TSB customers claim they were locked into mortgages with 'excessively high’ interest rates'
Today, six years to the day since TSB bought £3.3bn mortgages from Northern Rock, approximately 200 homeowners whose mortgages have been administered by TSB’s ‘Whistletree’ brand have issued claims for around £50,000 each in overpaid interest.
Harcus Parker Limited, the firm of specialist group action solicitors which is bringing the case in the High Court, said that up to 27,000 people could ultimately join the Whistletree claims litigation.
Since TSB bought the loans, it has charged its Whistletree customers almost double the rates charged to its other customers, it is claimed.
Until recently, it had also refused to allow these ‘mortgage prisoners’ to access ordinary’ TSB fixed-rate deals on the same basis as its other customers, according to Harcus Parker.
Matthew Patching, Senior Associate at Harcus Parker, said his clients have been charged interest on their mortgages at rates significantly higher than those charged to other similar customers at the same bank.
He added: “This has had a real and devastating impact on the lives of homeowners who, other than happening to take out a mortgage with Northern Rock prior to the global financial crisis, are often identical to large numbers of TSB’s other customers.”
Many of these borrowers have unblemished repayment histories, but have been unable to move to another lender because they would not qualify under stricter affordability requirements imposed by regulators, according to Mr Patching.
A spokesman for TSB said:; “TSB is aware of potential action proposed by Harcus Parker and will robustly defend its position.
“We are committed to treating our Whistletree customers fairly. TSB took ownership of the Whistletree mortgages in 2016 and subsequently created access to product transfers for customers who did not previously have access to them.
The spokesman added: “Since then, over two-thirds of Whistletree customers have either transferred to a new Whistletree product or closed their mortgage with Whistletree.
“We write to customers twice a year to remind them about the opportunity to switch.”
The spokesman stressed that TSB is one of the few active lenders to manage former Northern Rock Asset Management (NRAM) customers.
When the mortgages were managed by NRAM, customers had no ability to transfer their mortgages or look for better rates, the spokesman said.
“When TSB bought the Whistletree book there was no product transfer capability. We invested over £1m and introduced the ability to switch to new products,” the spokesman added.
“TSB understands that, of the 67 companies that house former Northern Rock mortgages, TSB is one of only four that offer a product transfer.
The statement added: “During the pandemic over 4,800 customers took payment holidays. To continue supporting customers’ choice in this circumstance, we extended their ability to apply for lower rate product transfers in this situation as well.”
At a hearing in the Autumn the Chancery Division of the High Court will be asked to make a Group Litigation Order, consolidating the claims and making it possible for anybody who has ever had a mortgage administered by ‘Whistletree’ to seek compensation.
Matthew Patching, Senior Associate at Harcus Parker, said: “ It is hardly surprising that - from what we can tell - the Whistletree portfolio of mortgages has comfortably produced more profit for the bank than its ‘ordinary’ mortgages.”
Anybody whose mortgage has been administered by ‘Whistletree’ is eligible to claim, according to Mr Patching.