Retired junior school teacher Brenda Allder is waiting for a House of Lords' ruling that could enable her to win back thousands of pounds she lost because of bad financial advice at the height of the 1980s housing boom.
Mrs Allder, 73, who lives in Gamlingay, Bedfordshire, was persuaded in 1989 to take out a home income plan, under which her home was remortgaged and the Pounds 60,000 provided by the building society was invested in a bond which was supposed to give her a monthly income.
She was one of tens of thousands of elderly people, many of them teachers, who were assured by newspaper advertisements and plausible salesmen that home income plans were a way of "releasing the capital tied up in a home". The mortgages available were either interest-only, or "roll-up" (where the interest was added to the outstanding debt, to be paid by the estate of the home-owner after death).
But the schemes had several fundamental flaws. One was that they relied on bonds being invested in ways that ensured they retained their value and generated enough money to both pay any mortgage and provide income. They also relied on house prices staying high enough for building societies to remain confident that the debt would be cleared when the house was sold.
But house prices tumbled and investments failed to match expectations. Just a few years after they took out their plans up to 10,000 home-owners like Mrs Allder suddenly found themselves living a nightmare, thousands of pounds in debt to a building society, with little chance of meeting interest payments, let alone repaying the debt.
Some of them have now been in debt for four years and have spent thousands of pounds on legal advice in an attempt to retrieve their money.
The advisers who sold the home income plans had in many, if not most, cases failed to point out the risks properly. When the bonds failed to produce enough income, the capital in the bonds was often raided to carry on paying the monthly income the elderly investors were expecting. Eventually most of the advisers involved ceased trading, leaving their clients with bonds worth far too little to pay off their mortgages.
Mrs Allder's three-bedroomed terraced house was valued at around Pounds 78,000 when she invested in the home income plan six years ago. The man who sold her the plan said she could take out Pounds 5,000 as a lump sum, pay the mortgage and still get Pounds 60-a-month income from the bond he was buying on her behalf. But in 1991 the income stopped, the adviser was declared in default and when she cashed in the bond to try to repay the mortgage, it fetched only Pounds 39,000. Today her house is worth Pounds 65,000.
Solicitors Barnett Sampson now represents Mrs Allder and another 450 elderly home income plan investors who have average debts of between Pounds 10, 000 and Pounds 20,000. And it knows of at least another 2,000 home-owners left badly in debt. Age Concern, however, estimates that the true total is nearer 10, 000.
The Investors' Compensation Scheme, set up to help the victims of bad financial advice, met Pounds 13,000 of Mrs Allder's loss, but this still left her owing the Halifax Pounds 11,000. The ICS, which is facing a potential compensation bill of Pounds 34m, has refused to replace money which people like Mrs Allder spent from their plans. Marguerite Mungovan of Barnett Sampson said: "These people were told to take 'income' from their investments, but the income was actually coming from the capital, and their capital was dropping in value. We believe the ICS should give full compensation. They spent their cash because of advice that was wrong."
The Lords are expected to rule whether the ICS was entitled to limit compensation before the end of this month, but the judgment may not arrive until October.
Understandably, Mrs Allder rues the day she answered the home income plan advertisement. "I can't think why I fell for it, looking back," she says. "I was put on to a very persuasive gentleman, and he set up the scheme with the Halifax for me. I thought if I had a bit of extra income I might be able to help my daughters. I gave most of the Pounds 5,000 lump sum to them and spent what remained on a lounge suite."
Mrs Allder's husband, a policeman, died in a car crash 30 years ago. She only entered teaching after his death, and as a result accrued only 12 years of pensionable service. Her police pension helps to compensate for the small teaching pension but with a debt to the Halifax much larger than her annual income, she still lies awake at night worrying.
Edited by David Budge