Lloyds Bank is being sued in the High Court after selling mortgages tied to rising house values.
The case has been brought by 150 homeowners who were sold loans by Bank of Scotland.
The so-called shared appreciation mortgages, which permitted borrowers to take out a loan against their house provided that the bank received a percentage of the equity growth when the property was sold, were mostly agreed in the late 1990s. House prices have quadrupled since then, leaving homeowners owning hundreds of thousands of pounds more than their original loan.
Teacher Stern, the law firm acting for the homeowners, said the value of the claims could be as much £50m. Its case alleges that the mortgages were “fundamentally unsuitable” for consumers and “inherently unfair” under the terms of the 1974 Consumer Credit Act.
Bank of Scotland, which is defending the claim, denies the allegations in their entirety.
The case is due before the High Court in October with no date yet fixed for trial.
Barclays, which was also facing legal action over similar products, settled with 37 borrowers in June.
