The Missing Watchdog: Why The UK Needs a Trustee Ombudsman

This article examines options for redress when a trustee fails in their obligations to beneficiaries and suggests that it is time for the UK to establish a Trustee Ombudsman to plug this gap. It uses the example of a family trust gone wrong and highlights how the lack of an affordable oversight mechanism leaves beneficiaries at a substantial and unfair disadvantage.

The UK’s trust law system, especially as it applies to trustees, has been in place for a very long time and is based on the principles of fiduciary duty (the duty of the trustee to act in the best interests of the beneficiary).

As set by law, trustees have important responsibilities. They must manage trust assets wisely and act in the best interests of the people the trust is intended to benefit-the beneficiaries. However, when trustees fail in their duties, beneficiaries often suffer considerably, particularly because the law provides only one practical remedy, which is going to court.

This article promotes the idea of a Trustee Ombudsman. It uses the example of a family trust trustee failing in their duties to beneficiaries and suggests that the lack of an affordable regulatory system is very unfair to beneficiaries.

A Case Study with Anonymised Information

The Edwards Family Trust, used here as an example, is based on a real-life event, but names and details have been changed to protect privacy.

Emily Edwards, a British woman living in France, is one of three siblings. All are equal beneficiaries of a family trust established by their grandfather in 1977. The trust was created to preserve two residential properties - allowing the siblings’ grandmother and, subsequently, their mother to remain in the homes for life.

Upon the deaths of the life tenants, the trust capital was to be divided equally between the three grandchildren: Emily, Robert, and Julia. However, after their mother died in 2019 and Julia became the sole trustee, she refused to sell the trust property or release the proceeds to the beneficiaries.

For more than eight years, Julia lived in the house rent-free and later rented it out to tenants at market rates-without reporting or sharing the rental income. Emily repeatedly requested accounts, receipts, or evidence of expenses, but Julia simply ignored her.

Emily’s option for redress was to bring a claim - most likely under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). However, like many people in her situation, she could not afford the thousands of pounds such litigation would cost.

There was no ombudsman to investigate, no regulator to contact, and no public body responsible for trustee oversight.

The Structural Problem

The Edwards case is far from unique. Thousands of private family trusts across the UK are managed by individuals with no professional training and no regulatory supervision. These trustees - often relatives and laypersons - operate without any meaningful oversight.

Unlike pension schemes, financial advisers, or even landlords, trustees of private, non-charitable trusts are not regulated. They do not require a licence, are not obliged to belong to a professional body, and cannot be dismissed unless someone takes legal action against them.

In context, it is important to note that the Financial Ombudsman Service does not deal with trust-related disputes, the Charity Commission has no role unless the trust is charitable and the Solicitors Regulation Authority can only act where a trustee is also a solicitor acting in a professional capacity.

This regulatory vacuum creates a serious imbalance of power between trustees and beneficiaries-especially in cases where:

• The trustee is a sole, non-professional individual.
• The trust holds property rather than money assets.
• The beneficiary is financially or geographically compromised.
• There is familial estrangement or conflict.

In these scenarios, the risk of trustees abusing their position-misusing assets, failing to provide information, or delaying distributions-is high and growing, particularly as private family trusts become more common.

The Case for a Trustee Ombudsman

A Trustee Ombudsman Service would provide a simple, accessible, and low-cost system for beneficiaries to raise concerns and seek redress when trustees breach their obligations.

Such a service would offer a trusted, impartial point of contact for individuals facing trustee misconduct - particularly in cases where formal legal action is either unaffordable or disproportionate to the remedy being sought.

A Trustee Ombudsman could:

• Investigate complaints of trustee misconduct or mismanagement.
• Compel trustees to produce accounts, financial records, or rental documentation.
• Recommend mediation, restitution, or the replacement of a trustee.
• Refer serious matters, such as fraud or gross breaches of duty, to the courts or law enforcement.
• Intervene early to prevent further abuse and safeguard trust assets.

This model already exists in the UK. The Pensions Ombudsman addresses disputes involving occupational pension trustees. The Legal Ombudsman regulates legal professionals. The Financial Ombudsman Service manages consumer complaints about banks and insurers.

Even estate agents are subject to ombudsman oversight. But if a sibling misuses their power as trustee of an inheritance, there is currently no one for a beneficiary to turn to for redress except the courts.

The Wider Effects

The absence of oversight has broader consequences. It diminishes confidence in family trusts, stokes inheritance disputes, and burdens the courts with claims that could be avoided through early intervention.

The current framework effectively creates a two-tier justice system: one for wealthy beneficiaries who can litigate, and another for those who cannot, whose rights exist only on paper. This reality is inconsistent with the foundational principles of trust law -good faith, loyalty, equity, and fairness.

A Trustee Ombudsman would not replace the courts, but would complement them by providing early guidance, dispute resolution, and a critical layer of accountability.

Such a service would not only help prevent misconduct but would offer thousands of people an affordable and fair route to justice. As such, it is time for the UK government to address this long-standing regulatory blind spot.

ABOUT THE AUTHOR: Dr Andre Alexander, LLB, SJD, Barrister, Solicitor
Dr Andre Alexander is an international lawyer specialising in litigation and alternative dispute resolution. He represents and advises clients in a wide range of contentious matters, including trust law, worldwide. He is the Managing Partner of ABS&P International Law Firm.

Copyright ABS&P International Law Firm

Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and.how they may affect a case. For specific technical or legal advice on the information provided and related topics, please contact the author.