A class action lawsuit potentially worth up to £800 million is being filed today against high street bank TSB in relation to customers dubbed 'mortgage prisoners' locked into loans with high interest rates. Harcus Parker, a London firm of specialist group action solicitors, is bringing the case in the High Court which it claims could see up to 27,000 customers join the lawsuit.
TSB said it was aware of potential action and planned to "robustly defend its position", adding it was committed to treating affected customers fairly.
The action stems from mortgages worth £3.3 billion which TSB bought from now defunct bank Northern Rock. The deal, which completed exactly six years ago today, saw the bank create a new brand called 'Whistletree' which was purpose built to manage 27,000 former Northern Rock mortgages.
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The initial claim lodged with the High Court today affects around 200 homeowners whose mortgages have been administered by the Whistletree brand. They have each issued claims for around £50,000 in overpaid interest, with Harcus Parker stating it thinks the overall lawsuit could be worth up to £800 million.
Harcus Parker claimed that, after TSB bought the loans, it had charged its Whistletree customers almost double the rates of its other customers and, until recently, had also refused to allow these customers to access ordinary fixed-rate deals on the same basis as other mortgage holders.
Senior associate at the firm Matthew Patching said: "Our clients have been treated terribly by TSB. They have been charged interest on their mortgages at rates significantly higher than those charged to other similar customers at the same bank.
"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."
Harcus Parker added in a statement that many of these borrowers had unblemished repayment histories but had been unable to move to another lender because they would not have qualified under new, stricter affordability requirements imposed by regulators.
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Anybody whose mortgage has been administered by 'Whistletree' is eligible to claim. Customers who took out a 'Together Mortgage', which allowed borrowers to access lending of up to 125 per cent of the value of their homes, may be able to seek additional compensation.
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
TSB said in a statement: "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. 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."