA has stated now that some of these fees must now be lowered dramatically and those who were unfairly charged should be compensated - this action will include nearly all the major banks and several building societies who are traditionally seen as being customer-friendly. Some of the increases included Cheltenham and Gloucester from £45-225 and the Abbey from £125-225, but the highest increase was that of Alliance and Leicester who were the culprits of the £295 fee - a figure almost three times that of the original price.

If people affected by these high charges wish to claim money back then they first have to make a complaint. Most likely to be able to secure a refund are those who signed up for a mortgage before the large increases and switched lender since that time. The numbers of people involved in this refund could be in excess of 500,000 at the Halifax and around 200,000 at Abbey, Alliance and Leicester, Cheltenham and Gloucester, Northern Rock and Woolich. Lower fees from places such as Nationwide may not be included in the claims bracket.

The Financial Mail managed this turnaround after their dedicated campaign which began in August 2004. They first wrote to the boss of Alliance and Leicester, perpetrators of the £295 fee, to no avail. This was then followed by the delivery of 100 letters of complaint to the headquarters and a prolonged argument with the relevant parties which did not bear fruit. Following this, they then published a draft complaint letter to help borrowers win rebates and complained to the FSA and also the Financial Ombudsman Service. The campaign is now beginning at last to bear fruit.

For more information about reclaiming exit fees please follow this link.