MPs hit out at FCA decision not to investigate building societies over £138m Philips Trust scandal

Cross-party MPs have criticised the Financial Conduct Authority for its controversial decision not to investigate the role of building societies in a £138m scandal which has affected the properties and life savings of more than 2,000 elderly victims.

Several major building societies including Leeds, Nottingham and Newcastle 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 – including £44m worth of invested savings – ultimately ended up in the hands of a firm called Philips Trust Corporation (PTC), which collapsed into administration in 2022.

Hide Ad
Hide Ad

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.

Labour MP Emma Lewell-Buck has put forward the Early Day Motion in connection with the Philips Trust issueLabour MP Emma Lewell-Buck has put forward the Early Day Motion in connection with the Philips Trust issue
Labour MP Emma Lewell-Buck has put forward the Early Day Motion in connection with the Philips Trust issue

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 – leaving many victims fearing they will lose everything.

The FCA, which had been warned by a PTC whistleblower in 2020 that the firm was allegedly operating an effective ‘Ponzi scheme’ but only issued ‘guidance’ to the company as a result, recently announced it had determined it would not investigate the role of building societies involved.

It said building societies had not been conducting a regulated activity when it referred customers onto advisers but also stated “we can’t hold the building societies responsible for the actions of PTC”.

Hide Ad
Hide Ad

Since then, Leeds, Nottingham and Newcastle have all said they will make “meaningful” voluntary payments to affected victims but details of how any scheme will work is yet to be confirmed.

MPs on the All Party Parliamentary Group on Investment Fraud and Fairer Financial Services, which has been investigating the issue, have now tabled an Early Day Motion for other Parliamentarians to support. It calls for full compensation for affected victims and highlights concerns that the FCA has “failed to act” in the matter.

Tory MP Bob Blackman, Co-Chair of the APPG, said: “The Building Societies Scandal is a matter the APPG has been working on for over two years.

"It is fair to say that we are not at all happy that the FCA has failed to take swift and decisive corrective action, despite a mountain of evidence the APPG gathered from victims and provided to the FCA that showed many FCA principles had been breached and therefore that it has the basis to compel the building societies to compensate the victims.

Hide Ad
Hide Ad

"The Early Day Motion places on record our dissatisfaction with the situation - the APPG will continue to act in the interests of the elderly and vulnerable victims - they just haven’t been treated correctly, it’s as simple as that.”

Labour MP Emma Lewell-Buck, the APPG member who initiated the Early Day Motion, said: “This is yet another scandal where nobody is taking responsibility, not the building societies themselves or the Financial Conduct Authority with their responsibility to protect customers.

"I will continue to fight for victims who simply cannot wait years for a resolution and compensation.”

Andrea Hindley, from the Philips Trust Action Group of affected victims, said: “This might have to end up in the courts, but it shouldn’t have to be that way, not when the FCA could and should step in to sort out this mess.”

Hide Ad
Hide Ad

A spokesperson for the FCA said: “The collapse of Philips Trust Corporation has led to significant distress for those who lost money and we considered the role of the building societies very carefully.

“We have set out why we could not take action in this case. The evidence we have seen does not show that the building societies were carrying out regulated activity or that our principles would have applied.

“Some of the building societies involved have told us that they are exploring some support to affected customers on a voluntary basis.”

Related topics:

Comment Guidelines

National World encourages reader discussion on our stories. User feedback, insights and back-and-forth exchanges add a rich layer of context to reporting. Please review our Community Guidelines before commenting.