The group action was brought about by 392 mortgage prisoners, who were challenging the ruling of the High Court delivered in September 2024 following a trial that ruled in TSB’s favour.
The former Northern Rock borrowers had their mortgages transferred to TSB and placed under its higher-interest Whistletree brand in 2016.
Although TSB initially maintained the borrower’s previous mortgage rate, it later introduced a Whistletree standard variable rate (SVR). This rate, say the borrowers, sat consistently above the Bank of England base rate by more than four percentage points, which was higher than TSB’s own SVR.
The mortgage prisoners argued that this change of interest rate breached their mortgage contracts and their original rates should have been maintained or they should have been transferred to the bank’s own SVR.
TSB argued that it was entitled to continue operating and varying the inherited rate in line with the contractual provisions.
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Unfair relationship provision
A second challenge relates to those borrowers who took out a Together product with Northern Rock that combined a mortgage with a linked secured loan.
Those claimants raised a challenge based on the unfair relationship provisions of the Consumer Credit Act 1974 to reclaim money paid against the secured loan and mortgage interest. However, the bank argued that section 140A(5) of the act excludes regulated mortgage contracts from the court’s remedial powers.
On both counts, Lord Justice Arnold, backed by Lord Justices Newey and Baker, agreed with TSB.
The mortgage contracts, it was concluded, allowed TSB to set and vary the rate for the portfolio and it had the option but not the obligation to move borrowers onto an existing lower rate.
It agreed the statutory unfair relationship remedies allowed for under the Consumer Credit Act could not be used to claim compensation for a regulated mortgage.
A spokesperson for UK Mortgage Prisoners said: “The UK Mortgage Prisoner Action Group have been made aware of the result of the appeal of the preliminary issues held in court in January. At this stage, we are discussing the implications with our advisers, but would stress that these are preliminary matters and not the substantive claim.”
TSB has been approached for comment.
