Many British homeowners, who had previously either paid off their mortgage or switched to another lender, complained to the FSA about being charged higher exit fees than those initially agreed upon in their contract.

It is estimated that the average cost of exiting a mortgage has risen by 33% in the last two years.

Clive Briault, managing director of the FSA, said: “What we are seeing achieves our principal aim of stopping customers from being surprised by unexpected increases in mortgage exit fees.

“Customers will 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 varied fairly.”

In light of the FSA’s investigation, major lenders such as Standard Life, HBOS group and RBS have now opted to get rid of their exit fees altogether.

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Other lenders have either reduced their exit fees or transferred the cost of the exit fee to other charges, such as arrangement fees.

Some lenders, such as Barclays and Woolwich, continue to charge exit fees.

Consumers are warned that in some cases, mortgage arrangement fees could increase by as much as £1,000, in order to compensate for the loss of the exit fee.

Where lenders have chosen to set an exit fee, those lenders must now only ever change this fee if the reasons for it are clearly explained to the customer at the beginning of the mortgage contract.

Ray Boulger, senior technical manager at John Charcol, said: “There is now no hiding place for lenders.

“They must be open about what they are doing, and will have to be upfront in justifying these fees.”

The FSA has issued the following advice to consumers: “If you think you have been charged a higher exit fee than the fee stated in your mortgage contract, contact the lender to find out if you are eligible for a refund of the difference. You may not need the original mortgage documentation to claim. If you give your name and the address of the property, the lender should be able to find your details.”

“From now on, you should know when you sign up for a mortgage what exit fee you will pay, or should be given a clear idea of how the fee might be varied in the future. This transparency and fairness will allow you to make an informed decision about which mortgage product is best for you.”

“Check all the mortgage fees as well as the interest rate when comparing mortgages. Consider what impact the fees will have on the overall cost of borrowing.”