‘We lost £105,000 after putting our life savings in a trust – our disabled son will suffer’

A salesman from Family Trust visited Norman and Ann at their home in 2013 after Newcastle Building Society made the introduction.

The trust cost Norman £4,000 to set up. It saw his Prudential bonds, which were generating around £700 each month based on annual returns between 8pc and 10pc, transferred to Family Trust.

The £700-a-month kept coming in, even when money was transferred to Philips Trust  in early 2019. It wasn’t until March 2023 that the income suddenly stopped.

Mr Turner said: “My father called me very concerned. They relied on this drawdown to pay their bills and buy food. I tried contacting Philips Trust by phone but got no answer. We received an automated email response – that set alarms bells ringing.

“I started looking online and on TrustPilot where I found many similar people who were not receiving their monthly payments and could not make contact with the company.”

Mr Turner’s parents will both turn 83 this summer. They are devastated. These were their life earnings.

Where has the money gone?

Kroll, Philips Trust’s administrators, have been trying to track down customers’ money for nearly two years.

So far, they have deduced that money held by Family Trust was moved in its entirety from stocks and shares investments with popular fund management platforms into bonds with four investment management companies: Berkeley Rutherford, CX Wealth, Float and Woodville.

This began in April 2018, after Philips Trust was incorporated in December 2017 and later took over a portion of its clients.

At the end of 2018, the role of trustee began switching from Family Trust to Philips Trust. Customers were told in letters seen by The Telegraph that Family Trust was closing down. The company is still active today and acknowledged The Telegraph’s request for comment.

Sources alleged that Family Trust received a commission for every customer it moved over to Philips Trust  – but the  company told The Telegraph it has never received any such commission.

Philips Trust’s books were in disarray when Kroll entered the scene. Not all customers’ trustees had been reassigned, and for months the company had failed to keep records for customers and had not tracked their balances.

With £14.5m in default out of £15.5m in bonds which have matured so far, Kroll is now waiting for a further £12m to mature this month. 

Building societies: ‘We never had a relationship with Philips Trust’

Building societies have pointed The Telegraph to the FCA’s official statement, that “it was the actions of Philips Trust, not the building societies, which caused customers to experience investment losses.”

The City watchdog has also highlighted that Philips Trust “did not exist at the point that the building societies referred customers to the Estate Planning Group [the umbrella firm for FTC and The Will Writing Company].”

A Newcastle Building Society spokesman said: “The society is very concerned by, and sympathetic to, the difficult situation faced by people who have been affected by Philips Trust.

“We have never had a relationship with, nor at any point have we referred our customers to Philips Trust, which did not exist at the time we introduced customers to The Will Writing Company.

“In January 2019, we wrote to customers we understood had taken a trust with Family Trust,” the spokesman added, referring to an option the building society gave customers where they could place their assets with the Co-op instead of Philips Trust.

But because the building society said there was “no risk” to customers’ properties and assets, many say they didn’t think twice.

Newcastle Building Society’s introducer arrangement with Family Trust ceased in November 2017. Despite claims from customers about what they deemed to be advice from their money managers on setting up trusts, the building society denies ever providing any advice on these products itself.

A spokesman for Leeds Building Society said: “We’re deeply saddened by what has happened to customers of the Philips Trust and the impact it is having on some current or former members and their families.

“We had no relationship or involvement with Philips Trust and never recommended the firm to customers. As the FCA concluded, it is the actions of Philips Trust that have caused the expected investment losses.

“We’re seeking to find out how many people affected by those losses were referred by the society and subsequently set up a trust which later transferred to Philips Trust. We’re doing this to better understand whether we may be able to financially support those customers impacted on a voluntary basis.”

The Financial Ombudsman Service said it “may be able to consider a complaint against a building society depending on the individual circumstances of the case”.

So far, cases brought to it by victims have been rejected on the basis that trusts are unregulated products.

Geoff Bouchier, managing director of Kroll said: “The Administrators from Kroll continue to conduct the Philips Trust Corporation case as efficiently as possible with the aim of achieving the best outcome for Philips Trust’s clients and creditors.

“We recognise the significant impact this situation has caused, and we sympathise with those affected.”