TSB will be taken to the Rolls Building court on 23 July by legal firm Harcus Parker, acting on behalf of mortgage borrowers under its Whistletree brand.
Harcus Parker is running a group claim for 2,500 TSB Whistletree customers in total under no win, no fee agreements. The firm is seeking compensation and alleging that the borrowers were stuck on high interest rates, which caused “emotional misery”.
Tomorrow’s hearing 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.
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.
Some borrowers have been unable to switch onto a new rate because they do not meet the lending and affordability criteria brought out after 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, added: “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 spokesperson for TSB 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.”
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 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 knowingly enabled.”
Earlier this year, a cross-party mortgage prisoner bill passed in Parliament to end evictions for borrowers and cap standard variable rates.
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
