NATIONWIDE has issued an alert as “lifeline” accounts are suddenly blocked “without warning” leaving Brits “cut off”.
It is just one of the many British banks scrapping trust accounts – whereby people can appoint a third party to manage their finances for them.
These are an important resource for disabled people and people with learning difficulties – as it allows their money to be safely handled by an appointed trustee.
Often, the funds – which do not affect a person’s status when it comes to means testing and are eligible for tax relief – are used for crucial care expenses.
The accounts are also used by victims awarded personal injury settlements – allowing them to keep and administer compensation from a personal injury without affecting their eligibility for means-tested benefits.
Trust accounts have been gradually phased out by high street banks and building societies since Covid – with Nationwide the latest to follow suit.
Companies have blamed the cost of running the accounts, as well as the stringent laws surrounding them.
Nationwide account holders have now been blocked from accessing crucial funds without warning, while the building society prepares to close trust accounts for good, the Guardian understands.
One man, James Trotman, claimed £28,000 held in his disabled son’s account had been frozen without warning, leaving him cut off from his own money.
He said Nationwide had instructed him to re-submit verifying paperwork in order to access the funds – but that a month after doing so, the account remained frozen.
And charities have warned that these kind of unforeseen blockages, and the eventual closure of trust accounts altogether, could be detrimental to vulnerable people.
Mencap chief executive told the Guardian: “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 told the paper that she too was told to resubmit documents after her disabled brother’s account was frozen.
But three weeks later, the funds were still not accessible – meaning she could not replace her brother’s broken laptop.
Metro is the only high-street bank to still offer trust accounts.
But there is a one-off £150 fee for opening the account, and an additional monthly fee of £5 for those holding less than £25,000 in their account.
In a statement, Nationwide said: “We accept we could have been clearer that restrictions would be placed on these accounts and that there have been delays in resolving the issues with some customers when they have supplied us information for review.”
