§ (1)For the purpose of facilitating repayment to the society of an advance made or to be made by the society to a member upon the security of freehold or leasehold estate, a society shall have, and shall be deemed always to have had, power to make to the member, by way of addition to the advance aforesaid, a further advance of the whole or part of such sum as may be necessary to enable payment to be made of a single premium payable in respect of a policy of life assurance upon the life of the member or the spouse or son or daughter of the member, being a policy which provides for payment, in the event of the death of the person upon whose life the policy is effected before the advance has been repaid, of any sum not exceeding such sum as is sufficient to defray the sums which are, at and after the time of the death, payable to the society in respect of the advance as increased by the additional advance made by the society under the power conferred by this Sub-section.
§ (2) Where, in pursuance of the power conferred by the last foregoing Sub-section, a society has added any sum to an advance made by the society upon the security of freehold or leasehold estate, the sum so added to the advance shall not be deemed to form part thereof for the purpose of determining whether the advance is beyond the power of the society by reason—
- (a)of the amount of the advance being excessive; or
- (b)of the amount of any excess advance included in the advance being greater than that which is authorised by this Act.
§ (3) Where a society has made an advance to a member upon the security of freehold or leasehold estate, and the advance is an advance to which the provisions of Section five of this Act apply, then, if the society subsequently adds to the advance a further advance under the power conferred by this Section, the said provisions shall also apply in relation to that further advance; and for the purpose of the application thereto of those provisions, the further advance shall be deemed to have been made at the time when the original advance was made.
§ (4) In relation to an advance made by a society before the first day of January, nine teen hundred and twenty-six, the references in this Section to freehold or leasehold estate shall be deemed to include references to copy hold estate. —[The Solicitor-General..]
§ Brought up, and read the First time.
§ 11.49 p.m.
§ The Solicitor-General (Sir Terence O'Connor)
I beg to move, "That the Clause be read a Second time."
1176 In the long Committee stage of this very complicated Bill it was suggested by my hon. Friend the Member for Harwich (Mr. Holmes) that the practice of issuing single premium policies, which have the advantage that they provide for the death of the person who has mortgaged his property and can be taken out equally in the name of the mortgagor or of the son or daughter or the dependent of the mortgagor, should be recognised and should be put beyond the reach of criticism. I think it was recognised in all parts of the Committee that policies of that kind were extremely valuable and that anything which threw doubt on the validity of such policies should be removed. One point was raised that where you had a premium or an instalment advanced for the purpose of enabling the premium to be paid, the total sum that was so advanced might in certain circumstances exceed 100 per cent., and it could therefore not be said to be money advanced on the security of freehold or leasehold estate. My right hon. and learned Friend in dealing with that point in Committee expressed the view that in the Bill as it stood such an advance even if it exceeded 100 per cent., would be a valid advance in the case of a pooling arrangement. A strong case was made out for allowing the premium to bring the total advances to over 100 per cent. in cases where there was no pooling agreement. It was generally felt that this kind of transaction is desirable and prudent and prevents a great deal of distress on the death of the breadwinner. This new Clause implements the undertaking given, fulfils the desire of the hon. Member for Harwich, and applies in the case of policies whether taken out by the borrower or a member of his family. It will be noted when we come to look at the Clause that it will be necessary to eliminate the proviso to Clause 2 (4), because the Clause now covers and clarifies the ground, and that proviso will no longer be necessary.
§ Question put, and agreed to. Clause added to the Bill.