Philips Trust scandal: Payouts to building society customers reach £43m as new figures revealed

It follows Newcastle Building Society setting aside £20m for repayments, Leeds Building Society paying out £10.3m and Nottingham Building Society providing £11.2m in payments – taking the total figure to £42.95m.

The four mutuals decided last year to voluntarily reimburse almost 700 affected customers despite having no legal or regulatory obligation to do so.

It followed The Yorkshire Post and other media highlighting the stories of victims who had been campaigning for compensation.

The societies and six other smaller mutuals had introduced hundreds of customers to unregulated advisers who sold them family trusts linked to properties and investment schemes for their savings which then became mired in financial complications.

The assets ultimately ended up in the hands of PTC.

It collapsed in 2022 while holding £138m of 2,300 building society customers’ assets including properties in trust and £44m worth of invested savings.

Administrators then struggled to recover millions in savings which PTC had passed on to high-risk “investment management” firms, several of which had themselves collapsed.

It had left those affected fearing they would lose everything – eventually leading to the announcement of the voluntary repayment scheme.

Saffron Building Society’s recently published annual report recognised charges of £1.66m relating to the Philips Trust issue, of which £1.45m were direct payments being made to affected members.

Chief executive Colin Field said: “We were pleased to be able to provide voluntary financial support to members who were affected by the collapse of Philips Trust Corporation.

"Though there was no legal or regulatory obligation to do so, together with three other building societies, we chose to provide this support to alleviate the significant hardship that would otherwise have occurred.”

Under the agreement, the societies are due to receive money back from administrators depending on what can be recovered, with the administration process due to end next year.

Nottingham’s 2024 accounts listed an initial recovery of £1m and the society has said it is “unlikely” any significant further amount will be returned to it, while Leeds Building Society has also said the vast majority of funds won’t be recovered.

Saffron Building Society recorded a profit after tax of £4.1m in its 2024 figures.

Mr Field said: “At the society, we remain cautiously optimistic.

"As a niche lender, we believe that we can leverage the momentum that we have built to continue to grow our lending over the coming year.

"We also believe that we can continue to build our savings balances, supported by our retail offerings and our new savings propositions for SME and community groups.

"We do believe that the next couple of years will not be easy.

"We anticipate that the pressures that we have seen on margin will continue, if not intensify, as the funding provided through Bank of England schemes during the pandemic are withdrawn.”