The whole of the building societies sector is being undermined by the £138m family trust scandal - Yorkshire Post Letters

Thank you for carrying your article about the building societies’ involvement in the Philips Trust scandal, where thousands of families lost ownership of their homes and life savings (Exclusive investigation: Brothers lose £180,000 from sale of family home in building society scandal).

I am dismayed to read the building societies’ attitude to their own obvious negligence, in my view. They seem keen to deflect attention to criminal proceedings rather than face their own obligations.

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As a building society, we expect more from them, even than we would from our banks.

Their mutual status is what, as “members”, we trust in. As the Building Societies’ Association (BSA) points out in their publication Your Rights as a Building Society Member…

“As a member of a building society you are more than just a customer; unlike a depositor with, or borrower from, a bank you have certain rights to receive information and to voice your opinions on the way your building society is run.”

Plainly, the building societies involved in this scandal did not provide due diligence before recommending these unregulated third parties and failed in their communication obligations – they did not warn customers that these firms were unregulated.

Nor did they warn customers of the pitfalls awaiting anyone who bought their will-writing or family trust products from an unregulated company.

There is also an obligation to keep members informed during the relationship with third parties recommended by them.

Why were members not advised of the implications when the Family Trust Corporation was apparently failing and reps from the PTC were suggesting they had gone into administration (not the case) and that PTC was the only option available to prevent trusts from failing (untrue)?

Why was the Building Societies Association not encouraging members to fulfil this obligation? As the voice of the Building Society sector, they are remaining suspiciously quiet!

And then, when members realised they were facing lengthy and costly legal battles to regain homes and savings, the building societies ignored members and refused to engage in meaningful dialogue regarding help and compensation.

Their communication obligations have not been fulfilled before, during or after members’ unfortunate relationship with companies that they recommended. Equally, regarding the BSA’s assurance that as members, we have rights “to voice your opinions on the way your building society is run”, I find this has been ignored.

I am curious to know what the remainder of building societies who were not part of the scandal make of this situation?

The quarter of UK building societies involved are undermining the entire sector. What building society member will trust any building society after this? These societies bring the entire concept of mutuality and its benefits into question.

Shame on them. I suggest that if the BSA can’t or won’t police their own members, then the FCA and Government will have to step in.

And let’s not forget, victims are mainly in their 80s and 90s now, so cannot wait years for a resolution and compensation.