US private equity firm Creberus has been accused of misleading UK government by withholding relevant information about largest sale of state assets in the country’s history. BBC Panorama has reported that Cerberus had told state government that it would offer homeowners better mortgage deals before completing the £ 13 billion purchase of Northern Rock mortgages in 2016. But surprisingly the firm has offered no such mortgages and around 65000 homeowners are now trapped in a vicious cycle of high interest rates. But Cerberus promoters have denied the allegation though several homeowners are trapped in the high interest cycle since government took over Northern Rock in 2007.
According to Labor peer Lord McFall many homeowners are paying large amounts of interest and some of them have to pay extra £ 40-50000 mortgage to get ownership of their property which is totally unacceptable. During the sale government bank UKAR had told him in a letter that homeowners should be given benefits of extra lending and fixed rates as the ownership is being returned to private sector firm Cerberus. The firm had the capacity to lend to former Northern Rock customers and UKAR believed that they would do so.
Panorama stated that in the documents given by Cerberus to UKAR when it submitted its proposal to buy the mortgages they had stated that the firm will evolve into an online challenger bank and provide its customers with a wide range of products. But Financial Conduct Authority had told Cerberus that it would not be able to offer new mortgages unless it has the right systems and people in place. But even after three years the firm has failed to follow these guidelines and has denied the allegations by BBC Panorama. Homeowners have alleged that Cerberus is treating them poorly while charging high interest rates. Several complaints have been made about customers being issued default notices despite making payments on time that has affected their credit history.