Lifetime mortgages
Scottish Widows Bank Plc
What did we think was unfair?
A term gave the bank freedom to decide what to do with any money that was received from your buildings insurance if your property suffered damage, for example from a fire. So the bank could choose whether the money paid off (or reduced) the mortgage amount, or was used to repair the property.
Why did we think it was unfair?
The damage to the property could be so severe as to leave it uninhabitable. The bank could decide to use the money to pay off (or reduce) the mortgage amount rather than repair the property. Customers with a lifetime mortgage may be left without a home to live in.
What has the firm done?
The decision whether to pay off (or reduce) the mortgage amount or repair the property (this applies to existing customers also) is now with the customer.
The bank has changed a term in their 
Illustration Offer. This forms part of the overall contract and is sent to customers along with the lifetime mortgage conditions.
Old term
'… any money which becomes payable under a policy … is used at our option either to pay off or reduce the whole debt or to reinstate the property.'
New term
'All monies which become payable under your Buildings Insurance Policy are to be used at your option either to reinstate the property or pay–off or reduce the whole debt.'
What next?
Read more agreements from firms – see Unfair contracts.
Read more about Mortgages.
Read more about our work on Unfair contract terms.