I have a client who is trying to set up a Trustee account with Metro Bank. My client is the Trustee of a discretionary trust for the benefit of her nieces and nephews. (None of whom are minors). She is asking whether the funds in the Trust account will be protected in the same way they would be for an individual under the FSCS compensation rules. (ie the first £85k). I can’t seem to find an answer and was hoping someone could point me in the right direction?
My understanding is that the limit applies to the account holder and the
total of all accounts in that name are aggregated.
If an individual has balances in excess of the limit, whether
personally, as a trustee or jointly, the balances will be aggregated and
any compensation paid in proportion to the balances on each account.
For example, if £170,000 is held across all accounts and the
compensation limit is £85,000, each account will only receive 50%.
This raises the question of whether a trustee should use a deposit
holding institution for trust funds separate to that they use for
personal monies.
Happy to be shot down in flames, but I think the answer is in the FSCS Compensation handbook (https://www.handbook.fca.org.uk/handbook/COMP.pdf) chapter 12A “Special cases” and in particular sections 12A.1.1 and 12A.1.2 which appear to confirm my understanding of the situation in that unless it is a bare trust, the trustees have an £85k allowance in their own right.