Disabled customers put at risk of hardship after banks scrap 'lifeline' trust accounts

People with disabilities are facing potential hardship because banks are scrapping trust accounts that allow money to be managed safely on their behalf.

- Anna Tims

Victims awarded personal injury settlements and those with learning difficulties are among those facing "severe consequences" as accounts are closed or frozen, according to campaigners.

Trust accounts are typically set up by representatives of a vulnerable individual to protect their assets and ensure a stable financial future.

A disabled person's trust gives an appointed trustee a legal right to administer funds or property on behalf of the beneficiary.

The assets, which may include compensation for serious injury, do not count toward means-testing and are eligible for tax relief. However, since Covid nearly all high street banks have withdrawn the service citing costs and complex compliance laws. In recent weeks, Nationwide became the latest provider to pull out of the market.

The closures have removed a lifeline from learning-impaired people who are already financially excluded, according to the charity Mencap, which says ordinary accounts may put them at risk of financial abuse.

Some trustees have been unable to pay for essentials such as carer support and phone contracts because a trust account has been closed.