Seema Malhotra MP and Lord John Sharkey today sent an open letter to Tesco Bank on the announcement that they would be selling off customers’ home loans. The open letter asked Tesco Bank to sell the loans to an active lender, to ensure that these customers would not become “mortgage prisoners”, unable to switch mortgage providers. Ms. Malhotra and Lord Sharkey are the Co-Chairs of the All-Party Parliamentary Group on Mortgage Prisoners.
The full text of the letter is below:
We are writing about the news that Tesco Bank is leaving the mortgage market and looking to sell the mortgage of its 23,000 customers. The APPG on mortgage prisoners is concerned about the lack of protection for customers when their mortgages are sold on to other lenders. We have seen the damaging impact when mortgages are sold to vulture funds or inactive lenders which hold trapped customers on high Standard Variable Rates. It will come as a shock to many of your customers that the small print of the mortgage contract enables Tesco to sell on their mortgage.
Your customers put their trust in Tesco. We hope that you will repay that trust by committing to only sell their mortgages to a fully regulated active lender which will offer them new deals and fixed interest rates. The lender should be a signatory to the UK Finance agreement enabling borrowers on a reversion rate to move to a better deal. Until the mortgage book is sold, it is our view that Tesco should also continue to offer its existing customers new mortgage deals and fixed rates.
We hope you will be able to give these commitments and would be happy to meet with you to discuss these issues.
In addition we would be grateful if you could inform us about how you plan to structure the sale of the mortgage book, how quickly you intend to proceed and how you are communicating with your customers about the sale.