No win, no fee legal firm Harcus Parker is running a group claim for 2,500 TSB Whistletree customers. The firm is seeking compensation and alleging that the borrowers were stuck on high interest rates, which caused “emotional misery”.
Tomorrow’s hearing (Tuesday 23 July) at the Rolls Building Court in the High Court will relate to 300 claimants whose mortgages were transferred to TSB. Harcus Parker said if the hearing was successful, more mortgage prisoners could be compensated.
It said the average estimated claim to be worth between £20,000 and £30,000.
The case centres around homeowners who had their mortgages transferred from failed banks to inactive lenders who charged higher rates than traditional high street lenders.
Lenders such as Northern Rock and Bradford and Bingley were bailed out by the Government in 2008 due to the financial crash, and some mortgages were sold onto non-lending entities.
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Some borrowers have been unable to switch onto a new rate because they do not meet the lending and affordability criteria brought out in the aftermath of the global financial crisis.
This includes measures introduced by the Mortgage Market Review in 2014, which was designed to encourage responsible lending. After it was published, lenders were required to conduct affordability assessments on mortgage borrowers.
The Financial Conduct Authority (FCA) changed its rules in 2019 to allow mortgage prisoners to access new rates with amended affordability assessments. In 2021, the regulator admitted that just 200 borrowers had benefitted from the change.
Matthew Patching, partner at Harcus Parker, said: “This trial represents the first significant step towards compensation for our clients, who have paid very high interest rates on mortgages for a significant period of time.
“It’s not just about the money; our clients feel very strongly that there should be recognition that they’ve suffered a terrible injustice.”
TSB has ‘treated Whistletree customers fairly’
In 2016, TSB purchased a portfolio of 27,000 Northern Rock mortgages from the Government’s holding firm UK Asset Resolution (UKAR) and established the Whistletree subsidiary to administer the loans.
The lender said its Whistletree brand treated customers fairly and allowed them to switch to new rates.
A TSB spokesperson, said: “Whistletree customers are not mortgage prisoners. Since we took over the management of these mortgages, over two-thirds of Whistletree customers have either moved to a new mortgage or closed their mortgage with Whistletree. We remind customers they can switch at least annually, and this is displayed prominently on the Whistletree website.”
The Whistletree website has a page directing borrowers to advised or non-advised ways of switching their rate and states: “You don’t need to go through a credit check or provide any documents.”
YourMoney.com’s sister title Mortgage Solutions understands that TSB invested over £1m to enable customers to switch onto new Whistletree rates. Some of the options the firm offers include a two-year fix at 60% loan to value (LTV), with no fee, which has a rate of 5.09%, while the equivalent with a £995 fee has a rate of 4.79%.
The TSB spokesperson added: “This is a hearing for the court to determine some specific issues that have been raised as part of Harcus Parker’s legal action relating to Whistletree mortgage terms and conditions, in advance of any final trial. TSB has always been committed to treating Whistletree customers fairly, does not believe the claim has merit and is defending it vigorously.”
A call for legislative reform
Rachel Neale, lead campaigner of the UK Mortgage Prisoners Action Group, said they welcomed the hearing.
She said: “After six years of tough campaigning for justice, UK Mortgage Prisoners Action Group hopes that Harcus Parker Solicitors is successful in this aspect of justice for our members.
“Additionally, we call upon Government to right the broader wrongs that only legislative reform can bring about for mortgage prisoners in order to right the wrongs Government enabled.”
Earlier this year, a cross-party mortgage prisoner bill passed in Parliament to end evictions for borrowers and cap standard variable rates.
This article was first published in YourMoney.com’s sister title, Mortgage Solutions. Read: First ‘mortgage prisoner’ court hearing to be held this week.
