03496-24 Newcastle Building Society v The Northern Echo

Summary of Complaint

1. Newcastle Building Society complained to the Independent Press Standards Organisation that The Northern Echo breached Clause 1 (Accuracy) of the Editors’ Code of Practice in the following articles:

• “Victims of £138m scandal left ‘unable to sleep or eat’” published on 8 April 2024.

• “‘I feel cheated’ says widow who could lose £100,000 in scandal” published on 10 April 2024.

2. The first article – which appeared on a double-page spread across pages four and five – reported on the experiences of customers who lost money after a trust fund company (Philips Trust Corporation) went into administration. It reported that, “[f]urious and out of pocket, they have slammed building societies for claiming no responsibility over the scandal - despite them introducing them to the scheme initially - while some struggle to sleep or eat because of stress. Many victims say they’d never have moved their assets into trusts if it hadn’t been for building societies including […] Newcastle”.

3. The article reported that “three [building societies, including the complainant] had agreements with and earned commission for referring customers to third-party advisors who encouraged them to set up the trusts, saying it would protect their homes and investments for their children, or from being lost paying for social care in later life. But that decision has instead had the complete opposite effect and they’ve been left fighting to keep their own homes and fear their life savings are lost forever after the company behind the trusts fell into administration amid alleged mismanagement.” It also reported that the complainant “had a relationship with the Will Writing Company (WWC) from 2006 and received a commission for referring customers to unregulated WWC advisors who often worked in branches and told elderly victims to set up trusts with sister firm the Family Trust Corporation (FTC), at a cost sometimes upwards of £3,000.”

4. The article said that “[b]etween 2006 and 2017 customers […] were advised to speak to third-party advisors about writing wills - which resulted in many setting up trusts - at Newcastle Building Society branches across the region”. The article then reported that “Newcastle Building Society says it ‘never had a relationship with, nor at any point have we referred our customers to, Philips Trust Corporation’. A spokesperson said they were ‘very concerned by, and sympathetic to, the difficult situation faced by those affected.’”

5. The article quoted a previous customer of the complainant, who said: “’We were lied to. Nobody told us these companies were unregulated. If we had known all of this, we would never have touched them. We’ve got an awful lot of regret.’” It also quoted another previous customer, who said: “’We aren’t wealthy at all, we worked hard to buy our house. We trusted Newcastle Building Society. We thought if they were sending this person out we could trust them. In hindsight what started as a conversation about wills turned to him selling us a trust in about two minutes, he made us believe it was the best thing for us.’”

6. The article also quoted ”a lawyer who has since helped tens of families plunged into what she calls a ‘massive mess’ by the scandal”, who reportedly said: “’I have a lot of clients who are in a massive mess and the reason they are in this massive mess is because they set foot inside the building societies. If they had put their money with another high street bank, or wherever else, they wouldn’t be in the position they are in today. Surely the building societies must take some fraction of responsibility. They may be able to wriggle out on legal technicalities but from a moral point of view they must. […] All they (the victims) have done is go into the branch and they got collared. They went in just for normal day-to-day banking and came out in this mess. […] It makes me feel ill - the thought that these people have done nothing wrong, and they (the building societies) have said ‘It’s nothing to do with us’. If it’s nothing to do with them, how come these people are in this situation?’”

7. The article said that “[t]he Newcastle Building Society disputes not telling customers WWC [Will Writing Company] was unregulated, saying literature at the time said the services were ‘not regulated by the FCA [Financial Conduct Authority]’”. The article also said that a “Newcastle Building Society spokesperson said they may consider providing support to victims down the line, adding: ‘We are currently engaging with the administrators [of the PTC], to better understand the impact on those affected and their next steps.’”

8. The article also quoted an FCA spokesperson: “’We know the collapse of Philips Trust Corporation has led to significant distress for those who lost money, and have considered this issue carefully. 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. Legislation expressly excludes this type of estate planning trust services’”.

9. The first article also appeared online in substantially the same form under the headline “Victims of Philips Trust scandal in North East speak of fear”. This version of the article included a further quote from the FCA, who reportedly said: “’We can’t hold [them] responsible for the actions of PTC, which did not exist at the point the building societies referred customers to the EPG (Estate Planning Group - the parent company of WWC and FTC).’”

10. The second article – which appeared on page four - reported on another individual who had lost money due to the scheme going into administration. The article said that she had been “referred by the Newcastle Building Society in 2012 to unregulated third-party advisors who told her and husband […] to set up a family trust”. It also reported that she felt “‘angry and cheated’ by a building society as she may never see a penny of her £100,000 of lifesavings ever again". The article also said that the “building society took a commission for referring customers like [the individual] to the Will Writing Company (WWC), whose advisor told [the couple] putting their home and savings in a family trust would protect them if they went into care.” It said that she “slammed the Newcastle Building Society for taking no responsibility.”

11. The article also reported that the “Newcastle Building Society had an agreement with WWC where they earned a commission for referring customers to their advisors to write wills. Those advisors often encouraged people to set up trusts with sister firm the Family Trust Corporation. In 2018 the Will Writing Company went bust and many trust holders were advised to transfer management of their trusts to the Philips Trust Corporation (PTC). That too went under in April 2022, plunging more than 2,300 families into crisis, battling to keep homes and investments”. It further reported that the “Newcastle Building Society sa[id]’ it ‘never had a relationship with, nor at any point have we referred our customers to, Philips Trust Corporation.’” The article quoted the FCA, who reportedly said it “can’t hold building societies responsible for the actions of PTC, which did not exist at the point [they] referred customers to the EPG (Estate Planning Group - the parent company of WWC and FTC)”. The second article also included the same quote from the lawyer which appeared in the first article.

12. A version of the second article appeared online in substantially the same form under the headline “Sunderland victim of Philips Trust scandal 'loses £100k'“. This version of the article closed by reporting that “the Echo told how [the couple] fear their hard earned savings worth about £150,000 are gone forever and how a Newcastle couple are out of pocket after discovering their names had been completely removed from the deeds of their home”. This sentence was a hyperlink to the first article under complaint.

13. On 26 March 2024 – 13 days prior to the publication of the first article - the publication approached the complainant via email to ask for its comment on the allegations made by previous customers. The email included the following: “Many of your customers who were referred by yourselves do hold you responsible. Many say they would never have been in this situation if the Newcastle Building Society had not referred them to representatives of the Will Writing Company and say the Building Society should not have referred them to something which was unregulated. Many are angry about this and say they thought they could trust the Newcastle“.

14. The email also asked: “Who was the initial Newcastle Building Society link/partnership with?”; “Was this with the Estate Planning Group, the Will Writing Company or the Family Trust Corporation? And in which year did this agreement start and end?”; “How much commission did the building society receive, or what bonuses were given to staff, for referrals of customers?”; “How many customers of the Newcastle Building Society were referred during the course of that agreement?”; “would also appreciate if you could provide a comment on whether the building society will accept any responsibility for the situation your customers now find themselves in, and whether you will look to compensate these customers, if not for the amount of investments lost but for the costs associated with them joining the trust and subsequent legal fees?”. The publication asked for a response by the following day.

15. The day after, the complainant responded with some background information, and a statement:

“The society is very concerned by, and sympathetic to, the difficult situation faced by people who have been affected by Phillips Trust Corporation.

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

In January 2019 we supported our customers by writing to those we understood had taken trust with the Family Trusts Corporation. We informed them that we had set up a discounted trustee reassignment service as an alternative to entering into an arrangement with Philips Trust, which enabled the appointment of individuals (such as family members) as Trustees.

We welcome the clarity provided by the FCA’s recent statement on 22nd March 2024, which notes that it was the actions of Philips Trust Corporation which caused their customers to experience investment losses. We are currently engaging with the administrators, Kroll, to better understand the impact on those affected and their next steps. Once this information is available we will be in a position to consider if we may be able to provide some support to affected customers on a voluntary basis. Given the complexity of the situation and early stage of proceedings we are unable to pass further comment at this stage.”

16. Following the articles’ publication, the complainant contacted the publication on 10 April and made it aware that it had concerns around the accuracy of the articles. The publication responded on 18 April with a response setting out why it did not consider the article had breached the Code.

17. On 7 May the complainant contacted IPSO. It said the article breached Clause 1 as it considered it blamed the complainant for the loss and distress caused by the risky investments made by PTC. It said that the articles included statements to this effect from various customers.

18. The complainant said that it did not introduce its clients to the PTC as the PTC did not exist at the time the referrals were made. Rather, it said, it introduced its customers to the Will Writing Company (WWC) which made recommendations to its customers to place assets into a trust. WWC went into administration in 2017 at which point the complainant ceased its referrals. The assets of the WWC were then bought out of administration by Taylor Rose TTKW, an entity which was connected to PTC.

19. The complainant said it wrote to those customers affected by the collapse of the WWC in 2018 and 2019. The 2018 letter stated that the complainant was not connected to Taylor Rose TTKW, nor Berkeley Rutherford, a company offering investment products to which Taylor Rose TTKW was referring clients. It said the letter also made clear the complainant did not endorse Berkeley Rutherford's investment products. The 2019 letter said that the complainant had set up a discounted trustee reassignment service so new trustees could be appointed, following feedback that some FTC customers were looking to transfer their trust to remove FTC as trustee. The complainant provided copies of the letters in question.

20. These letters, said the complainant, showed that it was the customers’ decision to appoint PTC and that it had never recommended that customers move to PTC. It said it made clear in its letters that it was not affiliated with PTC and in its 2019 letter to customers it warned that a transfer to PTC “may not be necessary and could incur charge”.

21. The complainant further said that both articles had breached Clause 1 as they included a quote from a lawyer which it said inaccurately implied the complainant was responsible for the losses and that it had acted immorally.

22. The complainant also said that, while the publication had approached it prior to the first article’s publication, the specific allegations included in this article had not been put to it prior to publication.

23. The complainant also said that the first article quoted an individual who stated that he had been lied to by the complainant, which it said breached the terms of Clause 1. It said that all customers had been told that trust companies were unregulated. It provided a leaflet which is said was in branches in 2012, which was the year the individual had alleged he was approached in-branch about the Will Writing Company. In a footnote the leaflet said: “NBS Will Writing services are provided by the Will Writing Company. Wills are not regulated by the Financial Services Authority. The Will Writing Service offered by NFSL is not part of the Openwork Limited offering and Openwork Limited accepts no responsibility for this service.”

24. The complainant provided an FCA statement to support its position that it was not responsible for the actions and mismanagement of PTC: "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. We’ve considered very carefully if we can take action. We have concluded that in this instance we cannot. We know that this will be disappointing for consumers, and so we want to set out why that is”. It also said that, “[b]ased on the evidence we’ve seen, the building societies were not carrying out a regulated activity when they referred customers to companies which were part of the EPG. Our understanding 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.” It said it had provided this statement to the publication prior to the article; however, it had ignored it.

25. The complainant also said that the second article was inaccurate. It said that the publication had not approached the complainant prior to the second article’s publication. It said that, had it done so, the complainant would have made clear the first article contained significant inaccuracies.

26. The complainant said the second article also suggested it was responsible for loss and distress. It said it had failed to make clear that any losses to customers were a result of risky investment decisions made by PTC, and that customers would have made a decision to appoint PTC as a trustee and consented to PTC making investment decisions on their behalf, something that the complainant said it never recommended or had any control over. It said that the article had included a quote from a customer which said it had let her down after she placed trust in it and could not see how it could take no responsibility.

27. The complainant said that the second article was misleading, where it stated that "[i]n 2018 the Will Writing Company went bust and many trust holders were advised to transfer management of their trusts to the Philips Trust Corporation (PTC). That too went under in April 2022, plunging more than 2,300 families into crisis, battling to keep homes and investments.” It said this implied that it advised trust holders, directly or via WWC, to transfer the management of their assets to PTC, but it actually did the opposite.

28. The complainant also said that, as the online version of the second article included a link to the first article, it had republished the original inaccuracies.

29. The complainant requested the following apology appear in the newspaper’s corrections and clarifications column:

“Two articles headlined 'Victims of Philips Trust scandal in North East speak of fear' (April, 8) and 'Sunderland victim of Philips Trust scandal 'loses £100k' (April, 10) suggested that Newcastle Building Society acted immorally and lied, misled and took advantage of customers causing them financial loss and distress as a result of investment decisions made by a company called Philips Trust Corporation (PTC). In fact, Newcastle Building Society did not act in these ways and was never responsible for such losses, including because it never referred customers to PTC, had no business relationship with PTC and made this clear to customers in correspondence it sent to them. We apologise to Newcastle Building Society for any damage caused and for any confusion this may have caused readers.”

30. The publication did not accept a breach of Clause 1. It said that the articles made clear that the legal responsibility for the loss of money and distress was with the PTC and not with the complainant. It said the customers gave honest opinions based on the chain of events. The publication said that, due to the fact that the complainant made the initial referral to the WWC, the customers held the complainant partly morally responsible. It said that the statements from the individuals quoted in the articles were distinguished as their comment on the situation, rather than as statements of fact. It said that no “reasonable reader” would consider these comments to be anything but valid and genuine expressions of opinion, which is permitted by Clause 1 (iv). The publication said that the article did not allege that the complainant introduced its customers to PTC.

31. With regard to the lawyer quoted in both articles under complaint, the publication said a “reasonable reader” would understand the solicitor was not claiming that the complainant held legal responsibility for the scandal and its consequences. However, she was of the opinion that the complainant had a moral responsibility for past events, and to assist the victims.

32. In regard to the quoted individual who said that he hadn’t been told that the companies were unregulated, the publication said this represented his recollection of events and that he did not recall being told that the firms were unregulated. The publication said that, for balance, it had included the complainant’s statement that customers were told that the firms were unregulated.

33. The publication did not accept that it failed to put the key elements of the concerns of customers to the complainant or had failed to comply with its obligations under the Code when seeking comment prior to publication. It said there was no obligation for a journalist to provide the subject of an article with a detailed preview of it. Rather, it had met its obligations under the Code by providing the complainant with a broad indication of the issues which were to be covered and inviting comment on these matters. It also said that that Clause 14 of the Editors’ Code expressly obliges journalists to protect their sources of information. It said that if it had given the complainant prior notification of the identities of the individuals complaining about it this would have been a clear breach of this ethical obligation.

34. Turning to the complaint that it had not contacted the complainant prior to the publication of the second article, the publication said that this was not the case. It said a reporter gathered information from all three sets of customers at the same time, for the purpose of preparing an article about their concerns and - as part of this process – he approached the complainant for comment. However, once the article had been written it was too long for editorial purposes, so was split into two articles. The approach for comment had been made in relation to all three of the complainants and both articles, so it did not consider that it was necessary to approach the complainant for comment a second time prior to publication of the second article.

35. The publication did not consider that it had ignored the FCA’s statement. It said that the following passage was included in the first article: “We can’t hold [them] responsible for the actions of PTC, which did not exist at the point the building societies referred customers to the EPG (Estate Planning Group - the parent company of WWC and FTC)”. It also noted that the following excerpt from the statement was included in the second article: “The Financial Conduct Authority last month said it “can’t hold building societies responsible for the actions of PTC, which did not exist at the point [they] referred customers to the EPG (Estate Planning Group - the parent company of WWC and FTC)”. It said this made clear to readers that the FCA did not hold the complainant legally responsible, which was the message conveyed by the full statement.

36. The publication said that, since the articles and other similar articles on the issue had been published, the complainant’s position had changed: on 2 May it announced a voluntary financial support scheme which would pay back 100% of ‘lost’ savings, and give victims £2,400 towards the costs of getting their homes back in their names. It said it had reported on this development both online and in print.

37. The complainant said it was the publication’s responsibility to verify claims made by customers and it had failed in doing so.It noted that the publication had accepted that their sources "do not necessarily understand the legal complexities" of the PTC case.

38. The complainant said the articles were not why it had changed its position. It said it had been working to understand appropriate steps it could take for customers who had been affected prior to the articles’ publication. It said, despite never having had a relationship with PTC and being under no legal or regulatory requirement to offer financial help, it decided to make voluntary contributions to the affected customers. It also said that, having explained its position, other publications chose not to publish the inaccuracies, or to remove their articles on the subject.

Relevant Clause Provisions

Clause 1 (Accuracy)

i) The Press must take care not to publish inaccurate, misleading or distorted information or images, including headlines not supported by the text.

ii) A significant inaccuracy, misleading statement or distortion must be corrected, promptly and with due prominence, and — where appropriate — an apology published. In cases involving IPSO, due prominence should be as required by the regulator.

iii) A fair opportunity to reply to significant inaccuracies should be given, when reasonably called for.

iv) The Press, while free to editorialise and campaign, must distinguish clearly between comment, conjecture and fact.

Clause 14 (Confidential sources)

Journalists have a moral obligation to protect confidential sources of information.

Findings of the Committee

39. The Committee considered whether the articles had inaccurately blamed the complainant for the loss of money and distress experienced by the customers referred to in the articles, as alleged by the complainant.

40. The articles focused on a number of individuals who had opened funds with the PTC – an unregulated organisation - after the WWC, an unregulated organisation the complainant recommended, had ceased trading. As the WWC had been recommended by the complainant, the individuals considered that the complainant had some moral responsibility: the first article made clear the “victims” believed “they’d never have moved their assets into trusts if it hadn’t been for building societies including the Newcastle, [and two others]”. Both articles also included direct quotes from previous customers, setting out their views. For instance, the first article reported that one customer had said: “We trusted Newcastle Building Society. We thought if they were sending this person out we could trust them.” It also set out the factual basis behind the customers’ concerns, which was that the building societies had “agreements with and earned commission for referring customers to third-party advisors who encouraged them to set up the trusts” and “the company behind the trusts fell into administration amid alleged mismanagement.”

41. Both articles also included the complainant’s position in response to the view that it held responsibility for the loss of customers’ money, which was that it “never had a relationship with, nor at any point have we referred our customers to, Philips Trust Corporation”. Both articles also included the FCA’s position, which made clear it couldn’t “hold building societies responsible for the actions of PTC, which did not exist at the point [they] referred customers to the EPG”.

42. While the customers considered the complainant had some form of moral responsibility over the loss of money and distress caused, given the complainant’s and FCA’s position was clearly set out in response, and the factual background made clear, this was clearly distinguished as their opinions, in accordance with Clause 1 (iv). As such, there was no breach of Clause 1 on this point.

43. The Committee next considered the quotes from the lawyer, which the complainant said implied it was responsible for the losses and that it had acted immorally. The Committee noted that the lawyer’s comments were clearly presented as her views on the situation. The article made clear she had “helped tens of families plunged into what she calls a ‘massive mess’ by the scandal”, and went on to quote her: “I have a lot of clients who are in a massive mess and the reason they are in this massive mess is because they set foot inside the building societies. If they had put their money with another high street bank, or wherever else, they wouldn’t be in the position they are in today”. It was clear from this quote that the lawyer’s view was that the building societies were responsible as her clients were “in a massive mess […] because they set foot inside the building societies”. While the complainant disagreed with this view, the factual basis for it was made clear elsewhere in the articles: the clients had been referred to the WWC by Building Societies, which resulted in them placing their money in trusts based on the WWC’s advice. It was also clearly distinguished as the lawyer’s own subjective view of the situation, reporting her comment that :”It makes me feel ill”. The lawyer had also acknowledged that the complainant was not legally responsible in both articles: “Surely the building societies must take some fraction of responsibility. They may be able to wriggle out on legal technicalities but from a moral point of view they must”. Further, both articles had included an excerpt of the complainant’s statement, making clear it never had a relationship with, or had referred customers to the PTC; as well as the FCA’s position which explained that the complainant had not referred its customers to the PTC. For this reason, there was no breach of Clause 1.

44. The Committee next turned to the complainant’s concerns that the publication had not put specific allegations to it prior to the first article’s publication nor contacted it prior to the second article. The Committee noted that, in this case, the publication had contacted the complainant prior to the first article’s publication and had put to it several claims and questions which were relevant to both articles under complaint. The publication’s email said that customers who were referred by the complainant held it responsible; that they believed they would not have been in the situation if they had not been referred by the complainant to the WWC; that it should not have referred them to an organisation which was unregulated; and asked whether the complainant accepted any responsibility for the situation. Given the articles focused on the customer’s perspective of events, the Committee was satisfied the publication had relayed relevant customer’s claims and had put across the complainant’s position that it had not referred customers to the PTC, and therefore was not responsible for the losses. The Code does not require the publication to approach the subject prior to publishing the story. The Committee further noted that the complainant had not identified any significant inaccuracies which had come about as a result of a failure to put a specific claim to it prior to publication. Therefore, there was no breach of Clause 1 on this point.

45. The Committee also considered whether the following quote from one of the customers breached the terms of Clause 1: “’We were lied to. Nobody told us these companies were unregulated. If we had known all of this, we would never have touched them.’” The complainant said it had informed the customers via its literature that these organisations were unregulated. It also noted that the complainant had supplied a leaflet which it said would have been in branches at the time the customer had been made aware of the WWC. The footnote in the leaflet said “NBS Will Writing services are provided by the Will Writing Company. Wills are not regulated by the Financial Services Authority.” The article also included the complainant’s position - it said: “The Newcastle Building Society disputes not telling customers WWC was unregulated, saying literature at the time said the services were “not regulated by the FCA”.

46. The Committee noted that the complainant was unable to demonstrate the specific customer had been explicitly told that the firm was unregulated, nor confirmed the complainant had been sent the leaflet prior to his visit to the branch, received a copy while he was there, or that it would have been explained to him that the firm was unregulated. In addition, the article included the complainant’s position - which was that they had told customers the WWC was unregulated. Taking these factors into account, the Committee did not consider that there was a sufficient basis to find that the article was inaccurate, misleading, or distorted on this point – particularly in circumstances where the article set out the complainant’s position that customers were informed that the WWC was unregulated or the implications of this - and there was no breach of Clause 1.

47. The Committee considered the complainant’s concerns that the publication had ignored the FCA’s statement. As noted above, an excerpt of the FCA statement was included in both articles which made sufficiently clear its position that the complainant was not legally responsible for the customers’ losses. There was no breach of Clause 1 on this point.

48. The complainant said that the second article inaccurately implied that it advised trust holders, directly or via WWC, to transfer the management of their assets to PTC. The Committee noted the article did not claim the complainant had advised customers to transfer management of their trusts to the PTC. Further, the article made clear that the complainant had no affiliation with the PTC: “Newcastle Building Society says it ‘never had a relationship with, nor at any point have we referred our customers to, Philips Trust Corporation’”. There was no breach of Clause 1 on this point.

49. The Committee considered the text in the second article which linked to the first article. The Committee noted the complainant had not suggested the linked text in and of itself was inaccurate. Rather, it considered that the act of hyperlinking to the first article effectively republished the claims. However, the Committee did not consider that this was the case; it considers complaints about specific articles that are within its remit, rather than complaints about all material linked within articles. At any rate, the Committee had considered whether both articles breached the Code, and did not consider that either article included information in breach of Clause 1. The Committee did not consider the link represented a breach of Clause 1.

Conclusions

50. The complaint was not upheld under Clause 1.

Remedial action required

51. N/A

Date complaint received: 07/05/2024

Date complaint concluded by IPSO: 08/10/2024