Administration, Connected Fees, and Missing Records

The first failure is the oral arrangement with a connected company. There are no written scope, service levels, fee basis, termination rights, or data-protection terms. That makes it difficult to show the services were necessary, properly performed, and reasonably priced. The second is the conflict of interest: Paul controls both the trustee and the service provider. He cannot objectively approve the arrangement or sign off the accounts without independent scrutiny. The third is inadequate disclosure. A single 'administration' line conceals the connected-party fees and prevents beneficiaries from understanding what they are paying.

The fourth is the bank mandate change without a trustee resolution. That is a control failure: it undermines evidence of authority and creates fraud and reconciliation risk. The fifth is missing distribution records. The trustee must be able to account for every payment and show it was authorised. The sixth is the absence of independent review of the accounts. The trustee should have a written policy on connected-party transactions, approvals with conflicted directors recused, and annual benchmarking. These failures matter because they go to the trustee's duty to account, avoid conflicts, act prudently, and keep proper records.

The beneficiary is entitled to an account of the trust and to understand the charges borne by the fund. The trustee should provide a clear breakdown of its own 0.85% fee and the Ashby Admin charges, showing the calculation base, the period, and the transaction fees. It should not hide behind 'commercial confidentiality' for fees paid from trust assets. It may redact information about other beneficiaries or privileged advice, but the fee breakdown itself should be disclosed.

The trustee should also acknowledge the conflict. Paul should not deal with the request alone. A non-conflicted director or independent trustee should review the figures, check the deed's disclosure requirements, and correct any errors. If the fees are not adequately disclosed in the accounts, the trustee should explain why and rectify future reporting. The response should be timely, in writing, and should invite the beneficiary to raise any further queries. If the beneficiary is not satisfied, the trustee should follow its complaints procedure and consider whether an independent review is appropriate.

The trustee should quantify all payments to Ashby Admin, compare them with the written fee terms (if any can be reconstructed), and benchmark them against comparable services. It should ask whether the services were actually delivered, whether the transaction fees were properly incurred, and whether the total cost was reasonable. If there was overcharging or duplication with the trustee fee, the trustee should credit or repay the difference. Paul should be recused from that decision.

A trustee cannot simply ratify its own conflicted arrangement. If the beneficiaries are to approve past fees, they need full disclosure, capacity, and independent advice where appropriate. A court application may be needed if the amounts are material or the beneficiaries cannot agree. The trustee should also consider whether the arrangement was a secret profit or an unauthorised connected-party transaction, and whether any regulatory notification is required. Going forward, there should be a written service agreement, a tendering or benchmarking review, separate approval by non-conflicted directors, and clear disclosure in the accounts.