FCA 'monitoring' £138m family trust scandal affecting Yorkshire victims

LBS customers were introduced to unregulated advisers operating from the building society’s branches who then sold them expensive family trusts which in the years since have become the subject of financial complications and are now costing thousands of pounds to revoke.

The customers want compensation and apologies from the building society but LBS says the advice given and agreements made were ‘independent’ of the society.

Other building societies including the Nottingham and the Newcastle are also involved in the issue.

The FCA’s powers in the cases are limited as the services involved were not regulated by the organisation. But it has been seeking more information from building societies involved on the referrals made in the case.

An FCA spokesperson said: “We engaged with a number of building societies for further information about referrals they made to their customers to trust service providers for will writing and other services, which are not regulated by the FCA, and are monitoring the position.

“If anyone believes they have a complaint or believe that the actions of their building society caused them detriment, they should contact the building society to discuss this.

"If there is any difficulty or problem with the handling of any such complaint, they can contact the Financial Ombudsman Service.”

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.

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 had been in a working relationship with TWWC between 2005 and late 2017.

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 of PTC’s collapse but has already said its 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.