Trust loan - regulated mortgage?

Hi - a father is setting up a discretionary trust with adult children/their issue as potential beneficiaries. Trust is to loan funds (interest free) to one of father’s daughters to assist in property purchase. If trust secures loan by way of a charge (CH1) at land registry can this fall into regulated mortgage provisions? A conveyancing colleague has flagged this.

Thank you in advance.

Philippa Torkington

Provided the arrangement is a “one-off” and the trustees are not intending to undertake any regulated business activities, I do not believe the arrangement would be a regulated activity.

This was an issue we had to consider when I was working for a trust corporation, whose parent was a regulated lender, and it was accepted that occasional lending from individual trusts to beneficiaries of those trusts was not a regulated activity.

However, probably a question best referred to your firm’s compliance manager.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals