TSB did not breach the terms of its home loan deals with hundreds of ‘mortgage prisoners,’ the High Court ruled in a preliminary ruling.
Judge Nicholas Thompsell ruled that TSB, whose Whistletree subsidiary bought £3.3bn of mortgages from Northern Rock eight years ago following its 2008 government bailout, had not violated homeowner’s contracts with the interest rates it charged.
Around 400 former Northern Rock claimants argue they became trapped into paying a Whistletree standard variable rate that was 2.29% higher than a comparable TSB standard variable rate.
The class action suit claims these homeowners paid £30,000 in extra interest payments on average, in a test case valued at up to £75m if 2,000 other homeowners join the suit led by law firm Harcus Parker.
But Judge Thompsell ruled that TSB had not broken its agreement with these mortgage holders.
He said: “The Whistletree standard variable rate should be regarded as the continuation of the original standard variable rate originally operated by Northern Rock, and not as a new rate.”
The UK Mortgage Prisoners Action Group, which backs the claimants, said it was “disappointed” by the decision, but stressed that the ruling was a preliminary judgment around various aspects of the case, “and not the trial of the group claim against TSB/Whistletree”.
A TSB spokesperson said: “We welcome the court’s decision today, which recognises that TSB acted in accordance with the terms of Whistletree mortgage contracts.”
Mortgage Prisoners Action Group will meet Treasury officials on 1 October to ask for protection for consumers caught in this situation.
Mortgage Prisoners Action Group lead campaigner Rachel Neale said:” We will not rest until action is taken by government and regulator.
“It is abhorrent that our members continue to suffer injustice 16 years on from the global financial crisis due to a lack of setting adequate protections in place upon the sales and transfers of our mortgages.
“No residential mortgage should sit in the clutches of profiteering debt collectors who offer no mortgage products.”
