How can an account be protected

xylophone

The situation is difficult - the trouble is that in general, a joint account is set up on an either to sign basis with the account holders as "joint tenants with rights of survivorship".

When an account is specifically set up as a trust account or a "business" account, the situation is different.

I don't think that the correct type of account was opened - the bank need to set up an account "Trustees of XYZ" with a chequebook, two of three or all signatures required and no internet access or card access allowed.

If you explained your requirements to the bank and the bank failed to "know their customers" and set up the correct type of account then they could be held to have been negligent.

I think you may need to return to the ombudsman and try again.

TheBanker

I've seen and dealt with similar cases before when I worked for a different bank.

What reason did FOS give for rejecting the complaint? In my experience (working for the bank and interacting with FOS), they do tend to have a good understanding of this kind of situation. Did FOS actually consider the complaint and send a written decision, or did they discuss it as a general enquiry by phone?

Whose name is the account actually in? The fact you are being held liable for the debt suggests it is actually a joint account - if it was in the VA's name with you as an additional signatory, you could not be held liable for the debt unless you had signed some kind of guarantee.

You talk about being a "trustee" - is there a formal trust deed? If so the account should be in the trust's name.

2tosign

There is a formal trust deed. There is either a 2 to sign or all to sign mandate on each account. The accounts are in the name of the trust and they are also joint accounts for VA and myself (as the original trustees) and 3rd trustee added (sort of - he is mentioned on the account details but not added properly as a signatory) as an additional signatory.

The response from FOS came in an email after a phone call. They said that they can't stop someone using a valid bank card and that an account doesn't exist that does what I want it to do (he should know what I want it to do after our long phone call but he doesn't seem to). It doesn't say in the letter but on the phone he said that a bank can't stop someone getting a bank card from their own account. It also says I should have put all the money in my name and I have a duty as trustee to make sure the trust money is only spent on the purposes it was set up for. I am not sure how I was meant to do this on my own - maybe he expected me to get a bank card and withdraw all the money without the other trustees agreement and then dish it out as I saw fit.

xylophone

I think that you are going to have to make a formal complaint in writing to the bank, get their final response and then make a formal complaint in writing to the FOS if required.

If the accounts are in the name of the Trust then they are not joint accounts- they are Trust accounts with the Trustees as signatories.

This being the case, bank cards should not have been issued and no internet access should have been allowed as no one Trustee had the power to act on the account without the authority of at least one other Trustee.

2tosign

We did formally complain to the bank (they apologised) and the official response from FOS was that I should have put all the money in my name and should remove the VA from the trust (but its his trust and that is not what the solicitor wanted). FOS seem to think they know better about how this should have been set up (without ever talking to VA) than the solicitor involved.

The names might be an issue. The bank named the account after the trust but I think they filled in our names as joint owners. Is that a problem? We have tried to address the name issue a few times and I don't know if it is addressed now or not.

xylophone

The name of the account is "The xxxxx Trust".

A Trust has Trustees.

The Trustees are joint legal owners of the assets within the Trust and so are named on the account because they legally own and manage it.

It is their duty to manage the assets for the beneficial owner of the assets.

The Trustees have joint responsibility for the management of the assets and must have the agreement of at least two Trustees before funds can be disbursed.

It appears that this was explained to the bank when the account was opened and the appropriate mandate(s) were set up.

Therefore only a chequebook should have been issued.

The chequebook for our family trust simply has

[B"]Trustees of the.......Will Trust"[/B] on the chequebook - it is clear therefore that at least two signatures are required.

It seems to me ( although I'm no expert in law) that you do have the right to complain that a card was issued since the mandates were clear that at least two signatures were required for disbursements.

The very fact that the account was in the name of the Trustees of a Trust should have alerted the Bank Clerk to the fact that to issue a card could be inappropriate and that he should check the situation before doing so?

2tosign

Thank you. It will help in my response to FOS and dealing with the bank. FOS seem to be arguing that accepting the bank card overwrote the mandate - although they don't spell that out clearly in the letter. They just say that a valid bank card was used correctly and then lecture me on how I should have kept the money.

Our cheques don't have the trust name on, only name of 2 of the trustees (as they haven't ever dealt with the 3rd trustee properly despite informing them in 2014. The trust name is something held in the record of the bank. Does this matter?

xylophone

Our cheques don't have the trust name on, only name of 2 of the trustees (as they haven't ever dealt with the 3rd trustee properly despite informing them in 2014. The trust name is something held in the record of the bank. Does this matter?

Before issuing the card the clerk should have checked the mandate?



https://bankomb.org.nz/news-and-publications/quick-guides/item/account-mandates

It seems to me that issuing the card went against the mandate.

How can one signatory "override" a mandate without the consent of the other signatories?

TheBanker

2tosign wrote: »

The response from FOS came in an email after a phone call. They said that they can't stop someone using a valid bank card and that an account doesn't exist that does what I want it to do (he should know what I want it to do after our long phone call but he doesn't seem to).

The FOS are wrong. The bank I used to work for would not allow a card to be issued on a 2 to sign account. So such accounts do exist. However...

...it depends on the trust deed. I do remember a case where the beneficiary of the trust was able to appoint and remove trustees at his discretion. So when he was told he couldn't withdraw money because the other trustee hadn't signed, he removed her from the trust completely.

I think there is a decision to be made. If the VA lacks the capacity to make decisions, then the trust needs to restrict his access to funds. If he has the capacity to make decisions, then he will always be able to make the decision to spend his money or borrow more money, one way or another.

2tosign

Yes, VA is in a grey zone between full capacity and lacking capacity. VA wants protection but will not think through his actions on a day to day basis. VA has the right to sack us at will - but he doesn't want that. He appreciates us trying (in vain) to protect him and apologises for the mess he has caused.