In recent days I have been inundated with correspondence from people who believe – rightly – that they have been left out to dry.
Some letters and emails are difficult to read without shedding a tear – or boiling with anger. They express concern about the care given to long-standing customers of selected mortgage banks and the willingness (lack thereof) of the municipal regulator to protect consumers from financial malpractice.
The letters relate to will drafting and estate planning services that consumers purchased through their local building society in the 2010s. These were initially provided by the Will Writing Company and the Family Trust Corporation (both part of Estate Planning Group) and later by Philips Trust Corporation, which subsequently came into administration. The building societies had no business with Philips Trust, the real villain in this story.
Customers, mostly elderly, paid to have new wills drawn up and their assets (including their homes) taken into custody, because they were told this would protect their money later in life – and upon their death. In theory, yes. In practice not. They bought these financial products because they thought they were doing the right thing. They also bought them because they trusted their friendly building company to look after their best financial interests.
It was simple. When their local chapter recommended that they sit down for coffee and discuss important financial matters such as estate planning, they invariably agreed. It made financial sense.
The writing on the wall: Many clients have been sold proverbial financial puppies and have since incurred horrific costs to put things right
Unfortunately they were disappointed. Many were sold proverbial financial puppies and have since incurred horrific costs to put things right – while some are still waiting to see what remains of the assets they transferred to be managed tax efficiently. Precious little, it seems.
Tragically, many have died waiting to get the remains of their money back, leaving children (now adults) to pick up the pieces.
These people suffered another blow a few days ago when the Financial Conduct Authority said it would not be taking any enforcement action against building societies involved in this sad story. Her main argument is that these services, for which the mortgage banks as contributors received a commission, were not regulated activities (such as collecting deposits).
So it is powerless to act. Furthermore, the services the associations recommended were part of the Estate Planning Group – and not Philips Trust, where all the customer losses (and administrative chaos) occurred due to gross mismanagement (I’m being polite here).
More than 2,300 people had their assets ‘managed’ by Philips Trust.
The regulator says that it cannot hold associations responsible for the incompetence of Philips Trust, even though the company did not yet exist when they introduced customers to the services of Estate Planning Group.
Announcing its decision, the FCA admitted it would “profoundly” disappoint customers who suffered losses as a result of the debacle. And they are absolutely right.
Those caught up in the scandal – whether because customers or children had to pick up the pieces – feel deeply let down.
Andrea Hindley of the Philips Trust Action Group – a group representing the interests of more than 200 affected families – described the FCA’s decision as a ‘dereliction of duty’.
Andrea’s parents, Maureen and Jim, were introduced to the Will Writing Company and Family Trust Corporation through Nottingham Building Society. Their house in Lincoln plus £120,000 in investments ended up with Philips Trust.
Although the family has now managed to regain ownership of the house, there is little prospect of recovering the money their parents invested; any residual value will likely be absorbed into administration costs.
Maureen died in April 2022 and her funeral later that month coincided with the collapse of Philips Trust. Only then did Andrea discover what her parents had done with their house and investments. Since then, she and other members of the pressure group have tried tirelessly to get the FCA to talk to them – and hear their side of the story. But they have been thwarted (in the FCA’s defense it says it has absorbed mountains of written consumer evidence).
Andrea, a retired publican, has protected her father from the FCA’s announcement: he is currently receiving end-of-life care. “If we can’t trust regulators to regulate, who can we trust?” she asks.
She hopes that with the support of the all-party parliamentary group for personal banking and fairer finance, the FCA’s decision can be challenged.
“This is not the Philips Trust scandal,” she says. ‘This is the Building Society scandal.’
Nottingham was not alone in promoting Estate Planning Group’s wares. Both Leeds and Newcastle did so too, along with some smaller associations (I repeat: these mutuals had no business with Philips Trust).
I invited all three associations to tell me whether they would help customers caught up in this terrible crisis. I also asked them to quantify the commission they earned by getting clients talking to Estate Planning Group’s salespeople.
Nottingham said it is working with the trustees of Philips Trust (Kroll) to consider how ‘it can help (customers) on a voluntary basis’.
Newcastle said the same, stating that it is in discussions with Kroll ‘to better understand the impact on those affected’ and to see if support can be provided. It added that before Philips Trust came on the scene, it offered customers a ‘discounted trustee relocation service as an alternative to entering into an agreement with Philips Trust’.
Leeds also confirmed discussions with Kroll, adding: ‘In relation to possible criminal conduct by Philips Trust, the matter has been referred to Greater Manchester Police and we continue to urge them to investigate.’
None provided details about the commissions they earned for introducing clients to the Will Writing Company. Make of that what you will.
As for the regulator, he told me: ‘Although the building societies are regulated by us, these introductions were not for activities that we regulate. “Some of the building societies involved have told us they are in discussions with the administrators to explore possible support for affected customers on a voluntary basis.”
It is the least these societies should do.
HSBC transfers map to history
It is not only cash that is being overtaken by other forms of payment. The good old debit card is slowly dying a death – a form of plastic that allows customers to pay on credit and avoid paying interest, provided the card balance is settled every month.
HSBC has just written to its small group of Gold Mastercard payment card customers to say that they will be pulling the plug on the card at the end of September this year. In compensation, she extends the annual travel insurance that comes with the card for another year (and free of charge).
The bank says the decision will allow it to “deliver an even better customer experience” to holders of its other credit card products.
It also adds that the card, which charges an annual fee, has not been available to new customers for 25 years.
It leaves the payment card market – a market that is especially popular with high earners – firmly in the grip of American Express.
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