This fee is levied by the society when mortgage customers do not want to use the insurance deal it has set up.
Building societies are allowed to charge the fee to cover their costs of checking that the policy covers their interest in the property. But the Office of Fair Trading regards higher charges as an infringement on competition.
Harry Cohen of Clayhall, Essex, said the policy arranged by Nationwide was not the cheapest available, so it was right that he should be allowed to transfer to another insurer without paying the fee.
Robin Haywood, customer relations manager, said that insurers were judged for their service and efficiency in settling claims as well as price.
He wrote: 'The property insurance which we provide may not be the cheapest available within the market place at any one point in time, but we believe that what we offer represents good value for money.'
But after further protests from Mr Cohen, Mr Haywood decided that a gesture of goodwill was in order and agreed to waive the pounds 25 fee.
A Nationwide spokesman emphasised this was not normal policy and other customers cannot expect to have their fee waived for changing insurers.
Mr Cohen said: 'The moral would appear to be never take 'no' for an answer.'Reuse content