The Financial Services Authority (FSA) has told mortgage lenders that have hiked their mortgage exit administration fees to repay customers who complain. If you switched mortgage recently, you may be owed hundreds of pounds.

Some mortgage companies were charging up to three times the mortgage exit administration fee that was listed on the original documents when the person signed up for the loan. Now the FSA has finished its investigations into Mortgage Administration Exit Fees (MEAFs) and has concluded that those charged by many lenders are unfair.

The FSA has now told lenders that they have to decide by 28 February 2007 which of the following outcomes they will adopt for their current customers: charge no MEAF; charge the original MEAF; charge a revised MEAF or charge their current increased MEAF. Lenders are expected to either charge the original MEAF shown in the loan documents, or a lower fee, if they want to avoid potential complaints and compensation. Any lender that decides to continue charging their current increased MEAF is likely to be asked to justify their decision to the FSA.

Anyone who has redeemed a mortgage since 2003 can use the ruling to go back to their lender and demand a refund of the amount by which the MEAF they paid exceeded what was shown in their original loan documents.

So, if you switched loan any time after 2003, dig out your paperwork and find out if the MEAF you paid was more than that in your original loan documentation. If it was, write to your lender citing the FSA’s statement of the 26th January on MEAFs and ask for a refund of the difference between the original fee and the higher amount you actually paid. The longer you’ve had your mortgage, the lower the fee shown in the agreement will be and the bigger the refund you’ll be due.

Clive Briault, FSA managing director of Retail Markets, said: “We expect that these measures, agreed with the Council of Mortgage Lenders, will stop borrowers from being surprised by unexpected increases in these fees. People will now know when they sign up for a mortgage what fee they will pay on exit, or should be given a clear idea of how the fee might be increased fairly.”

Estimates of the total amount of compensation that might be claimed are £50-100m.