By Chris A'Court
BBC Radio 4's Money Box
The FSA wants lenders to vary fees in a way that is fair for consumers
The financial regulator is holding talks with mortgage lenders who it thinks are changing mortgage administration fees in an unfair way, it has revealed.
The Financial Services Authority (FSA) wants more explanation on why mortgage entry and exit fees have increased significantly, BBC Radio 4's Money Box understands.
Firms are having to justify their claims that the rise in fees reflects lenders' increased costs and extra work.
Customers have been growing increasingly angry with the lenders who have hiked their fees.
Alliance and Leicester has raised its mortgage exit fee by £100 to £295 in the past year.
Northern Rock now charges £250, Cheltenham and Gloucester (C&G) charges £225, and Nationwide has introduced a fee for the first time and charges £90.
If customers think they are being asked to pay unfair entry or exit charges on mortgages they should first complain direct to their lender.
Money Box has learned how Mark, from London, complained to C&G that the closing administration charge on his mortgage, taken out in 1999, had been increased by 350%.
Mark persuaded the lender that a fair rate for him to pay would be based on a 50% increase in costs and C&G accepted he should pay only £75, not £225.
C&G told Money Box that it will reduce exit fees in "very exceptional cases" and said it feels the £225 exit charge is not unfair for customers, because while the exit charge has increased some other charges have been removed.
Other customers are concerned about the increasing level of mortgage arrangement fees, which can now often be £500 to £700.
And in certain circumstances when a house purchase does not go through, customers still have to pay the arrangement fee even though they do not take out the mortgage.
All the major mortgage lenders are represented by the Council of Mortgage Lenders (CML).
Its Director General, Michael Coogan, told Money Box: "Fees are going up for a variety of reasons, one of which is the services are being charged more accurately.
"Another is they're providing fees which are counter-balancing lower interest rates."
If customers think they are being asked to pay unfair charges on mortgages and cannot reach an agreement with a lender they can take a complaint to the Financial Ombudsman Service.
BBC Radio 4's Money Box was broadcast on Saturday, 24 September, 2005, at 1204 BST.
The programme was repeated on Sunday, 25 September, 2005 at 2102 BST.