'Despairing' Leeds Building Society customers seek compensation over £138m family trusts scandal

Leeds Building Society (LBS) introduced customers in branches to unregulated advisers who sold them expensive family trusts which have since become mired in financial complications and are now having to be cancelled at a cost of thousands of pounds.

Angry society members affected by the issue told The Yorkshire Post they have sought compensation and apologies from LBS but have been rejected on the grounds the agreements were ‘independent’ of the society.

However, documents show LBS directly benefited financially from commission on sales and even included successful referrals from branch staff in bonus calculations.

George Moore, 77, from Halifax, is one of those affected. He said: “LBS have told me there is nothing they are willing to do regarding my financial losses. I am one of many elderly people who were targeted to take out a family trust that are now in despair at the situation.”

Setting up a trust means someone else becomes the legal owner of the assets placed in them with responsibility for what happens to those assets after the death of the trust-holder.

LBS was among several building societies nationally to have previously had a contract with a firm called the Estate Planning Group, whose arms included The Will Writing Company (TWWC) and the Family Trust Corporation (FTC).

Customers were encouraged to sign up for the trusts by advisers working in Leeds Building Society branches on the basis that doing so would protect their homes from future care home fees so they could eventually be passed onto family members.

LBS had been in a working relationship with TWWC between 2005 and late 2017 “when TWWC’s operational difficulties became apparent”.

The Will Writing Company arm of the business went into administration in February 2018 but the Family Trust Corporation division continued to trade.

However, LBS members were wrongly told later that year that all trusts had transferred into the ownership of a recently formed company called the Philips Trust Corporation (PTC).

PTC told those signed up to the trusts to pay further money to them to retain them – but the firm then went into administration itself last year. PTC had controlled 2,345 trusts with a value of £138m at the time of its collapse.

Administrator Kroll is continuing an investigation into PTC’s collapse.

But it has already said the firm’s operational problems included maintaining inadequate records and a failure to respond to requests for trust assets to be transferred or for PTC to end its involvement.

Kroll said the “majority” of the affected trusts had originally been set up with the Family Trust Corporation.

The administrator said: “During 2018 it was communicated to clients that the operations of FTC were being wound down and clients were encouraged to appoint a replacement trustee.

"The company (which had then only recently been formed and was an associated entity) was recommended by FTC as a suitable replacement trustee.

“Many of those clients did decide to appoint the company as replacement trustee.

“The administrators are aware that FTC remains an active business. The administrators have no authority or involvement in the running of that business.”

The Yorkshire Post has attempted to contact FTC but there was no response at their Manchester offices.

Customers now face fees of £2,400 from PTC administrator Kroll to cancel the trusts and return the properties back to their own names.

While properties can be withdrawn from the trust, life savings people put in alongside them currently cannot be as the administration process continues.

Leeds Building Society said today that advice given “was independent of the society and was not shared with the society”.

It did not directly respond to a question from The Yorkshire Post about how many LBS customers had been signed up to the trusts.

‘The Leeds needs to acknowledge their part in this’

Victims of the family trusts scandal say the situation has cost them thousands of pounds – and years of stress and anxiety.

George Moore said he and his wife had gone into their local LBS branch in Halifax in 2012 to make a transaction when they saw a notice on the wall about will-writing.

They were given an appointment in branch and at the meeting with The Will Writing Company worker were advised to put their home into a family trust, which they did at a cost of £3,750.

Documentation shared by Mr Moore with The Yorkshire Post shows the will signing that was part of the process was jointly done by the TWWC worker and the local LBS branch manager – something Mr Moore says helped cement in their heads this was a trustworthy LBS linked company.

After TWWC went into administration, Philips Trust Corporation said it was taking over responsibility for the trust and asked for an additional £600 in charges.

Mr Moore’s request for LBS to pay the £600 was rejected in November 2018.

Following PTC’s own administration, Mr Moore and his wife have paid over £2,400 to administrator Kroll to have their home registered back to them. A further £5,000 of life savings also in the trust is currently inaccessible.

He said: “The whole experience from that visit to LBS Halifax branch has cost me thousands of pounds."

Mr Moore is among 800 people who are part of a Facebook group about the situation.

Another member is Christine Chamberlin, who along with her husband saw a notice in the Barnsley branch of LBS in 2011 offering appointments to advise on wills and trusts. She said the couple hoped to be able to leave their home to their two daughters and requested a meeting.

She said they were surprised to be quoted £3,750 for the work but felt the presence of the LBS branch manager in the room at that point made them feel “this was a guarantee that the product was worth the fee”.

She said: “We were told that if we went ahead, there would never be any future costs involved. Nothing could be further from the truth.”

Mrs Chamberlin said that in 2019 they paid £643 to Philips Trust Corporation to transfer the trust to them but in May 2021 were then asked to pay a further £521 as a supposed ‘10 year tax payment’ to HMRC.

She said they paid the figure but then two months later received another demand for an annual fee of £500. She said this was the “final straw” and asked for the trust to be revoked which she was told could be done for a fee of £600 plus VAT.

She paid the fee but the revocation never took place.

Mrs Chamberlin said in early 2022 just before PTC went into administration she employed a solicitor who managed to get the trusts taken out of PTC’s control. The process cost thousands of pounds.

She said she believes that LBS and other building societies owe compensation to customers they set down this path.

“I really feel they ought to face up to what they did. Had we not gone ahead with the trust and left it in our own names, none of this would have happened. It has been a waste of money from start to finish and a lot of stress. I really feel the Leeds need to acknowledge their part in this.”

Stephanie Robinson is pursuing a complaint in relation to her late sister-in-law’s case. Her relative put her home and substantial life savings into a family trust following a meeting at the Moortown branch of LBS in 2014.

While the family engaged a solicitor in 2019 to remove PTC as a trustee on the house, the life savings remain in the trust.

She said she is frustrated that LBS is refusing to admit any liability for what has occurred. “I think it would make a big difference to compensate people and go some way to restoring people’s trust in them.”

What Leeds Building Society says

A spokesperson for Leeds Building Society said: “Society branch colleagues provided introductions to Estate Planning Group, which incorporated The Will Writing Company and Family Trust Corporation for wills and trusts. Any advice given by those businesses was independent of the Society and was not shared with the Society.

“Regrettably, the Estate Planning Group encountered financial difficulties. The Will Writing Company went into administration at the beginning of 2018, and Philips Trust Corporation acquired the Family Trust Corporation business, taking on some of the trusts.

“Whilst the Society has never had a relationship with Philips Trust Corporation, or indeed any influence over them, we have been following developments regarding Philips Trust Corporation since 2018. We share the concerns about the management of that company.

“We continue to follow the updates from Kroll, the administrators, regarding the matter.”