The first of the mortgage prisoner group legal action cases is due to come to court in London on July 23.
This first tranche of cases will relate to TSB’s Whistletree subsidiary which was built to manage the mortgage accounts of former Northern Rock customers.
The Mortgage Prisoners Action Group lead campaigner, Rachel Neale, said: “After six years of tough campaigning for justice UK Mortgage Prisioners Action Group hope that Harcus Parker Solicitors are successful in this aspect of justice for our members.
“Additionally, we call upon the government to right the broader wrongs that only legislative reform can bring about for Mortgage Prisoners in order to right the wrongs government knowingly enabled.”
The action group said their members are made up of people who had taken their mortgage out with banks such as Northern Rock before the economic crash of 2008 which saw them go bust.
Following this, new economic criteria was introduced which meant that many pre-crash borrowers no longer met the criteria for their own mortgages and so could not switch lender and couldn’t change the type of mortgage.
As a result, mortgage prisoners have been paying around 5 per cent interest while the majority of borrowers had access to 1 to 2 per cent for a decade.
The consecutive rate rises from 2021 have only exacerbated this issue, with some mortgage prisoners now stuck on interest rates of nearly 10 per cent.
As a result of this spike in costs, many mortgage prisoners have lost their home to repossession.
The action group likened this to the Post Office Horizon case that made waves earlier this year due to the fact that the prisoners who joined UK Mortgage Prisoners Action Group via their Facebook previously thought they were alone.
However, entities such as the Financial Conduct Authority and the Financial Ombudsman Service say these companies have acted in line with the original mortgage contracts which state that, when a customer’s fixed rate term ends, they switch to the SVR.
Despite this, the action group argued that “no one willingly stays on a high SVR” and that its main purpose is to “incentivise” a customer to sign to another fixed rate.
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