The Financial Ombudsman Service has identified break fees as a trouble spot for lenders and their customers, with a number of disputes focussed on that issue in recent months.In its latest quarterly circular, published this week, the ombudsman reported that several disputes arose because customers of a particular financial institution felt adequate disclosure about the break cost involved in taking on a fixed rate loan was not made at the time they switched from variable to fixed rates. Other complaints against the same lender were that it gave misleading information about fixed-rate break costs.FOS found that one lender had a poor loan-switching process and was unable to switch loans from fixed to variable within an acceptable time. In some cases, when rates were changing, this resulted in extra cost to the borrower.There were a "substantial number" of disputes involving the level of the break costs charged by one lender. The lender's break-cost calculation method included a credit spread at either end of the calculation. The lender argued that the magnitude of the spread was variable and it was unable to make an accurate assessment of its costs. In response to the ombudsman's inquiries, the lender agreed to revise its break-cost method.Another lender's practice was to calculate break costs on lump sum repayments on the anniversary date of the loan. In some cases, the cost was worked out almost a year after the lump sum payment was made.FOS was concerned that this method could result in a higher break cost being charged if rate changes in the intervening months went against the borrower.