The FCA today issued a warning about potential mismanagement of the ‘Asset Protection’ trust scheme.
It said it had seen cases where companies had improper investments made by trustees and grossly mismanaged trusts.
Regulators warn: In most cases, these investments are not suitable. “
Under a trust arrangement, the trustee is responsible for the assets placed in the trust and has the power to determine how the assets are invested.
However, the money could be misused if the trustees involved do not have sufficient competence or are not acting in the best interest of the consumer, the FCA said.
FCA said: It also has the potential to promote high returns on the assets entrusted. “
According to the FCA, there is also the risk that the usual protections for consumers will be lost.
The FCA has advised consumers to seek independent legal advice to ensure that the trust actually works to provide the intended protection of their assets. Convert assets into a trust scheme.
A trust is a legal arrangement set up to manage assets such as property, money, or shares.
Trusts have legitimate uses, for example, in estate planning, protection of assets for children and incapacitated persons, and regulated investment structures.
Done correctly, trusts can yield good results and be an efficient way to manage and protect these assets.
However, it advised consumers: “Read the trust deed carefully and see what the trustee can do with your assets, especially the types of investments the trustee may make and the types of investments they may entail.” Make sure you clearly define your level of risk, and make sure it’s to your liking.”
We also told consumers to check if the company is regulated by a member of a professional body such as STEP.
If so, they should be subject to some code of conduct, unlike unregulated trustees.