The All Party Parliamentary Group (APPG) on Mortgage Prisoners has written to the Co-operative Bank, the Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FOS) demanding action for mortgage customers of Mortgage Services No 5 (MAS5). who they say have been hit by unfair increases in interest rates.
The APPG said evidence uncovered by MPs and the FOS suggests that MAS5 treated customers unfairly and that the increases to the MAS5 SVR did not comply with the terms and conditions of the mortgage.
Mortgage Agency Services No. 5 Ltd is a subsidiary of the Co-operative Banking Group.
The FOS investigator found that MAS5 treated a customer unfairly by increasing its standard variable rate (SVR) from 2.99% to 5.75% over the period from 2009 to 2012, the APPG said.
In a statement, the APPG said: “MAS5 increased the SVR four times over the period from 2009 to 2012. It says each of these increases was necessary to reflect changes in the cost of funding.
“In relation to the 2009 increases, the FOS investigator found that MAS5 ‘provided no evidence that the cost of funds he used in his business had increased’.
The APPG statement added: “In relation to the 2011 and 2012 SVR increases[MAS5]did not provide anything that specifically relates to MAS5’s own costs, or how these might have changed.”
MPs said they had also received “very worrying reports of how MAS5 and the Co-operative Bank have treated vulnerable customers and these have been forwarded to the FCA for investigation”.
MP Seema Malhotra, co-chair of the APPG on Mortgage Prisoners, said: “The Financial Ombudsman’s investigator has concluded that the SVR increases by Mortgage Agency Services No.5 (MAS5) Ltd were unfair and not in line with the terms and mortgage terms. These unfair increases have had a devastating impact on customers.
“We hope The Co-operative Bank will begin to uphold its ethical values and redress customers who have overpaid due to misconduct.
“The FCA and FOS must step in to protect these customers and prevent MAS5 from dragging out these cases and causing more misery for the vulnerable.
“Many of these customers have serious health issues or financial problems.”
In its letter to Nausicaa Delfas, chief executive of the Financial Ombudsman Service, the APPG said: “We are also concerned that the FOS allows companies to pressure customers into signing confidentiality agreements which prohibit such customers from sharing their concerns with the FCA.
“We are particularly concerned that when companies receive an FOS decision that they do not wish to apply in other cases, they pressure customers to withdraw their complaint, accept an agreement and sign a clause confidentiality.
“FOS seems to be allowing this to happen and not questioning it, while also allowing MAS5 to delay and drag out these complaints for as long as possible.”
“In our view, this requires a strong and proactive response from FOS to avoid further harm to MAS5 customers.”
A FOS spokesperson declined to comment in response to the APPG’s letter.
A spokesperson for the Co-operative Bank said: “Today we received a letter from the APPG on Mortgage Prisoners and intend to review it and respond in due course to the APPG on the issues they have raised.”
An FCA spokesperson said: “We have received the letter and will respond to it.”