Victims of a £138m financial scandal who feared they’d never see a penny of their life savings again reacted with elation after building societies announced tens of millions of pounds of voluntary financial support.

The Philips Trust went into administration in 2022, leaving 2,300 building society customers’ homes and life-savings hanging in the balance.

Victims had called on Newcastle, Leeds and Nottingham Building Societies to offer support over the money they thought was lost forever.

Although the building societies never had a relationship with the Philips Trust Corporation (PTC), they did have relationships with the Will Writing Company (WWC) and Family Trust Corporations (FTC). The Newcastle referred customers to WWC advisors in branches between 2006 and 2017.

When WWC went bust in 2018 many of those initially referred by the building societies moved their family trusts - which they were told would protect their savings and homes for their families if they went into care - into the hands of the PTC.

On Thursday (May 2) all three building societies announced a voluntary financial support scheme which will pay back 100% of ‘lost’ savings, and give victims £2,400 towards the costs of getting their homes back in their names.

It comes after The Northern Echo told how victims in our region had been hit by the Philips Trust’s collapse.

The building societies said they were “deeply saddened” by the situation some of their customers had found themselves in and said that while they had no legal or regulatory requirement to offer financial help they would “stand by their purpose-led, mutual principles” and offer support to customers.

The Northern Echo: File photo: Newcastle Building Society branch in Durham.File photo: Newcastle Building Society branch in Durham. (Image: SARAH CALDECOTT)

Andrew Haigh, Newcastle Building Society Chief Executive, said: “We are very concerned by, and sympathetic to, the difficult situation faced by people who have been affected by Philips Trust Corporation.

“It has been extremely distressing to hear the customer stories and the impact on their lives. Our members understand our commitment to purpose and our support for the communities we serve, which makes it even more important that we go ahead with this voluntary support for members at this time of great difficulty.

“It is clear that these difficulties are a direct result of the actions of Philips Trust and we will continue to offer support to any current or future police investigation which aims to hold those responsible to account.”

The decision was agreed at Newcastle’s annual general meeting last week. A spokesperson said at the time: “As shared first with members at our AGM, even though there is no legal or regulatory liability on the Society’s part, it is our intent, on a voluntary basis, to provide meaningful financial support for affected customers.”

Durham couple John and Carol Bell moved their £120k of savings and their three-bed detached home in Brandon, Durham, then worth £170k, into a trust at a cost of about £3,700 after a visit to their local Newcastle Building Society branch in 2012.

The Northern Echo: John Bell.John Bell. (Image: SARAH CALDECOTT)

John, 77, previously told the Echo how they feared their savings, now thought to be worth about £150k, were gone forever.

Speaking after the announcement on Thursday retired engineer John said: “It’s just a fantastic sigh of relief – it’s unreal really.

“When we thought everything was gone and we’d never see a penny again it’s unbelievable.

“I’m just pleased that the building society has come round to making this decision. Over the last two years we’ve battled with them, and they have just turned around and said ‘sorry but it’s nothing to do with us’ so we never thought they’d offer us any money.

“It has had an effect on everyone, the health issues, the stress, the worry that has been in the back of my mind. It’s really quite hard to believe at the moment.

“Just a big thank you to the building society for doing this and to everyone who has campaigned on this, including The Northern Echo.”

Instead of making bespoke investments for individual trust holders, PTC instead piled a total of £44m into four private companies. £15.7m of that was due to be received by administrators Kroll by February 23, but only £1.17m had been received.

Kroll said because of “weak corporate governance and inadequate record keeping” by PTC it had no way of saying where money from each trust had been invested.

On top of whatever is recovered, Kroll will get to take money to cover its costs – which stood at £2.9m in January 2023 and have been ever rising since - before anything goes to victims. That left most fearing they’d never see a penny, and further out of pocket after paying for deeds on their homes to be returned to them, and legal fees.

The move by building societies will pay 100% of each customer’s PTC investments and the £2,400 that Kroll charges to make changes to property deeds to return them to victims’ names.

Widower Dorothy Hitcham previously said she felt ‘angry, depressed and miserable’ as she feared she’d never seen any of her and husband Eric’s life savings ever again.

The Northern Echo: Dorothy Hitcham.Dorothy Hitcham. (Image: SARAH CALDECOTT)

They put their £280k bungalow in Seaburn, Sunderland, and investments believed to be worth £97,000 into a trust at an initial cost of £3,200.

She said yesterday: “I’m just so relieved, very excited about it and can hardly believe it. I don’t know what to do with myself I’m so excited.

“We worked all our lives to have the safety cushion that money would give us, to not have to worry about every penny when we retired. I never thought I’d see it again.

“I feel as if a huge weight has been lifted off my back, not to have those thoughts and worries whirring around my head.

“My daughter rang me from Tenerife asking if I’d seen the news, I couldn’t believe it.”

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The Philips Trust Action Group (PTAG) has been campaigning for support from the building societies. A spokesperson told the Echo: "PTAG are delighted that the large 3 building societies have decided to redress their members 100% of savings. We hope that the smaller societies will follow their lead, engage with members and offer meaningful redress.

"We feel there is still work to be done to get a fairer outcome for victims who had only their homes in trust. These members are significantly out of pocket still."

A Financial Conduct Authority (FCA) spokesperson said: “We are pleased about the announcement today of support for customers of Philips Trust Corporation.  We have spoken to the Building Society Association (BSA) and the buildings societies involved as they developed this proposal and welcome the voluntary steps taken.”