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Co-op takes FOS to court over review of ‘mortgage prisoner’ case

  • 15/06/2022
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Co-op takes FOS to court over review of ‘mortgage prisoner’ case
The Co-operative Bank is legally challenging the Financial Ombudsman Service (FOS) over a review of a customer’s interest rate.


A judicial review at London’s High Court will look at whether the FOS is right to probe a case relating to interest paid by one of Co-op’s MAS5 customers between 2009 and 2012.

Rachel Neale, lead campaigner for group UK Mortgage Prisoners, said it is “an important day for all MAS5 customers”.

The Co-op Bank’s closed book subsidiary MAS5 received the complaint in 2018 over the customer’s variable mortgage rate between 2009 and 2012.

Co-op believes the case should be time-barred. Usually, a customer needs to complain about a problem within six years of it happening. Customers can also complain within three years of becoming aware of the issue – or reasonably becoming aware of the issue.

In 2021 the FOS found that it did have the jurisdiction to consider the complaint, which prompted the Co-op to commence legal action.

A spokeswoman for Co-op said: “This judicial review is about whether or not the events complained of are within the FOS’s jurisdiction and not on the merits of the underlying complaint.

“The bank is satisfied that the historical variations were applied fairly and in accordance with the terms and conditions of the mortgage contract.

“As the hearing is today we cannot speculate on the outcome at this time.”

The case could potentially open the gate for more customers to complain against MAS5.

The All Party Parliamentary Group (APPG) on Mortgage Prisoners says that MAS5 increased the standard variable rate four times between 2009 and 2012, taking it from 2.99 per cent to 5.75 per cent.

The Bank of England base rate remained at 0.5 per cent during this period.

Earlier this year, Seema Malhotra MP, co-chair of the APPG on Mortgage Prisoners, said “The Financial Ombudsman’s investigator concluded that the SVR increases by Mortgage Agency Services No.5 (MAS5) Ltd were unfair and not in line with the terms and conditions of the mortgage. These unfair increases have had a devastating impact on customers.

“We hope that the Co-operative Bank will start living up to its ethical values and pay redress to the customers who have overpaid due to the misconduct. The FCA and the FOS need to intervene to protect these customers and stop MAS5 from dragging out these cases and causing more misery to vulnerable people. Many of these customers have serious health issues or financial problems.”

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