Given these “serious misrepresentations and breaches of contact”, the APPG is calling for the FCA to investigate the conduct of MAS5, the Co-operative Bank and its senior executives.
Additionally, the APPG is calling on the Co-operative Bank to address the issue by, among other actions, paying full redress to the customers who have overpaid.
APPG on Mortgage Prisoners co-chair, Seema Malhorta MP, said: “It is disgraceful that MAS5 and Co-operative Banking Group customers have been mistreated for more than 10 years.
“People have suffered mental health issues, attempted suicide and lost their homes – all of this could and should have been prevented.
“Now that the Co-operative Banking Group has been shown to have treated customers unfairly by increasing the Standard Variable Rate, it must start living up to its ethical values.”
Co-operative's response
In response to the Fos ruling, a spokesperson for the Co-operative bank stated: “The Bank has received a final decision from the Fos on two long-standing customer complaint cases that refer to historic SVR changes made to some of our MAS5 mortgages over a decade ago.
“MAS5 is a former Britannia Building Society subsidiary that became a Bank subsidiary after the merger between Britannia Building Society and the Bank in 2009.
“The Bank believes that the historic MAS5 SVR changes were all made in accordance with the terms and conditions of the mortgage contracts and reflected the financial, economic and market conditions at the time.
“As such, we are disappointed that, in partially upholding the complaints, the Fos has come to a different conclusion.
“The Bank is now working through the details of the final Fos decision and will endeavour to progress this as quickly as possible to determine next steps."
The spokesperson also said: “We remain committed to providing our customers with the support and appropriate forbearance measures they need based on their individual circumstances.
“We have proactively sought ways to assist customers that could be considered as mortgage prisoners, including the option to re-mortgage to a Co-operative Bank mortgage, subject to eligibility, and in line with our commitments as a responsible lender.”
FCA and Fos
APPG’s criticism was not confined to the Co-operative Bank however, as it additionally raised “serious questions” about how the Financial Conduct Authority and the Fos have responded to this case.
Malhotra commented: “FCA senior executives have failed consumers by not taking effective action when this issue was highlighted to them in 2019 and 2020.
“Nikhil Rathi [the FCA chief executive] needs to take a different approach and ensure that all customers receive full refunds for all of the overpaid interest due to the 2.76 per cent unfair interest rate increases.
