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MP says Northern Rock ‘bad bank’ customers are “mortgage prisoners”

Treasury Select Committee Labour MP Jim Cousins says existing Northern Rock mortgage customers will be “prisoners” when the bad bank is split off from the rest of the assets.

Speaking at a TSC session yesterday, UKFI head of wholly owned investments Keith Morgan admitted that 85 per cent of mortgage borrowers would be trapped within the business that was being run down as part of the restructure approved by the EU Commission last week.

Cousins said: “It can’t be in the interests either of the taxpayer or of the individuals concerned that they end up being prisoners of an institution that can only offer them a very poor mortgage deal. What is being done to protect the interests of those people who will be in the mortgage book that is retained by the old Northern Rock?

“Those are people who if they possibly could have moved their mortgages would have been encouraged to do so already so they will be people in the most difficult circumstances. How are you going to deal with them? Are you going to offer them better mortgage deals as their mortgages run out and have to be renewed. Or are you going to offer them harsh deals.”

Morgan said: “All of our wholly owned companies have to observe the standards of treating customers fairly, it is one of their regulatory responsibilities to do that. Unfair pricing practices such as that would fall foul of treating customers fairly. It would be our job as stewards of these companies where these boards report to UKFI to ensure that these companies did observe treating customers fairly.”


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Treating Customers Fairly? Just like ‘Zombie’ life funds? Trapped, no escape and no say in the matter… horrid.

  2. More proof of double standards within the banking sector as TCF does not seem to matter to some. Don’t expect the FSA to take the customers side on this one as usual.

  3. Tuija takieddine 5th November 2009 at 1:18 pm

    I think it is completely unfair that myself as an existing customer of NR have to stay in their variable rate simply because they do not offer any other rates ie.fixed rates to existing clients. It kills me to see NR flashing their best ever rates to new customers leaving me a loyal customer out in the cold.

    Is there anything i can do ,is there anyone looking after my interest , if so please let me know.

  4. I would like to know if Mr Morgan could explain why it is that one of our clients was given an option of the new rates with Northern Rock and the other was put on Northern Rocks variable rate. ( both are existing clients of Northern Rock ) When this was query Northern Rock said that they could not inform the client of the criteria that was needed to allow one client better rates than the other.

  5. Unhappy NR customer 5th November 2009 at 2:31 pm

    Other lenders are offering those in negative equity the ability to pick a decent product at a more affordable rate. NR however seems to be wiping their hands clean and only allow them to go onto their SVR. It is criminal that they can do this. Its going to cause so much trouble when rates start to rise. The goverment should step in and insist they treat ALL their customers fairly.

  6. Its utterly awful, owned by the gov and they put us in this position. Surely they should help us all fairly and not like this. I am dreading interest rate rises. Ive never missed a payment ever and i never would id rather not eat. Step in the new gov. and help us little people out.

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