Watchdog did not speak to trust victims before decision not to act
‘Astounding’ decision over £138m scandal brings angry reaction from action group
THE Financial Conduct Authority did not meet directly with victims of a £138m investment scandal before making an “astounding” decision not to investigate the role of building societies linked to the matter.
Several major building societies including Leeds, Nottingham and Newcastle introduced hundreds of customers to unregulated advisers who sold them family trusts linked to properties and investment schemes for their savings which have since become mired in financial complications.
The assets – including £44m worth of invested savings – ultimately ended up in the hands of a firm called Philips Trust Corporation (PTC), which collapsed into administration in 2022.
PTC did not have a direct relationship with any of the mutuals involved but all of its customers were former clients of the Family Trust Corporation who had been introduced to that firm by their building societies.
While control of the majority of homes has now been returned to customers, administrators are struggling to recover millions in savings which PTC had passed on to “investment management” firms – leaving many victims fearing they will lose everything.
The FCA, which had been warned by a PTC whistleblower in 2020 that the firm was allegedly operating an effective ‘Ponzi scheme’ but only issued ‘guidance’ to the company as a result, announced last week it had determined it would not investigate the role of building societies involved. It said building societies had not been conducting a regulated
activity when it referred customers onto advisers but also stated “we can’t hold the building societies responsible for the actions of PTC”.
The decision has prompted an angry reaction from victims, hundreds of whom as members of the Philips Trust Action Group.
A spokesperson said there was particular unhappiness at the FCA’s failure to meet directly with victims before making the decision.
The action group spokesperson 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, the Financial Ombudsman Service and external parties but have not entered into any dialogue with one single victim to hear their evidence, despite repeated requests."
A spokesperson for the FCA said: “We have considered this matter as fully as we can, considering a significant amount of information, including documents and testimony provided by affected consumers."
The regulator said its work had included considering evidence provided by the All-Party Parliamentary Group on Personal Banking and Fairer Finance, which in March 2023 had arranged an evidence session for victims.
The FCA spokesperson said: “We reviewed and documented key points in a three-hour video recording of the evidence gathering session facilitated by the APPG, and reviewed, documented, and categorised the 400-plus documents provided as part of the same evidence gathering session.”
The spokesperson added: “The evidence presented a consistent picture and we believe we have had sufficient sight to make our determination. We will continue to monitor this situation and consider any further information as it arises.”