One of Britain’s biggest high street banks has agreed a payout to settle a case involving “unfair” mortgages – giving hope to thousands of people who have been left owing huge sums.
On the eve of a trial set to last six weeks, Bank of Scotland – part of Lloyds Banking Group – and a law firm representing 160 current and former customers reached an out-of-court settlement that means the bank will not face a public grilling.
The case involves a Bank of Scotland product called the shared appreciation mortgage (Sam), which has been accused of ruining lives by leaving some people owing 10 or 12 times the sum they originally borrowed.
Teacher Stern, the law firm behind the action, had claimed that Sams were “entirely unfair” products that have left borrowers trapped in their homes, unable to sell up.
The settlement is cloaked in secrecy, with the bank and the law firm only saying they had “agreed a commercial settlement, without any admission of liability”.
Nothing was disclosed about how much money has changed hands, although some of the affected borrowers have been saddled with debts of several hundred thousand pounds – and some owe in excess of £1m.
Individuals who join a claim of this type will sometimes be asked to pay a fee of perhaps £10,000. That may suggest the affected borrowers would not have agreed to forgo their day in court unless they secured a reasonable payout.