The society, one of the leading providers of the mis-sold mortgage products, yesterday promised to make unspecified cash payments to the 685 elderly victims of the scandal. Neither side would disclose the full amount.
West Brom has also offered to cap the interest on the mortgages at 6.25 per cent for the remainder of their duration, backdated to January 1994. The Investors Compensation Scheme and West Bromwich both said they were happy with the deal. The ICS, which will also be compensated, said it believed the compensation was "fair and reasonable".
However, neither West Brom nor the ICS was prepared to state yesterday that victims will no longer face mounting mortgage debts and bills for interest.
The deal follows years of legal battles after more than 3,000 elderly victims were advised to remortgage their homes in the late 1980s with a number of lenders, including West Brom.
The customers were advised to put the mortgage money in income bonds designed to pay off the mortgage interest. The plans unravelled when interest rates rose, property values slumped and the bonds produced poor returns. Fisher Prew Smith, one of the leading independent financial advisers involved in arranging the loans and selling the bonds, was put out of business by regulators in 1991.
During the High Court action, West Brom's former senior executives were accused of failing to care whether their customers had the means to pay off the mortgage interest. The society was also accused of continuing to sell the plans months after regulators warned them about the products.
Despite the deal yesterday, West Brom said it admitted no liability. Stephen Karle, general manager, said: "We want to be scrupulous and fair with all the borrowers."
Two groups of policyholders, will resume a High Court action against West Brom next week. They are asking for the mortgages to be set aside.Reuse content