The Philips Trust case further illustrates the need for individuals to seek independent estate planning advice from qualified, regulated and insured legal professionals. Trusts are a complicated area of law. People should be wary of referral schemes and should instruct a solicitor who has a Society of Trust and Estate Practitioners (STEP) accreditation, which means they specialise in trust work.
The Philips Trust scandal, which saw thousands of building society customers lose more than £130 million after being “duped” into opening trust funds, was back in the spotlight at the end of October after one of the victims’ families was interviewed on GB News (23 October 2023).
Victims of the scandal, which involved customers of various building societies being encouraged to take out wills and trusts that they believed would protect their assets from future care fees and inheritance tax, are still attempting to recoup financial losses.
Issues started in the late 2010s when it was claimed around 2,345 people were “pushed” by building societies, including Leeds, Newcastle and Nottingham, into unsuitable financial products supplied by a third party.
Originally, these were provided by sister companies, The Will Writing Company (TWWC) and Family Trust Corporation (FTC), with the building societies receiving commission on each sale they made.
However, when TWWC went bankrupt in 2018, the Philips Trust Corporation took over. Philips entered administration in 2022, which resulted in considerable uncertainty for its customers about what might happen to the assets they placed in trust.
GB News spoke to Gordon Crosthwaite, who claims that his mother-in-law was told by Newcastle Building Society (NBS) to give money to TWWC despite already having a will in place. Philips Trust’s collapse now means that her savings of £117,000 are in jeopardy.
“Her savings were set up in a way that would take care of her disabled son when she passes. The impact on her is that she doesn’t have the money to take care of him,” said Crosthwaite.
Administrators from Kroll Advisory were appointed in April 2022 and are currently investigating. However, it is proving a lengthy and costly process, with customers having to make four-figure contributions towards removing their homes from the trusts set up by Philips, according to This Is Money.
Those who hold investments in the trusts have been warned that they are unlikely to get back the sums they put in because of the poor quality of the holdings. Any repayments to customers could take until 2026 to be completed, says the report.
Difficulties have also arisen as parties are reluctant to take responsibility.
Trade organisation the Building Societies Association said: “We are aware of – and sympathetic to – the difficult situation being faced by some people. But to be clear, no building society introduced customers to Philips, which is the firm where the issues have arisen.”
Campaigners have criticised an investigation by the Financial Conduct Authority (FCA), which wrote to the building societies for their account of events and which it then accepted without hearing any additional evidence from consumers.
The All-Party Parliamentary Group on Personal Banking and Fairer Financial Services says the regulatory body was “complacent”. It has gathered its own evidence, which it has supplied to the FCA, and has also called for another review.
An FCA spokesperson said: “This is a very complex issue involving the provision of unregulated services by unregulated firms.
“Where concerns about regulated firms have been raised, we have asked the firms for more information, which we have scrutinised. We have also recently been sent information from consumers affected by this issue and are reviewing this currently.”
The case is a stark reminder of the dangers of being mis-sold asset protection trusts and other financial and legal products from inexperienced or unregulated suppliers.
When making a will or setting up a trust it is crucial to seek independent legal advice from qualified, regulated and insured professionals.
Wills Solicitors Alton
Bookers & Bolton is a regulated law firm with an experienced team providing comprehensive legal advice on wills and estate planning. Our solicitor and legal expert, Nigel Sims, is a member of STEP, a global professional body comprising lawyers, accountants, financial advisors and other practitioners that help families plan for their futures.
As specialists in inheritance and succession planning, STEP members draft wills and trusts, administer estates, act as trustees and advise families on how best to structure their finances to ensure compliance and preserve their assets for future generations.
Our private client lawyers in Alton and Hampshire can assist and advise in several areas, including:
- Power of Attorney.
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Our elderly and vulnerable client lawyers will take the time to understand your situation, ensuring you understand and are comfortable with our advice.