Lord Sharkey the Lib Dem peer has written to the Serious Fraud Office (SFO) to request an investigation into the treatment of mortgage prisoners by Mortgage Agency Services Number 5, which was part of the Co-operative Banking Group.
Mortgage Agency Services Number 5 (MAS5) increased the standard variable Rate (SVR) four times over the period 2009 to 2012. It claims that each of these rises was necessary to reflect changes in the cost of funding the mortgages.
An investigation from the Financial Ombudsman Service (FOS) found that “the evidence doesn’t show that there were changes in the overall costs MAS5 was liable itself to pay for the funds that it used” and “as a result the changes to the SVR MAS5 made between 2009 and 2012 – which collectively added 2.76% to the SVR – were not made for reasons permitted by the contract”. It added: “The evidence shows that MAS5’s cost of funding did not increase”
The conclusion from FOS seemed different to what MAS5 customers were told. For example, in February 2011 the letter sent by MAS5 said that the SVR increase was “a direct reflection of the increased costs of funding your mortgage loan”. In April 2012, the letter said that the SVR increase had been made after “careful consideration” and that the “rate we are charged for funding your mortgage has increased considerably”.
SVR explanation
Lord Sharkey now insists there should be a full investigation by the SFO into the conduct of Mortgage Agency Services Number 5 and the Co-operative Banking Group and the statements they made to customers to justify the increases in the SVR.
During the debate on the Second Reading of the Mortgage Prisoners Inquiry Bill, Lord Sharkey will also ask the new Labour Government when they intend to respond to the LSE Report which was funded by Martin Lewis and contained a series of costed proposals to help mortgage prisoners.
Following the 2024 general election, Lewis wrote to Rachel Reeves asking for the new government to respond to the LSE report. Lewis said the “financial, mental and physical toll on those trapped” as mortgage prisoners had led to “repossessions, hardship and, terribly, suicide”. So far the government has not publicly responded to the letter.
Lord Sharkey said “We need an inquiry so we can allocate responsibility and examine the mistakes within Government and regulators that caused the very bad situation for thousands of mortgage prisoners.
“We need an inquiry to identify and correct any failures at the FCA and the FOS and correct any miscarriages of justice which may have occurred.”
He added: “Most of all, we need an inquiry to develop and implement solutions for the current generation of mortgage prisoners; to help them stay in their homes and stop them from being exploited by vulture funds.”
