Northern Rock Customers Sue TSB for £800m. Why?
There is an £800 million lawsuit against TSB from alleged mortgage prisoners. And the reasons are former customers of Northern Rock. According to reports, these customers have been alleging that they were forced into mortgages with “excessively high” interest rates by TSB. Therefore, they’ve decided to file group litigation against TSB.
What is the case about?
Today, six years ago, TSB purchased 27,000 mortgages worth £3.3 billion that Northern Rock had previously issued. It acquired those mortgages from the Government. It had been in charge of them ever since Northern Rock failed at the start of the financial crisis in 2008. According to customers, the repayment was fairly manageable till that time. However, the interest rates significantly increased after TSB’s Whistletree brand became the in-charge. They claim that interest rates are ‘excessively high’ under TSB and that it has almost turned them into mortgage prisoners.
What details do you need to know?
TSB’s Whistletree brand serviced mortgages to about 200 homeowners. Now, they all have submitted claims for about £50,000 each in unpaid interest. It’s been six years to the day after TSB purchased £3.3 billion in mortgages from Northern Rock.
Moreover, up to 27,000 people can eventually join the Whistletree claims battle. This news comes from Harcus Parker, a law firm of group action specialists pursuing the case in the High Court.
The lawyers said that since TSB acquired the loans, it has charged its Whistletree customers approximately twice the rates it charges its other customers.
Not only that but according to a statement provided to this newspaper, the bank had previously refused to provide these “mortgage prisoners” access to “regular” TSB fixed-rate arrangements on the same terms as its other consumers.
Many of these customers have spotless payback histories. However, since they wouldn’t meet the new, harsher affordability requirements established by regulators, they’ve not been able to switch lenders as well.
“TSB has handled our clients horribly,” says Matthew Patching, senior associate at Harcus Parker. “They have charged them with much greater interest rates than those charged to other similar consumers at the same bank.”
“This has had a real and catastrophic impact on the lives of homeowners. They, other than having a mortgage with Northern Rock before the financial crisis, are frequently similar to significant numbers of TSB’s other customers,” says the statement.
Who can join the claim?
Anyone who has had their mortgage managed by Whistletree is eligible to join the claim.
At a hearing in the fall, the firm will request that the High Court issue a Group Litigation Order. So, anyone who has ever had a mortgage managed by Whistletree would be able to claim compensation.
Moreover, many customers got a “Together Mortgage” from the TSB. It provided loans up to 125% of the value of their homes. They will be eligible to claim further compensation.
The Together Mortgage was a particularly dangerous product, Patching continued. It seemed to give consumers the option of taking out an unsecured loan at a fair interest rate in addition to a mortgage. But there was a catch.
Interest on the connected loan of up to £30,000 would increase by as much as 8% if the mortgage was ever paid off. Also, it’s have been the same if the borrower switched to a different lender.
A lot of customers have come forward and shared the struggles these Together Mortgages have put them through. One customer said, “I was surviving on £13 per week to pay for food and bills after making the monthly repayments. I didn’t turn on the heat despite being hungry and shivering.” Meanwhile, another one said, “I went through some really bad times and felt like killing myself. I fear to think what would have occurred if my daughter’s support hadn’t been there. She has provided me with financial support during this.”
What is TSB’s reaction?
In reaction to the move, the TSB stated that “it is aware of prospective action recommended by Harcus Parker.” They further added that “it will vigorously defend its position.”
“We are committed to treating our Whistletree clients fairly,” a spokeswoman said. After acquiring control of the Whistletree mortgages in 2016, TSB gave customers who hadn’t had access to product transfers the ability. Since then, more than two-thirds of Whistletree clients have terminated their mortgages with the company or switched to a new Whistletree product. Moreover, to inform consumers about the chance to switch, we write to them twice a year.
