Thousands of mortgage borrowers could receive a cut of compensation worth a collective £150million if a legal claim at the High Court is successful.
Lawyers at the firm Harcus Parker could take action on behalf of customers who say they were unfairly charged high mortgage rates following the collapse of Northern Rock.
The law firm is said to be representing around 6,000 borrowers who argue they were kept on rates of around 5% for more than a decade even though interest rates plunged to near-record lows after the financial crash in 2008.
The law firm is set to take action against US private equity group Cerberus, which holds mortgages bought from Northern Rock through its Landmark brand, and against Topaz Finance Limited, which holds former Northern Rock mortgages through Heliodor Mortgages.
Matthew Patching, a senior associate at Harcus Parker told the Financial Times that the firm is preparing to sue if the claim isn't settled.
He said: “We are being instructed by more and more people who, after taking out mortgages with Northern Rock before the financial crisis, have been stuck paying very high standard variable interest rates at times when most of the market has enjoyed access to unusually cheap lending.
"It is difficult to overstate the effect this has had on our clients, who have often found it tremendously difficult to hear that they ‘cannot afford to pay less’.”
Harcus Parker says more than 200,000 mortgage borrowers are believed to be affected and have frequently urged people to come forward with their claims.
The law firm has set up a website - mortgageprisonersclaims.com - specifically for mortgage holders who believe they may be entitled to make a claim following the sale of the Northern Rock mortgage book.
There's no guarantee the Harcus Parker lawsuit could go on to be successful, as it would all depend on the High Court decision.
The law firm has already issued proceedings against the high street bank TSB over similar concerns that borrowers were kept on high rates when the Bank of England base rate dropped.
TSB purchased £3.3billion worth of Northern Rock mortgages which covered around 27,000 homeowners in 2015 under its Whistletree brand.
A court hearing has been set for March to progress with a group litigation order for mortgage customers.
A spokesperson for TSB said earlier this year than the lender would "robustly defend its position" in the case.
They added: "TSB took ownership of the Whistletree mortgages in 2016 and subsequently created access to product transfers for customers who did not previously have access to them.
"Since then, over two-thirds of Whistletree customers have either transferred to a new Whistletree product or closed their mortgage with Whistletree.
"We write to customers twice a year to remind them about the opportunity to switch."
