HOMEOWNERS with mortgages at Alliance & Leicester (A&L) have secured a victory after the bank changed its policy on exit fees.

The bank announced last week that it will fix borrowers’ redemption administration charge — A&L’s term for an exit fee — at the time the mortgage is taken out. Those looking to switch their mortgage once their current deal has ended will no longer find that the cost for doing so has leapt.

Between February 2003 and August 2004, A&L increased its redemption charge from £150 to £295. The near- doubling infuriated mortgage customers and many complained to the bank. Some even took their complaints to the Financial Ombudsman Service.

A spokesperson for A&L said: “Following feedback from customers, we have taken the decision to fix the redemption administration charge at the time the mortgage is taken out.”

Northern Rock is the only other lender that offers this guarantee, but The Sunday Times is calling for all mortgage providers to adopt the policy.

While most lenders are refusing to change their stance, they may, like A&L, back down if customers keep complaining.

The Sunday Times will keep the pressure on. Lenders are also under the spotlight of the regulator, the Financial Services Authority (FSA), which is investigating exit fees.

The FSA insists lenders treat their customers fairly, and there are question marks over the fairness of a policy that allows a bank or building society to alter the terms of a contract once it has been taken out.

Judging by The Sunday Times’ mailbag, a lot of readers do not think it is fair.

Paul Mullen, from Prestwood in Buckinghamshire, recently remortgaged when his two-year discounted tracker with Woolwich came to an end, and was shocked when he found out he would have to pay a final charge of £275.

When he took the deal out in April 2004, Woolwich’s exit fee was £195.

Mullen said: “I was happy to pay a fee of £195, because that is what I was expecting. I complained, but was initially told that the change would have been published in the tariff of charges leaflet I received with my mortgage statement.

“I think it is outrageous that Woolwich can increase the cost by more than 40% through small print, and I do not feel that relying on terms and conditions wording to slip changes like this through is a clear and honest way of communicating with customers.”

Woolwich said it believes it is fair to increase its charges during a borrower’s mortgage term, because changes reflect increased costs which have to be passed on to the customer.

It also said it had no plans to review the final payment charge. However, it did send Mullen a cheque for £80 — the difference between the £195 he was expecting to pay and the £275 he had to pay.

Antonia Simpson, pictured with her 20-month-old son, Joss, was also successful when she complained to Abbey about having to pay its £225 exit fee.

When she and her husband took out a fixed-rate mortgage with the bank seven years ago, the fee was just £50.

Simpson, from Portsmouth, said: “I thought the fee was unreasonable and then I read an article in The Sunday Times about exit fees and that prompted me to write a letter of complaint. Initially, Abbey refused to give in, so I wrote a second letter. They then agreed to refund the full £225, which really surprised me. I thought the best I could hope for was £175 because we knew there was a £50 exit fee when we took out the mortgage.”

Join the debate

Click here to have your say on exit fees