The first mortgage prisoner case against Whistletree, a subsidiary of TSB, commenced at City Court House, Rolls Building in London today (July 23).
Breeze and others v TSB Bank PLC was presented to Judge Nicholas Thompsell by Harcus Parker, representing the mortgage prisoner claimants, and Hogan Lovells International, representing TSB.
In court, Harcus Parker explained the claimants represented a group of people who, before 2008, had held a mortgage with the Northern Rock bank. After its collapse, they had their mortgage sold to other lenders.
In 2015, these mortgages were sold to TSB, which held them in its subsidiary Whistletree.
However, these customers were faced with higher interest rates while their mortgages were held by Whistletree, and were unable to switch due to changes to the affordability criteria undertaken by the Financial Conduct Authority.
This left the claimants, according to the Harcus Parker team, “imprisoned” on higher mortgage rates.
The case
The core claim of the claimants’ against TSB rested upon a number of bases, which incorporated principal issues with the conduct of the bank.
The first base concerned the express terms of the mortgage contracts that, the claimants argued, were breached by TSB charging them a standard variable rate exclusively for Whistletree customers and not its wider TSB equivalent.
They asserted that Whistletree customers were charged a separate SVR that stood 2.29 per cent higher than the SVR charged to other TSB customers, despite the bank being required to charge them the TSB SVR.
However, the claimants recognised the court may believe that TSB had a discretion as to which rate it used.
TSB denies that the express terms prevented it from charging the Whistletree SVR.
The court heard that the second base concerned the customers’ implied term, which the claimants alleged was breached by setting or maintaining the Whistletree SVR and/or charging the claimants interest based on the Whistletree SVR.
TSB denies there was such an implied term, and in any event, denies that it would have been breached.
This incorporated the second principal issue, which argued that “any discretion to set and/or vary interest rates should not be exercised dishonestly, for an improper purpose or in a way which no reasonable mortgage, acting reasonably, would do”.
However, as the hearing proceeded, Harcus Parker said the two parties had reached agreement on this second matter and, as a result, issue two would not be under discussion over the course of the hearing.
Lastly, the claimants whose mortgage contracts are not and were not regulated contracts alleged that the relation between themselves and TSB was “unfair” under the meaning of the Consumer Credit Act 1974.
However, TSB denied that these contract are reviewable for fairness under the CCA, and, in any event, denied that the relationship was unfair.
The hearing is expected to conclude on Friday (July 26).
tom.dunstan@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
