Leeds Building Society 'doesn't know' how many customers affected by £138m Philips Trust scandal

LBS was among several building societies who referred loyal elderly customers to unregulated advisers based in their branches who signed them up to put homes in trust and life savings into investment schemes.

The assets have since become mired in financial complications linked to the collapse of a firm called Philips Trust Corporation, which ended up in charge of much of them.

There are an estimated 2,300 victims of the scandal - many of whom expect to lose tens of thousands of pounds each.

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LBS has been cited with Newcastle and Nottingham building societies as among the mutuals involved but Richard Fearon, chief executive of LBS, told The Yorkshire Post he was unable to say how many of the organisation's current and former customers are affected.

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 and the Family Trust Corporation.

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

Customers were advised to transfer trusts and savings to a related company called Philips Trust Corporation which itself went into administration in 2022, leaving assets of those who did make the move stranded.

Administrator Kroll is working with building societies involved to establish how many of each mutual’s customers are affected in an ongoing process.

Mr Fearon said: "One of the difficulties is we never had a relationship with Philips Trust.

"While we have an idea of people who went to The Will Writing Company, we have no idea who then transferred between one and the other. Having not had that relationship it is very hard for us to know exactly who is affected."

He said he was also unable to confirm how many customers had dealt with The Will Writing Company before potential transfers of assets to Philips Trust.

"We know who was referred historically. Again, there comes a point where people were referred across and we don't know what they then went on to do,” he said. “So I don't think we have indications on the front.”

Affected victims and family members have been seeking compensation from building societies over their parts in what happened.

When asked about the prospect of compensation payouts, Mr Fearon did not answer directly but said details are still emerging from the administration process, which is due to run until 2026.

"Developments are coming out almost day by day. There will be more updates from the administrators. We will keep that under review and be very thoughtful about the impact on our members. I think there is lots we need to learn on this.”

Mr Fearon said he was “deeply saddened” by the impact of the issue and backs calls for a police investigation into the Philips Trust situation to be reopened.

"We will help the police in whatever we can. We are keeping this under review and are learning things day by day and monitoring the impact it is having on our members.”

Geoff Bouchier, Managing Director at Kroll, said: “We are in contact with all the Buildings Societies involved in the case to assist in determining exactly how many, if any, of their customer who were initially introduced to the Will Writing Company may have become and still remain active clients of Philips Trust Corporation.”

Andrea Hindley from the Philips Trust Action Group said: “Building Societies argue that they didn’t have a relationship with Philips Trust. However, they were aware of the relationship between the Family Trust Corporation and Philips Trust but chose not to do anything to deter their customers from transferring trusts.

"Leeds had a duty of care to manage any third party relationships they created.

"Without the Building Societies’s introduction, marketing, promotion and endorsement of the Estate Planning Group and their products, which they failed to inform their clients were unregulated, none of their clients would be in the position they are now.”

Victims have also asked the Building Societies Association (BSA) to encourage mutuals it represents to discuss compensation with them.

A BSA spokesperson said: “The BSA is sympathetic to the difficult situation being faced by some people who have been involved with the Philips Trust Corporation. It would not be appropriate for us to comment about the activities of individual societies.”