LONDON, ENGLAND – MARCH 07: A general view of the Nationwide Building Society on March 07, 2024 in London, England. Nationwide announced today that it is set to buy Virgin Money in a £2.9bn takeover deal, forming the UK’s second-largest mortgage and savings group. (Photo by Dan Kitwood/Getty Images) (Image: Getty Images)
Nationwide’s move to suddenly block key “lifeline” accounts has raised alarm, leaving numerous Britons effectively “cut off”. The banking giant is among several UK banks axing trust accounts – these allow a third party nominated by the account holder to handle their financial affairs.
These accounts are crucial, especially for disabled individuals and those with learning challenges, enabling their assets to be overseen by someone they trust. Specifically, these funds do not influence means testing for benefits and qualify for tax cuts, providing a critical resource for care-related costs.
For recipients of personal injury settlements, trust accounts ensure they can manage their compensation without jeopardising their entitlement to means-tested welfare. Post-pandemic trends have seen high street banks and societies steadily eliminating such accounts, with Nationwide being one of them.
As, this abrupt cessation by Nationwide has led to customers abruptly losing access to significant finances. James Trotman claims that his disabled son’s £28,000 savings were locked down without forewarning, leaving him without access to his own funds.
He claimed Nationwide demanded he resubmit verification documents to regain access to his funds; however, a month on, the account remained blocked. Charity organisations have raised concerns that such abrupt freezing and subsequent shutdowns of trust accounts could detrimentally impact vulnerable people.
The CEO of Mencap indicated to The Guardian: “We’re hearing from an increasing number of families of people with a learning disability who don’t know where to turn.”
He added: “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.”
In another case reported to the newspaper, a trustee had to resubmit documentation after a freeze on her disabled brother’s account, leaving her unable to purchase a new laptop for him weeks later. Currently, Metro is the sole high-street bank to provide trust accounts but charges a £150 initial fee and a £5 monthly fee if balances fall below £25,000.
A representative from Nationwide explained to The Sun: “We are closing some trust accounts and have been writing to trustees outlining their options.”
The spokesperson further clarified: “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.”