On becoming a TSB on April 1st 1976, the Bank did so on the understanding that it would be able to continue lending by way of mortgage.

 

The law governing the activities of TSBs at that time was mainly under two statutes:
    -  the Trustee Savings Banks Act 1969, and
    -  the Trustee Savings Banks Act 1976

 

The 1969 Act was a consolidation measure, while the 1976 Act extended the power of trustee savings banks so that they could extend the range of their services.

 

Section 9 (1) of the 1976 Act gave the TSBs the power 'to carry on the business of banking' and it was thought that this would allow TSBs to undertake mortgage lending. But doubt was subsequently expressed as to whether this did in fact give TSBs the power to lend on mortgage because banks (unlike building societies) did not at that time practice lending on mortgage for long periods.

 

By 1978, TSBs in general were planning to undertake mortgage lending and the position described above required to be clarified. Because, by this date, the Bank had lent some £2½-million secured by mortgage since April 1st 1976, it was necessary to make the legislation retrospective. This was not because the mortgages were invalid, but because the granting of the loans may have been outside the powers of the trustees.

 

The Trustee Savings Banks Act 1978 therefore regularised the position.