Nationwide’s recent decision to freeze “lifeline” accounts without warning has caused concern, leaving many feeling abruptly “cut off”. The building society is one of several UK banking institutions moving away from offering trust accounts.
These accounts are crucial for individuals with disabilities or learning difficulties as they permit a third party to handle their finances, ensuring that their funds remain unaffected by means-testing for benefits and are eligible for tax concessions. For those needing to pay for care costs, having a trusted party manage these funds is often indispensable.
Recipients of personal injury settlements also find these accounts advantageous, allowing them to control their compensation in a manner that does not jeopardise their qualification for means-tested benefits. Since the onset of the COVID-19 pandemic, high street banks and building societies have been steadily retiring such services, with Nationwide joining the fold.
The reason given for shutting down trust accounts points to the operational expenses involved and the complexity of maintaining regulatory compliance. A report in the Guardian highlights instances of Nationwide customers suddenly losing access to critical funds amid the institution’s drive to close trust accounts indefinitely.
Among those affected is James Trotman, who claims that his disabled son’s account was unexpectedly frozen by Nationwide, blocking access to £28,000 and leaving him financially stranded, reports Lancs Live.
He explained that despite Nationwide requesting new verification documents to regain access to the accounts, they remained frozen a month later. Charities have expressed concern that such unforeseen freezes and subsequent closures of trust accounts can detrimentally affect vulnerable people.
Speaking to The Guardian, Mencap’s CEO said, “We’re hearing from an increasing number of families of people with a learning disability who don’t know where to turn.”
“Some already have a disabled person’s trust account in place but have been warned it is now due to close and others can’t set one up because banks no longer offer this type of service.”
Another trustee reported to the paper that after her disabled brother’s account was frozen, she too was asked for document resubmission, yet three weeks on, the assets were still locked, hampering her ability to purchase a new laptop for him.
Metro Bank remains the sole high-street bank offering trust accounts, charging a one-time £150 opening fee and a monthly fee of £5 if the balance is under £25,000.
In response to the situation, a Nationwide spokesperson told The Sun, “We are closing some trust accounts and have been writing to trustees outlining their options.”
“Where there is an ongoing need for a trust account, a new account will need to be opened elsewhere. We needed information from the customers prior to closing the account and a security block was placed on the account while this took place.”
“This information has been received from the customer and the block has been removed, with the funds released. “We apologise for the inconvenience that completing this process has caused. “Where there is an ongoing need for a trust account, a new account will need to be opened elsewhere. We needed information from the customers prior to closing the account and a security block was placed on the account while this took place.”