"We hope that the Co-operative Bank will start living up to its ethical values and pay redress to the customers who have overpaid due to the misconduct."
An investigation by the APPG and FOS found that MAS5, which is part of the Cooperative Banking Group, treated customers unfairly and that the increases to the MAS5 SVR were not in line with the terms and conditions of the mortgage.
The FOS investigator found that MAS5 had treated a customer unfairly when it increased their Standard Variable Rate (SVR) from 2.99% to 5.75% over the period 2009 to 2012.
MAS5 increased the 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.
• On 1 July 2009 the SVR was increased by 0.75% to 3.74%
• On 1 October 2009 the SVR was increased by 0.76% to 4.50%
• On 1 March 2011, the SVR was increased by 0.75% to 5.25%
• On 1 May 2012, the SVR was increased by 0.50% to 5.75%
In relation to the 2009 increases the FOS investigator found that MAS5 “had not provided any evidence to show that the costs of funds it used in its business increased”. In relation to the 2011 and 2012 SVR increases “[MAS5] hasn’t provided anything that relates specifically to MAS5’s own costs, or how these might have changed”.
The conclusion of the FOS investigator was that “For the reasons I’ve explained, based on the information currently available, I’m not satisfied MAS5 has increased the SVR in line with the terms and conditions of [Mr and Mrs X’s] mortgage. As a result, I think Mr and Mrs X have been treated unfairly.”
The APPG says it has also received "very disturbing reports about how MAS5 and the Co-operative Bank have been treating vulnerable customers" and these have been passed to the FCA for investigation.
Seema Malhotra MP, co-chair of the APPG on Mortgage Prisoners, said: "The Financial Ombudsman's investigator concluded that the SVR increases by Mortgage Agency Services No.5 (MAS5) Ltd were unfair and not in line with the terms and conditions of the mortgage. These unfair increases have had a devastating impact on customers.
“We hope that the Co-operative Bank will start living up to its ethical values and pay redress to the customers who have overpaid due to the misconduct. The FCA and the FOS need to intervene to protect these customers and stop MAS5 from dragging out these cases and causing more misery to vulnerable people. Many of these customers have serious health issues or financial problems."
