FCA warns on “asset protection” trust mismanagement

FCA has published a consumer warning, setting out the dangers it has seen when firms seriously mismanage trusts. It notes the scope for misuse of consumer money where trustees are not competent or are not acting n the best interests of the customer. Many firms market trusts as a way of shielding assets from various claims, costs or fees, but FCA warns that if a trust invests in high risk assets, this will almost certainly not be a suitable investment, and there is also a risk that investing via trusts will cause the usual consumer protections to be lost.

FCA cautions consumers to take legal advice to check arrangements are appropriate and will deliver the desired protection and to ensure the advice is truly independent.

Emma Radmore