Trustees and sub-funds – FSCS query

Does anybody have any experience in relation to FSCS and the implications of Trustees having multiple deposit accounts (for multiple sub-funds of a trust) with the same banking institution? As far as we can tell there is nothing immediately obvious on the treatment of sub-funds of trusts in the FSCS Handbook nor accompanying guidance.

In short, if a trust has numerous sub-funds, is it the case that the deposit account for each sub-fund can benefit from the £85,000 deposit protection scheme or is the entire trust limited to one allowance?

The sub-funds are not separate legal entities for capital gains tax purposes, but are run as separate funds with different beneficiaries, differing initial trust terms and separate trust funds.

Anna Giles
Wedlake Bell LLP

This has been considered before by the forum.

The guidance is at pages 25 and 100 of the FCA Handbook

My experience has been that with SSAS with assets earmarked for specific members and PPPs, the FSCS certainly look through the pension wrapper and assess compensation
on the member. So, for trust, I would have thought that it would follow through to a beneficiary where that beneficiary has an IIP.

My understanding is that where no IIP exists, the trustees are regarded as a single entity in their own right as far as compensation is concerned – i.e. they
get one lot of £85k per banking group. So, in this instance, it would depend upon the precise terms upon which each sub-fund is held.

Paul Storrie
Storrie & Company

Hi Anna,

A quick rant from me who has to contribute to the FSCS levy - the fund has no money so it will never compensate anyone - if a bank goes - as in 2008.

Mu understanding is FSCS pays aggregated for a Discretionary Trust and individual for a Bare Trust

As per Paul’s answer -
BT with 10 bank accounts and 10 beneficiaries they could all claim to the FSCS Limits.
DT it’s one claim across all the trust bank accounts to the FSCS Limits.

Agree with Paul - the FSCS cover is dependent on the terms of the trust fund.

Richard Bishop