Life insurance company Scottish Widows has revealed that it will no longer try to retrieve thousands of pounds mistakenly paid to customers when it was bought by Lloyds/TSB last year.

It is estimated that about 200 customers were allocated too much money in windfall payouts at the time of the takeover, but the mistake was only realised recently.

An investigation by the BBC's MoneyBox programme discovered that some customers had been contacted by the company demanding they pay back the money, which in some cases amounted to several thousand pounds.

But Scottish Widows spokesman Alan Young has now told the BBC that those customers who received money in error will not have to pay it back if there has been what the company considers "undue delay" in contacting them.

Mix-up

More than 1.5m policy holders got payments averaging �5,700 when the insurance and pensions provider was taken over by Lloyds TSB last year.

Some were overpaid at the time because of a mix-up in the company's records.

Scottish Widows originally said that it wanted to recover the money so that other investors did not suffer from its overpayment mistakes.

Scottish Widows followed a host of other mutual life insurers that accepted takeover bids resulting in windfalls, including Scottish Amicable, Clerical Medical, Scottish Mutual and NPI.

The takeover ended 184 years of independence for the company, set up in 1815 to look after the widows and orphans created by the Napoleonic wars.