‘Astounding’ that no action will be taken over trust scheme referrals
FINANCIAL CONDUCT AUTHORITY SAYS BUILDING SOCIETIES’ AGREEMENTS NOT WITHIN ITS REMIT
THE financial services watchdog will take no action against building societies which referred customers to a trust programme that put their homes and life savings at risk.
The Financial Conduct Authority will not sanction The Nottingham, despite calls for it and other societies to be punished.
From 2011 to 2017, the society had a referral agreement with the Will Writing Company, and received commission for sending elderly customers to them for support and advice with writing wills and putting property and savings into trusts.
The company went bust in 2018, and the firm and its sister enterprise the Family Trust Corporation’s assets and database were acquired by the Philips Trust Corporation (PTC).
After writing to trust holders, telling them to switch over, the Philips Trust Corporation itself went into administration in 2022. This plunged elderly homeowners and relatives into long and expensive battles to get their own properties back, with many feeling “duped” by the society.
But now the FCA, which regulates building societies, has concluded the introduction of customers to the trust schemes is not within its remit.
In a statement, a spokesperson said: “While PTC itself was not regulated by the FCA, we have received a lot of questions about whether we can act against the building societies which introduced customers to predecessor companies.
“While the building societies are regulated by us, these introductions were not for activities we regulate.
“We do not decide what activities fall within our remit. Government and Parliament has not legislated to include the type of estate planning trust services provided by the companies within the activities regulated by the FCA.
“Our understanding, supported by the administrator, is that it was the actions of PTC, not the building societies, which caused customers to experience investment losses.
“We can’t hold the building societies responsible for the actions of PTC, which did not exist at the point that the building societies referred customers to the EPG (Estate Planning Group).
“We have also looked at other angles, such as whether the building societies breached any of our principles for business, which set the broad, minimum standards firms we regulate must meet.
“However, from the evidence we have seen it does not seem that any of the relevant principles would have applied to the introductory activities of the building societies.”
FCA investigators said they carried out a review of the building societies’ role as well as engaged with PTC’S administrators and customers, but those impacted have slammed the regulator’s update as a “complete dereliction of duty”.
Andrea Hindley, of the Philips Trust Action Group, which argued that the building societies’ introductions had broken the FCA’S guiding principles, said: “This is an astounding announcement from the FCA. Since being notified four years ago by a whistleblower, it has taken them this long to say anything at all to victims who are in their 80s and 90s.
“The FCA have spoken to the building societies, administrators, Financial Ombudsman Service, the Building Societies Association and external parties but have not entered into any dialogue with one single victim to hear their evidence, despite repeated requests. To be clear, the building societies did have a relationship with the Family Trust Corporation which ultimately led their clients on to PTC. Had appropriate due diligence been applied with the FTC relationship, then clients of the building societies would not be in this position.
“If victims cannot rely on the FCA to protect their interests when elderly vulnerable people are propelled into a third-party relationship with an unregulated group of companies, where can they go?”
The group expressed its hope the Government would force the building societies to compensate more than 2,000 families hit.
Nottingham Building Society reiterated that it had no relationship with the Philips Trust, which took over from Estate Planning Group companies such as the Will Writing Company and the Family Trust Corporation – which the society had referred customers to.
The Nottingham said it recognised the situation was “very difficult”, adding that it was looking at ways to voluntarily help impacted members.
“We have been working closely with the administrators, Kroll, to better understand the number of our members affected and to what extent, in order to ascertain how we may be able to help on a voluntary basis,” a spokesperson said.
“As a mutual building society, we have a responsibility to balance the interests of impacted customers with the best interests of our overall membership. By way of background, from 2011 to 2017 we had a referral agreement with a company called the Will Writing Company, whereby we referred customers to them for advice with will writing and estate planning. Some customers carried out investments and trusts with them into high quality investments. In 2018 the Will Writing Company went into administration at which point, we ceased making any referrals.
“A different company, the Philips Trust Corporation Limited contacted a number of the Will Writing Company customers in 2018 to change their trust arrangements. We have, and never have had, any links to the Philips Trust Corporation.
“Sadly, this resulted in some customers transferring their trust assets to the Philips Trust Company and entering into very different investments than the high-quality investments they were originally invested in.
“As the FCA note it was ‘the actions of PTC, not the building societies, which caused customers to experience investment losses. Having said this, we are investigating ways in which we can help impacted members on a voluntary basis while taking into account the rest of the membership.”
They have not entered into any dialogue with one single victim to hear their evidence, despite repeated requests
Andrea Hindley