The unanimous judgement concluded that TSB did not breach borrowers’ mortgage contracts and statutory duty by charging a higher standard variable rate.

The appeal concerned two preliminary issues: a question of contractual construction and a matter of statutory interpretation.

In September 2024, Judge Nicholas Thompsell ruled that TSB, whose Whistletree subsidiary bought £3.3bn of mortgages from Northern Rock in July 2016 after its 2008 government bailout, had not violated homeowner’s contracts with the interest rates it charged.

While the judge determined two preliminary issues in TSB’s favour, permission to appeal was granted.

Around 400 former Northern Rock claimants argued they became trapped into paying a Whistletree standard variable rate that was 2.29% higher than a comparable TSB standard variable rate.

But Judge Thompsell’s view was that TSB had not broken its agreement with these mortgage holders.

Commenting on the Court of Appeal decision today, a TSB spokesperson says: “TSB has always been committed to treating Whistletree customers fairly and welcomes the court’s decision, which recognises that TSB acted in accordance with the terms of Whistletree mortgage contracts.”

After TSB took over the management of these mortgages in 2016, the bank says it introduced the ability for customers to switch to new products, investing over £1m in making this happen.

Since then, TSB highlights that around three-quarters of Whistletree customers have either moved to a new mortgage product with Whistletree or closed their mortgage with Whistletree. TSB states that it allows customers to switch at least annually.

The UK Mortgage Prisoners Action Group says it has “been made aware of the result of the appeal of the preliminary issues held in court in January”.

However, the group adds: “At this stage we are discussing the implications with our advisors but would stress that these are preliminary matters and not the substantive claim.”