TSB faces £800m mortgage prisoners’ lawsuit from former Northern Rock borrowers tied up at ‘extremely high’ rates
- The bank is facing an £800m class action lawsuit from former Northern Rock clients
- About 200 people have joined the claim so far, but a law firm says 27,000 people may eventually be able to.
- They each claim about £50,000 in what they say are excessive interest
- TSB has purchased loans from the government and runs them under an arm of Whistletree
- The bank says it will vigorously defend its position
TSB is facing an £800m lawsuit from alleged mortgage prisoners.
Six years ago today, the lender snapped up 27,000 mortgages worth £3.3 billion that Northern Rock had originally delivered.
And it bought those mortgages from the government, which has been managing it since the collapse of Northern Rock in the early days of the 2008 financial crisis.
Held in captivity?: Six years ago TSB bought 27,000 mortgages worth £3.3 billion that had originally been delivered by Northern Rock
But under TSB’s Whistletree branding, former Northern Rock borrowers claim they are locked into mortgages with “extremely high” interest rates.
Harkus Parker, the law firm filing suit on behalf of mortgage inmates, Today he filed documents with the Supreme Court with a view to creating a class action order.
It revealed that 200 homeowners had joined the cause – each claiming around £50,000 in excess interest. But she believes as many as 27,000 people could eventually join the litigation.
Harcus Parker claims that since TSB bought the loans, it has charged Whistletree customers nearly double the rates it charged its other customers.
It also says that until recently, TSB would refuse to allow them access to TSB’s “normal” fixed-rate deals on the same basis as its other clients.
Matthew Patching, senior associate at Harcus Parker, said: ‘Our clients were treated appallingly by TSB: they were charged interest on their mortgages at rates much higher than those charged to other similar clients at the same bank.
This has had a real, devastating impact on the lives of homeowners who, other than having a mortgage with Northern Rock before the global financial crisis, are often matched with large numbers of other TSB clients.
TSB said it would “vigorously defend its position”.
It claims that since it bought mortgages in 2016, it has allowed customers to switch to cheaper products where they couldn’t previously.
Harcus Parker claims Whistletree customers have paid nearly twice the prices of other TSB customers – but the bank says it has enabled them to move on to cheaper products
Who can join the claim?
Anyone whose mortgage has been managed by Whistletree is eligible to join the claim.
The company will ask the Supreme Court for a class action order at a hearing in the fall. This would make it possible for anyone with a Whistletree-administered mortgage to seek compensation.
According to Harcus Parker, customers who took out a “together mortgage,” which allowed borrowers access to lending of up to 125 percent of their home’s value, may be able to ask for additional compensation.
Patching added: “The all-in-one mortgage was a particularly toxic product. It seemed to allow borrowers to get an unsecured loan, along with a mortgage, at a reasonable interest rate, but there was a catch.
“If the mortgage is ever paid off, or if the borrower switches to another lender, the interest charged on the linked loan of up to £30,000 would jump by as much as eight per cent.”
“I lived on £13 a week.”
Margaret Lea, 73, from Bexhill, East Sussex, found herself struggling to keep up with paying off her two-bedroom flat after interest rates on her mortgage soared.
‘When I took out the mortgage in 2006, it was easy to manage,’ said the former CEO of the charity, retired and grandmother of two. But in 2009 it became redundant and Northern Rock soon fell apart.
Then my monthly payments started to go up. It has gone from £486 to £631 a month. That’s when I really started to struggle.
‘I was desperate to keep the house.’ My health was not good – I have asthma and chronic obstructive pulmonary disease – so being homeless would be a death sentence.
After paying off the monthly instalments, I was living on £13 a week to cover food and bills. I didn’t put the heating on; I was cold and hungry.
I went through some really hard times, and felt suicidal at one point. Without my daughter’s support, I dread to think what would have happened. You financially helped me get through this.
I feel sick when I think of the way the Bank has treated me and so many other vulnerable people.
They have robbed me of years of pleasure, and destroyed my self-esteem, all just to get more money out of me.