Charges for missed mortgage payments have been labelled "high and excessive" by a group of MPs, who called on the banking watchdog to crack down on the fees.

The Financial Services Authority (FSA) has been ordered to take action against companies that treat customers unfairly and "raise its game" when enforcing decisions.

The agency's failure to name lenders whom it was investigating was also criticised by the Treasury Select Committee, who said it was putting the lenders above the interests of consumers.

Practices like a £35 charge for a telephone or phone call or £150 for a visit from a debt counsellor for people in mortgage arrears, were labelled as "intolerable". The FSA and the Office of Fair Trading were also told to review the charges and ensure that they were fair.

The committee said lenders should also be required to provide an itemised breakdown of the additional costs their arrears charges were supposed to cover, to shed light on whether they were reasonable and justified.

It said in many instances, the charges appeared to go beyond the recovery of additional administrative costs, and were instead being used as an alternative profit stream.

John McFall, chairman of the committee, said: "We suspect that the small number of cases being brought against lenders making excessive arrears charges are merely the tip of the iceberg.

"This is why it is so important that lenders are compelled to open up their books and justify their charges, while the FSA must be prepared to take decisive action where it finds evidence of wrongdoing."

The report also raised concerns that the FSA first became concerned that some mortgage lenders were failing to treat their customers fairly when they fell into mortgage arrears in late 2007, but it was not until June 2009 that it announced it was taking enforcement action against four firms.

Copyright © Press Association 2009