Yahoo Finance US firm 'misled' government over £13bn deal to buy Northern Rock mortgages
US private equity giant Cerberus has been accused of misleading the government on a deal to snap up £13bn worth of mortgages from bust lender Northern Rock.
Cerberus bought the huge loan book in 2016 from state-owned UK Asset Resolution (UKAR), the company set up by the Treasury to manage its ownership of failed lenders it took over during the financial crisis.
The US firm pledged to offer customers trapped on high interest mortgages a better deal and to transform itself into a ‘challenger bank’ in Britain, according to pitch documents seen by the BBC’s Panorama programme.
However, nearly three years later Cerberus has still not been authorised by the Financial Conduct Authority (FCA) to offer mortgages to the customers it took on.
In a statement Cerberus denied Panorama’s claims, saying: “Cerberus categorically rejects the false and misleading allegations by BBC Panorama.
“No undertaking was given to UKAR to offer new lending to customers. That was not and did not form any part of the agreement between Cerberus and UKAR in 2015.”
Panorama spoke to several former Northern Rock customers who were paying over the odds for expensive mortgages and said they had been unable to shop around for a better deal.
Lisa and Mark Elkins, who have to pay £2,500 a month on their home loan because the interest rate is nearly 5pc, told the programme they had had to take on extra jobs, work long hours and borrow £20,000 from friends and family.
Ms Elkins said they had to sell their home of 15 years, adding: “You feel like you're sinking and you can't get up and I can't have that any more."
Labour peer Lord McFall, a former chairman of the Treasury select committee, said he had received assurances at the time of the sale from UKAR that homeowners should get offered better deals from Cerberus.
He told Panorama he was aware of former Northern Rock customers who were liable to pay an “extra £40-50,000 on a mortgage” over the course of a loan which he said was “totally unacceptable”.
Cerberus' subsidiary Landmark Mortgages - which oversees the servicing of customers acquired by Cerberus - is regulated by the FCA but is not authorised to offer new lending.
A spokesman for the FCA said: “The FCA is holding discussions about possible solutions for ‘mortgage prisoners’ who hold mortgages with these firms with a range of stakeholders including the Government, relevant firms and consumers groups.
"The FCA will continue these discussions in order to identify workable solutions and will update on this in the final report of the Mortgage Market Study.”
UKAR declined to comment.
