Mortgage exit administration fee or MEAF is paid when a mortgage account is closed or when the mortgage account is shifted to another lender. This fee is used to cover admin, staff and legal costs in administering the transaction. Other names for MEAF are ‘sealing fee’, ‘discharge fee’, ‘final redemption fee’, ‘deed release fee’ and ‘final administration fee’.
Unfortunately, there are some lenders that charged more than what was stated in their contracts. In 2007, these lenders were slapped by the regulator (FSA) for overcharging the MEAF. In 1997, MEAF only cost around £60. In 2007, the cost is already around £300. That’s around 5 times more in just 10 years! The excuse of these lenders was that there is a clause in their contracts that allow them to vary the MEAF cost overtime. However, FSA said that changing of fees was not agreed by consumers. Thus, it was considered against unfair contract law. Hence, the lenders agreed to refund their consumers of the difference. More than 100,000 people are now in the reclaiming process.
If you are one of those who were overcharged, then you must undergo the reclaiming process in order to get your money back. Your lender will refund some or all of the difference between the actual charge and the amount stated under your contract. Thus, the reclaim process is pretty simple. You can just send a letter or make a phone call. In fact, there are lenders that also give their customer interest on top of the difference. You may also ask your lender about this.
To complain via mail, there is already a template letter already. All you have to do is to fill in your detail. Delete the parts that do not apply to your case. Then, send it to your lender’s main customer service address.
To complain over the phone, just call your lender. You may check your lender’s website for their customer service number. Just say that you would like to reclaim your mortgage exit fee. When the customer service representative asks for details, just say that you don’t have them. Ask him the amount you were actually charged and how much was stated in your contract. When asked about the reason of reclaiming, just say that FSA says that you were overcharged.
If you like to be more militant, there are some MoneySavers which have pursued successfully the lenders for more or for all of the charged. This option, however, is not supported by FSA. In fact, it is not as straightforward. Lenders may also not give in easily. Hence, this may even up with court action.
This militant approach may work as arguably, MEAF are not justified. Under UK contract laws, you cannot fine someone for breaching a contract. What you can charge is an amount that is proportionate to the breach cost. You can write to your lender. Ask it to justify the fees charged to you, complete with full breakdown. Although this option works for some, it is really not advisable to go to opt for the militant approach as you might end up taking court action.