Newcastle BS sets aside £20m for Philips Trust victims

Newcastle Building Society said in its half-year report that it has set aside £20 million of funds to provide support for “members who are former customers of The Will Writing Company and have been impacted by the actions of The Philips Trust Corporation.”

Some customers of Newcastle Building Society lost savings when the Philips Trust Corporation (PTC) went into administration in 2022.

The Will Writing Company went into administration in 2018.

“Events leading to the problems that customers have experienced as a result of the actions of Philips Trust are complex, the detail of which has only become clear over a long period,” wrote Newcastle Building Society CEO Andrew Haigh in his review.

“As that detail has emerged, we have been very concerned by, and sympathetic to, the difficult situation faced by members who have been affected by Philips Trust. It has been extremely distressing to hear our customers’ stories and the impact on their lives.

“Our members understand our commitment to purpose and our support for the communities we serve. Therefore, although there was no obligation to do so, the Society has chosen to offer voluntary financial support to those members who were impacted.

“We have set aside £20m of funds to provide this support, including expected costs. Communications are now underway to finalise the arrangements for members wishing to participate in this voluntary support. Further information is available on our website.

It is clear that the difficulties that members have experienced are a direct result of the actions of Philips Trust. The society will continue to offer support to any current or future police investigation which aims to hold those responsible to account.”

CEO Haigh said that in the first half of 2024 the mutual saw £261 million growth in savings balances (HY 2023: £458m) to £5.3 billion, with a net growth in branch accounts of around 9,000.

Newcastle reported increased first-half operating profit before impairments and provisions of £20.1 million (HY 2023: £17.9m) and underlying profit of £15.6 million (HY 2023: £15.0m).

Haigh said first-half profit before tax for the group fell to £200,000 from £16.3 million in nthe first half of 2023 “reflecting the impact of the decisions we have taken to offer voluntary support to members who are former customers of The Will Writing Company and have been impacted by the actions of The Philips Trust Corporation.”

Haigh said: “Our Standard Variable Rate (SVR) for mortgages remains one of the most competitive on the market at 6.94% vs a market average of 8.18%, saving our SVR borrowers around £1.4m in interest payments over the first half of 2024 compared to the market average …

“Branches play an important role in creating value within our communities. Fifteen branches have dedicated community space for use by local charities and community groups, giving people a warm, comfortable place to socialise.

“Community rooms are free of charge and well used for a range of purposes including workshops, first aid classes and language groups. We’ve had more than 2,200 hours of community room bookings across our network so far this year, welcoming 61 new groups.”

The mutual’s subsidiary Newcastle Strategic Solutions Limited now manages savings balances in excess of £50 billion (YE 2023: £48bn+) for 16 different banks and building societies.

Our mortgage lending continues to perform well,” wrote Haigh. “In the first half of the year we’ve received more than £1bn new mortgage applications, supporting more than 2,000 first time buyers. Our gross residential lending to 30 June 2024 was £584m (HY 2023: £660m).

“We have seen small increases in underlying arrears levels as the cost of living pressures continue to affect borrowers. We continue to offer a range of measures to support them should they experience financial difficulty, including measures introduced by the Government’s Mortgage Charter.”

In the first half of the year, Newcastle’s membership grew to more than 371,000.