Mortgage prisoners make £800m legal claim against TSB over excessive interest rates

Mortgage prisoners are homeowners who are trapped on an expensive mortgage and are unable to get a cheaper deal with other lenders because they don't meet strict borrowing criteria – even though they'd often be paying less if they switched. Typically, they took out mortgages with lenders before the 2008 financial crash when lending rules were more relaxed. 

This particular group of claimants launched legal action on the sixth anniversary of TSB buying their mortgages from the now defunct Northern Rock. According to the lawsuit, homeowners say they have been overcharged around £50,000 each in interest while part of TSB's "Whistletree" brand. The interest rates applied to this group were double the size of other TSB customers.

Law firm Harcus Parker is leading the new claim on behalf of the 200 mortgage prisoners. However, the number of claimants could grow exponentially, as TSB bought around 30,000 Northern Rock mortgages in total.

TSB said: “We are aware of potential action proposed by Harcus Parker and will robustly defend its position."

Here's who could be part of the claim

Harcus Parker is encouraging people who believe they are mortgage prisoners, and who fit the following criteria, to register their interest:

• If your residential mortgage is, or ever has been, managed by TSB's 'Whistletree' brand.

• You can also claim if you took out a "Together Mortgage", which allowed borrowers to access lending of up to 125% of the value of their homes.

To register your interest, you need to sign up on the Harcus Parker website and enter some personal details.

You will need to agree to instruct Harcus Parker to act as your solicitor. It will then begin to investigate your claim, including requesting all relevant documents relating to your mortgage from your lender.

You could get up to £50,000 - but only if the case is successful 

Group legal actions like this one can take a long time to play out in court and, put bluntly, they often aren't successful. So definitely don't assume that taking part means you're in line for a big payout – or indeed any payout at all.

The law firm says it is difficult to give any precise figures for what individual claimants could get if the legal claim's successful. However, if the claim is successful – and it's a big if – Harcus Parker estimates some could get back as much as £20,000 to £30,000, while those who took out a Together Mortgage could be due up to £50,000.

While there's no fee to join the action, if the case is successful Harcus Parker will take a 35% cut of any payout, with VAT (20%) added to this.

The firm also says that, if successful, claimants will be required to repay their share of what it calls "disbursements" – these include things like insurance costs. This is likely to be in the region of £500 per person, though defendants could be ordered to pay a proportion of claimants' costs, which would reduce the amount.

The risks of taking part

While Harcus Parker says you won't have to pay anything upfront to join the lawsuit, it's important to understand that taking part isn't completely risk-free.

With this kind of group legal action, potential claimants are often advised to check how any lawsuit they join is funded and insured. That's because if the case were to proceed, and the court ruled against the claimants, they could technically be liable for the lender's legal costs.

Harcus Parker says it is fully insured for this eventuality, and so the only situation in which claimants could be left liable is if that insurance were to fail – a prospect that isn't very likely. However, joining the case is not without some risk and so you should carefully weigh up the potential pros and cons before signing up.

MoneySavingExpert.com's long campaign in support of mortgage prisoners

For the past six years, MoneySavingExpert.com has been campaigning to help the estimated up to 200,000 mortgage prisoners.

This included founder Martin Lewis meeting key figures from the European Union, the Treasury and the Financial Conduct Authority. Yet despite some positive movement, many mortgage prisoners remain trapped on expensive deals.

Since then, London School of Economics and Political Science (LSE) released a report, commissioned by MSE and funded by Martin, showing the urgent and necessary steps that could be taken now to release more mortgage prisoners from their financial cells. And more recently, Martin funded further research from LSE, which'll hopefully help build on the previous report.

Full details about MSE's campaign can be found in our Mortgage prisoners guide.