The Court of Appeal in London has dismissed a ‘mortgage prisoners’ complaint against TSB Bank worth £800m worth of claims.
The unanimous judgment concluded that TSB did not breach the mortgage contracts and the borrowers’ legal duty by charging a higher standard variable rate.
The appeal concerned two preliminary issues: an issue of contractual construction and an issue of statutory interpretation.
In September 2024, Judge Nicholas Thompsell ruled that TSB, whose Whistletree subsidiary bought £3.3 billion worth of mortgages from Northern Rock in July 2016 following the government’s 2008 bailout, had not breached homeowners’ contracts with the interest rates it charged.
While the judge decided two preliminary issues in TSB’s favour, permission was granted to appeal.
About 400 former Northern Rock claimants argued that they were stuck paying a Whistletree standard variable rate that was 2.29% higher than a comparable TSB standard variable rate.
But Judge Thompsell found that TSB had not broken the agreement with these mortgagees.
Commenting on today’s Court of Appeal ruling, a TSB spokesperson said: “TSB has always been committed to fair treatment of Whistletree customers and welcomes the court’s decision, which recognizes that TSB has acted in accordance with the terms of Whistletree mortgage contracts.”
After TSB took over the management of these mortgages in 2016, the bank says it introduced the ability for customers to switch to new products, investing more than £1 million to make this possible.
Since then, TSB highlights that around three-quarters of Whistletree customers have either switched to a new mortgage product with Whistletree or taken out their mortgage with Whistletree. TSB states that customers can switch at least annually.
The UK Mortgage Prisoners Action Group said it had been “informed of the outcome of the appeal in relation to the preliminary issues heard in court in January”.
However, the group added: “At this stage we are discussing the implications with our advisers but emphasize that these are preliminary matters and not the substantive claim.”