Chancellor Alistair Darling has called on mortgage lenders in the UK to ensure that their arrangement fees are fair to customers.

Mr Darling has expressed concern that people looking to remortgage are having their money problems made worse as a result of being charged large sums for arrangement by their financial service provider.

The Council of Mortgage Lenders has noted that the fees its members charge vary a great deal but the chancellor has warned the industry that he might turn the matter over to the Financial Services Authority.

"I’m very concerned that people ought to be treated fairly, especially people coming off fixed rates and going on to different rates," he said.

"Everybody accepts there are costs that have to be met when they change over, but I think we have to make sure people are treated fairly and are not taken advantage of."

Moneyfacts reported recently that the typical interest level now being charged by British lenders on a two-year fixed-rate mortgage is over seven per cent.