In a turbulent week that has seen interest rates hike to record levels following the Chancellor’s mini-budget, Manchester firm Quanta Law, has welcomed a high court outcome which could help thousands who have been mis-sold a mortgage.

High street lender, Santander, dropped its judicial review which aimed to prevent the Financial Ombudsman Service from having access to historic SVR variations more than six years before a mortgage complaint was lodged.

Quanta Law, who challenged the review explaining that full transparency in a client’s mortgage term was critical to assess their case properly, have called the decision a “step towards justice”.

The lender has agreed to pay both the FOS’ and Quanta Law’s costs in the matter.

Financial experts predict mortgage rates could top 6% in the coming months, with mortgage prisoners potentially facing rates of 10%.

Jonny White, CEO of Quanta Law, commented:

“This decision is important and necessary for firms like ours striving for justice on behalf of clients that have been mis-sold mortgages.

“We’re delighted that Santander filed a notice of discontinuance and the FOS’ decision to look at the full mortgage term regarding each rate variation to assess overcharge claims, can go ahead.

“At Quanta Law, we have a duty of care towards our clients, and doing what is in their best interests has always been our primary objective.

“When the Bank of England cut interest rates after the 2008 global financial crisis, lenders failed to cut their standard variable rate (SVR) for mortgage holders by a corresponding amount.

“That move, against a backdrop of increases when the base rate jumped, was unfair and, some might say, designed by lenders to shore up their profits and protect themselves from the massive drop in people taking out new mortgages.

“It is vital that the FOS is able to closely scrutinise the interest rate decisions taken by lenders which is subject to fairness tests under EU consumer law that was applicable at the time.

“There are hundreds of thousands of homeowners currently paying more than they should have done for their mortgage. What’s even more worrying is that many of these are mortgage prisoners who have been prevented by lenders from switching provider, so will be stuck on punitively high interest payments with no means of switching their mortgage to another lender.

“As a firm which seeks to acquire redress on behalf of our clients, having all the necessary information at our disposal in order to move cases towards justice, is crucial. If lenders feel as though they’ve acted morally, then there should be no need to supress important information at all.”

The news comes amid the Bank of Ireland’s €100m fine by the Central Bank for similar regulatory breaches in Ireland in relation to tracker mortgages.

The investigation, amongst other things, discovered that the bank’s contractual documents to customers were unclear and ambiguous regarding their right to a tracker interest rate after a fixed rate period.

And just a few weeks ago, Co-Operative Bank’s legal challenge to prevent the FOS from looking into a consumer’s mortgage overcharge complaint, was dismissed at high court.

Similar to Santander’s, the initial judicial review by the Co-Op considered whether the FOS could investigate historic standard variable rates (SVRs) in relation to customer Gwendolyn Davies.

Speaking about the wider picture, Mr White added: “The recent decisions will hopefully now encourage others who’ve been mis-sold mortgages to come forward.

“Mortgage overcharge cases often take several months before a client sees any redress, and the continued delays are causing untold harm to the financially vulnerable who are paying the costs of this every month.

“Our main priority is to help those who’ve been financially impacted as a result of mis-selling. We hope these outcomes will encourage lenders to think about their processes long term.

”We now eagerly await the FOS’ decisions particularly in circumstances where amending the mortgage balance to reflect a fair interest rate, will go a long way to help clients manage the cost of living crisis, and in some cases could be the difference between having their home repossessed or not.”