Philips Trust scandal: FCA promises to answer victims' questions before deadline for dropping complaints

Leeds, Nottingham, Newcastle and Saffron Building Societies announced earlier this year that they would be providing major voluntary financial support to victims of the Philips Trust Corporation (PTC) – a company which collapsed in 2022 while holding £138m of 2,300 customers’ assets including properties in trust and £44m worth of invested savings.

The four mutuals and six other smaller societies had introduced hundreds of customers to unregulated advisers who sold them family trusts linked to properties and investment schemes for savings.

The assets ultimately ended up in the hands of PTC. After entering administration, a company director subsequently admitting there had been “mistreatment” of client money. It was feared victims would be unable to recover anything.

But a voluntary compensation scheme was announced by the societies after The Yorkshire Post and other media covered the stories of the victims, many of whom had joined an action group campaigning on the issue.

Building societies involved have stressed they had no legal or regulatory obligation to offer support and a lawyer representing them has told a court hearing that dropping all associated complaints is “part of the price” of receiving a payout. But the Philips Trust Action Group of victims said today they view the proviso as a “built-in gagging order”.

Victims able to make claims have until December 1 to confirm they don’t want to accept offers before a final scheme deadline of December 31.

Earlier this year, the FCA said it would not investigate the role of building societies involved on the grounds that it had determined referring customers onto advisers was not a regulated activity and also that the mutuals couldn’t be held responsible for the actions of PTC.

In August, the action group submitted a series of 23 questions to the FCA, chiefly relating to its position that the activities of building societies involved did not fall into areas it regulates.

The questions are yet to be answered and the action group has now accused the regulator of “washing its hands of victims’ concerns”.

A spokesperson for the FCA told The Yorkshire Post that answers will be provided ahead of the December 1 deadline.

They said: “We understand the distress experienced by customers of Philips Trust Corporation, and were pleased that building societies have offered significant voluntary support.

“The questions raised were complex, but we will respond well ahead of the deadline.”

Victims who have separately submitted complaints to the Financial Ombudsman Service have been informed by the organisation that they need to withdraw their complaints in order to receive compensation.

One of those affected, Shaun Carroll, said it was frustrating that he and others are likely to have to concede before decisions are made about complaints that were submitted long before the voluntary compensation scheme was put forward.

He said of the FCA and FOS: “Their default position is about safeguarding the position of the mutuals rather than that of consumers or victims.”

Some affected victims are understood to have already withdrawn complaints to the FOS, which has said it is not providing advice but simply setting out the implications of continuing with a complaint.

An FOS spokesperson said: “We currently have a very small number of cases linked to this issue with our service. Our role is to resolve financial disputes between consumers and regulated companies, and we do not provide financial advice to individuals.

"We have not advised individuals on which decision is best for them, but we have highlighted the terms of compensation set out by the building societies involved and suggested that affected individuals seek independent advice where appropriate.

“Bringing a complaint to our service doesn’t guarantee financial compensation and each affected individual should make their own decision regarding the offer of compensation from the relevant building societies.

"If they are unhappy with the compensation offered, they can reject it and continue their complaint with our free, independent service.”​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​