Leeds, Newcastle and Nottingham Building Societies to pay tens of millions to Philips Trust victims

Leeds, Nottingham and Newcastle Building Societies have jointly announced they will be providing major voluntary financial support to victims of the Philips Trust scandal – a company which collapsed in 2022 while holding £138m of 2,300 building society customers’ assets including properties in trust and £44m worth of invested savings.

The societies will pay 100 per cent of affected customers savings investments as well as up to £2,400 each towards the costs of getting property titles back. The latter figure is what had been charged by administrator Kroll to make the changes to get properties back.

The decision follows The Yorkshire Post covering the stories of affected victims fighting for compensation over the past year.

Andrea Hindley, from the Philips Trust Action group of affected victims and family members, today welcomed the announcement and said of the building societies: “They have done the right thing.”

Leeds, Newcastle and Nottingham and seven other smaller societies had introduced hundreds of customers to unregulated advisers who sold them family trusts linked to properties and investment schemes for their savings which have since become mired in financial complications.

The assets ultimately ended up in the hands of a firm called Philips Trust Corporation. After entering administration, a PTC director called Kay Collins admitted there had been “co-mingling, pooling and mistreatment of client monies” by the firm.

PTC was founded by a man called Richard Wells, who resigned as a director in March 2019. He was subsequently a director of the now-collapsed funeral plan provider Safe Hands, which is the subject of a Serious Fraud Office (SFO) investigation.

PTC did not have a direct relationship with any of the mutuals involved but all of its customers were former clients of the Family Trust Corporation who had been introduced to that firm by their building societies.

While control of the majority of homes has now been returned to customers, administrators are struggling to recover millions in savings which PTC had passed on to “investment management” firms – which had left many victims fearing they will lose everything.

Money Kroll can recover from the investments will now go towards reimbursing societies for the cost of their support schemes but recoveries are expected to be limited, with most of the money owed currently in default.

In addition to the scheme involving Leeds, Newcastle and Nottingham – who had the majority of affected customers – the Building Societies Association today said the smaller mutuals are dealing with the matter on an “individual basis” and advised victims connected to them to make direct contact.

Victims will be contacted this month by administrator Kroll about the next steps in the process.

Richard Fearon, chief executive of the Leeds Building Society, told The Yorkshire Post: “Customers have suffered horribly as a result of what Philips Trust has done and some of their behaviour was shameful.

"This is a strong financial offer. We have not had any influence over PTC and there is no legal or regulatory obligation to do this, it is voluntary.

"We’ve been working really hard over a protracted period to get to this point. I’m really pleased we are able to come out and share this today.

"I know as we’ve gone through this there are some who feel that what building societies stand for has been undermined. I sincerely hope they have had their faith restored today.

"These are extraordinary circumstances which require an extraordinary response.”

Mr Fearon said it was too early to say what the exact cost to the society would be.

He said the position of societies had changed earlier this year when it became clear that savings invested via PTC were unlikely to be returned.

"It was really at the point those defaults became evident we worked together to reach this point today. I hope people feel relieved and reassured.”

Andrew Haigh, Newcastle Building Society Chief Executive, said: “We are very concerned by, and sympathetic to, the difficult situation faced by people who have been affected by Philips Trust Corporation.

“It has been extremely distressing to hear the customer stories and the impact on their lives.

Our members understand our commitment to purpose and our support for the communities we serve, which makes it even more important that we go ahead with this voluntary support for members at this time of great difficulty.

“It is clear that these difficulties are a direct result of the actions of Philips Trust and we will continue to offer support to any current or future police investigation which aims to hold those responsible to account.”

Sue Hayes, Nottingham Building Society Chief Executive said: “Members impacted by the actions and administration of Philips Trust have experienced a terrible chain of events and we hope today’s announcement provides some comfort.

“As a mutual, we want to stand behind those members and we believe our whole community would wish us to do so. We believe the significant financial support outlined today achieves that whilst balancing the interest of the wider membership.

“We have been working hard for a number of months to unravel the facts in this hugely complex situation. We would like to thank the many members that have supported our enquiries. We have been deeply saddened and frustrated to hear their stories and are truly sorry they have ended up in this position.

“Our focus now is on providing these voluntary payments as quickly as possible.

“Alongside others, we will continue to support action to hold Philips Trust to account.”

Robin Fieth, Chief Executive of the BSA, said: “I have been very sorry to hear what has happened to people as a result of the Philips Trust scandal. I hope that the generous and voluntary offer of financial support which has been made today will help many of those affected in a meaningful way.

“It is important that those responsible for this terrible scandal are thoroughly investigated by the police”