Section 46(4) of the Trustee Act 1956 provided that the High Court could order the appointment of the Public Trust in replacement for another trustee without requiring the Public Trust’s consent. Such a provision is necessary to ensure that no trust can fail for lack of a trustee.
However, where the trustee in question is the trustee of a failed finance company this appointment can be somewhat onerous. For this reason s 46 has been amended to protect the Public Trust from the cost of such an appointment.
The new Trustee (Public Trust) Amendment Act, which received Royal Assent on 13 May 2013 has amended the Trustee Act 1956 to provide that a retiring trustee that is a “securities trustee” (that is the trustee of a finance company or similar) must seek the appointment of a replacement trustee before seeking the appointment of the Public Trust.
In the event that a replacement trustee cannot be procured to act and the Public Trust is appointed, the retiring trustee must indemnify the Public Trust for its reasonable fees and expenses.
This amendment to the Truste Act provides an interim solution until the Financial Markets Conduct Bill is enacted. If that legislation is enacted in current form the Financial Markets Authority will take over the role of determining the replacement trustee for regulated investment products.
Notet that the amendment to s 46 of the Trustee Act does not apply to the appointment of the Public Trust in place of non-securities trustees.
Refrerences and other information:
- Trustee (Public Trust) Amendment Act 2013