Court of Appeal’s 2026 ruling reshapes the landscape for Northern Rock mortgage claims and transferred loan portfolios

Court of Appeal delivered a landmark judgment in high-profile group litigation Donna Breeze & Ors v TSB Bank PLC [2026] EWCA Civ 32

Introduction and procedural history

This is an appeal by the Claimants against an order made by Thompsell J determining two preliminary issues in favour of the Defendant (“TSB”) in a previous judgment in this case dated 25 September 2024. The Court of Appeal held in favour of the Defendant and dismissed the appeal. 

Background to the Whistletree Mortgages

By way of background, the claimants' mortgages originated from Northern Rock. Following the collapse and subsequent nationalisation of Northern Rock during the 2008 financial crisis, the claimants' mortgages were sold to other lenders. In 2016, TSB acquired these mortgages and administered them under its "Whistletree" brand. They have become known as the "Whistletree mortgages".

Issues in this case and the court’s conclusion

There were two issues to be determined in these proceedings – a question of contractual construction and a matter of statutory interpretation. The court dismissed the appeal on both issues.

Interpretation of contractual construction and interest rate setting

The claimants asserted that TSB breached the express terms of their mortgage contracts by charging the claimants an exclusive (higher) Whistletree Standard Variable Rate (SVR) and not the wider TSB equivalent. The judge’s analysis of Issue 1 in dismissing the appeal focused on the interpretation of the express terms of the Claimants’ mortgage contracts, specifically whether TSB had breached those terms by charging interest rates based on the Whistletree SVR rather than TSB’s own Standard Variable Mortgage Rate (SVMR). The judge examined the mortgage offer letters and the incorporated General Conditions. Key clauses included the definition of "Standard Variable Mortgage Base Rate," which allowed the lender (“we”, defined to include Northern Rock and any transferee, such as TSB) to set and vary the rate from time to time, and Condition 7, which permitted the lender to reduce or increase the rate for specified reasons. Condition 19.1 allowed the lender to transfer its rights, including the right to set interest rates, to a transferee, who could then set the rate by reference to its own (or one of its own) standard variable mortgage base rates, but was not obliged to do so. 

The judge agreed with TSB’s interpretation that, after the transfer, TSB stepped into Northern Rock’s shoes and was entitled to exercise the same rights under the contract, including the right to vary the inherited SVR under Condition 7. The option in Condition 19.1 for TSB to adopt its own SVMR was permissive, not mandatory; TSB could choose to continue charging the inherited rate or adopt its own rate. The judge rejected the Claimants’ arguments that TSB was required to charge its own SVMR to the Whistletree borrowers. The judge found no support in the contractual language for the proposition that TSB was obliged to use its own SVMR, nor that it was prevented from varying the inherited rate. 

Matter of statutory interpretation- unfair relationship remedies under the CCA and regulated mortgage contracts

As part of the other issue, the court further considered the boundary between mortgage and consumer credit regulation, confirming that regulated mortgage contracts fall within the Financial Conduct Authority’s Mortgage Conduct of Business (MCOB) regime and are excluded from the Consumer Credit Act's 1974 (CCA) unfair relationship remedies. 

By way of background some of the Claimants were offered a package by Northern Rock comprising a mortgage loan (a “Together Mortgage”) and an unsecured loan (a “Together Loan”). The Together Loan was linked to the Together Mortgage in that the interest rate under the unsecured loan was set to match that was applicable from time to time to the Together Mortgage, but would increase to a substantially higher rate if the Together Mortgage was repaid. By taking both loans, some borrowers were able to borrow well over 100% of the value of the property that was mortgaged, creating a high level of indebtedness. The basis of unfairness asserted was the combined effect of the terms of the Together Mortgage and Together Loan, the linking of the interest rates, and the consequences for borrowers (such as being trapped in high-interest arrangements and becoming "mortgage prisoners"). The Claimants argued this setup was unfair and asked the court to make an order under section 140B of CCA requiring TSB to pay back not just the unsecured loan payments, but also the mortgage payments. 

The Claimants argued that, when deciding what order under section 140B to make “in connection with” the Together Loan, the court can order repayment of monies paid not only under the Together Loan, but also under the Together Mortgage as a related agreement, in order to redress unfairness in the relationship arising out of the Together Loan agreement taken with the Together Mortgage.

The court rejected this argument and agreed with TSB that section 140A(5) precludes the court from making any of the orders specified in section 140B(1) “in connection with” Together Mortgages that are regulated mortgage contracts. It stated that this interpretation of section 140A(5) is consistent with the legislative policy which lies behind it, which was to exclude regulated mortgage contracts from the scope of the CCA 1974 unfair relationship provisions, on the basis that these are subject to their own regulatory framework under the Financial Services and Markets Act 2000 (FSMA) and MCOB.