Seema Malhotra MP, co-chair of the all-party parliamentary group on mortgage prisoners, fronted the call in an open letter to Tesco Bank chief executive Gerry Mallon (pictured).
“We have seen damaging impact when mortgages are sold to vulture funds or inactive lenders which hold trapped customers on high standard variable rates. It will come as a shock to many of your customers that the small print of the mortgage contract enables Tesco to sell on their mortgage,” the letter stated.
“We hope that you repay customers’ trust in Tesco Bank by committing to sell their mortgages only to a fully regulated active lender which will offer them new deals and fixed interest rates,” it continued.
Tesco Bank outlined plans to sell its £3.7bn book, which covers 23,000 customers, on Tuesday (21st May 2019).
“We have chosen to cease lending to new customers and to explore a sale of our portfolio. Our priority in any sale is to complete a commercially-acceptable transaction with a purchaser who will continue to serve our customers well,” said Gerry Mallon, chief executive of Tesco Bank.
The MPs requested that any prospective buyer of Tesco Bank’s mortgage book sign the UK Finance Agreement. This enables borrowers on reversion rates to move to a better deal.
They further asked for clarification on Tesco Bank’s plans for structuring the sale, the anticipated pace of a deal and plans for communicating with customers.
Tesco added in a statement: “Our priority in any sale is to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well. Furthermore, there are no changes to customer accounts as a result of this announcement and we continue to offer a full mortgage service to customers including additional and new borrowing.”
Malhotra and Charlie Elphicke MP established the all-party parliamentary group on mortgage prisoners earlier in May to represent victims of the sales. These are borrowers who became stuck on high rate mortgages when their loan was sold to a non-active lender.
The letter was signed by co-chairs of the all-party group Malhotra and Lord John Sharkey, as well as Elphicke and 24 others.
In April, mortgage campaigners met with Malhotra and Nicky Morgan MP to discuss the plight of mortgage prisoners.
The full list of the letter’s signatories
Rushanara Ali MP (Bethnal Green and Bow)
Chris Bryant MP (Rhondda)
Richard Burden MP (Birmingham, Northfield)
Julie Cooper MP (Burnley)
Rt Hon Yvette Cooper MP (Normanton, Pontefract and Castleford)
Geraint Davies MP (Swansea West)
Jack Dromey MP (Birmingham, Erdington)
Charlie Elphicke MP (Dover)
Helen Goodman MP (Bishop Auckland)
Kate Green MP (Stretford and Urmston)
RT Hon Harriet Harman QC MP (Camberwell and Peckham)
Sharon Hodgson MP (Washington and Sunderland West)
Kevin Hollinrake MP (Thirsk and Malton)
Diana Johnson MP (Kingston upon Hull North)
Rt Hon Norman Lamb MP (North Norfolk)
Jeremy Lefroy MP (Stafford)
Seema Malhotra MP (Feltham and Heston)
Gordon Marsden MP (Blackpool South)
Liz McInnes MP (Heywood and Middleton)
Lord John Sharkey
Virendra Sharma MP (Ealing, Southall)
Paula Sherriff MP (Dewsbury)
Tanmanjeet Singh Dhesi MP (Slough)
Alex Sobel MP (Leeds North West)
Paul Sweeney MP (Glasgow North East)
Gareth Thomas MP (Harrow West)
Catherine West MP (Hornsey and Wood Green)