"The Whistletree SVR should be regarded as the continuation of the original SVR originally operated by Northern Rock, and not as a new rate."
- High Court Judge Nicholas Thompsell
A group of former Northern Rock 'mortgage prisoners' have lost an initial case against TSB in London’s High Court after the Judge ruled the bank had “not breached the express terms” of the contracts by charging different interest rates.
The claimants allege they became trapped into paying high variable mortgage rates when Northern Rock collapsed. TSB Bank bought a portfolio of former Northern Rock mortgages from the government and began to administer the portfolio under its Whistletree brand. However, the mortgage holders said they were charged a standard variable rate (SVR) that was 2.29% higher than TSB’s own SVR and differed from the fixed or tracker rates they paid under Northern Rock. Many customers were later unable to pass the stricter affordability assessments that were introduced in 2014, leaving them as 'mortgage prisoners'.
Law firm Harcus Parker, acting for the defendants, said: "We are bringing claims for Whistletree customers for the difference between the interest they were charged on their mortgage and what they should have been charged. The claims allege that TSB has acted in breach of both express and implied terms of the mortgage agreement and has failed to act in accordance with its regulatory obligation to treat customers fairly."
However, High Court Judge Nicholas Thompsell found no breach of the loan terms.
Thompsell said: “The defendant has not breached the express terms of the claimants’ mortgage contracts by charging the claimants interest rates based on the Whistletree SVR and not on the TSB SVR.”
“The Whistletree SVR should be regarded as the continuation of the original SVR originally operated by Northern Rock, and not as a new rate.”
Following the ruling, 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.”
The bank noted that more than two-thirds of the customers in question had been able to a new mortgage product with Whistletree or another lender, or had settled their mortgage since 2016.
TSB argued that charging borrowers different rates is a “basic feature of the mortgage market”.
Sonia Tolaney KC, acting for TSB, said that TSB “offers different products, at different prices, to different customers, with different risk profiles” and that this was “neither surprising nor unfair”.
Matthew Patching, partner at Harcus Parker, commented: “Our clients are pleased that the judge seemed to appreciate the difficulties they have faced since the collapse of Northern Rock and the purchase of their mortgages by TSB.
“Although they are disappointed that the result of the preliminary issues trial is not to immediately determine the claims in their favour, they are looking forward to progressing their claims to the next stage and – ultimately – to a full trial.”
A further hearing in the case is expected to be held at a later date.
