Appendix 4 |
S.I. 2003/690: memorandum from the Lord
Public Trustees Fees (Amendment) Order 2003 (S.I. 2003/690)
23. The Lord Chancellor's Department submits
this memorandum in response to the request dated 1 April 2003
on the point set out below:
Explain the reasons for the fee increases made
by this instrument.
24. The Public Trustee administers estates and
trusts when appointed in wills and settlements or by a court.
For many years after the office was established in 1906, it adopted
an "open" policy, being prepared to accept almost any
case in which a settlor or testator chose it to act. Increasingly,
and certainly since the Lord Chancellor issued 'Making Changes:
The Future of the Public Trust Office' in December 2000, it has
adopted a more restrictive policy of accepting cases only on a
"last resort" basis, where no suitable person or institution
in the private sector is willing or able to act.
25. The Public Trustee Act 1906 required fee
arrangements to be made so that the Public Trustee recovered the
full costs of his operation. The Public Trustee (Liability and
Fees) Act 2002 removed this statutory requirement. However, the
office remains subject to Treasury fees and charges principles.
These require the Public Trustee to recover the full costs of
his office subject to a public subsidy for genuine last resort
26. Prior to the 2003 Order there had been no
increases in the overall fees levied since 1994, although the
balance between various fees was altered in 1999. Following the
passing of the 2002 Act, the Public Trustee has embarked on a
programme of fee increases, combined with cost reductions, with
the aim of achieving full cost recovery (less the subsidy for
last resort work) in accordance with Treasury fees and charges
principles. For the financial year 2003/04 increases to fees (where
scale fees are currently charged) will continue to be on the present
basis of a scale charge linked to the capital value of the funds
27. The 2003 Order provides for increases in
the rate of the annual administration fee, which accounts for
50% of the total income from trust fees. It also provides for
increases in other miscellaneous fees. The aim of these increases
is to bring fees more closely into line with the costs of doing
the work, so far as is consistent with maintaining scale fees
where these are applicable.
28. In addition, it provides a reduced rate for
calculating the withdrawal fees. These are payable when a trust
is distributed, either wholly or partly, or when the Public Trustee
retires. The previous rate of withdrawal fee is generally in excess
of the cost of doing the work and has therefore been adjusted
downwards. The Order also contains a broader power to remit fees.
This will allow the Public Trustee to consider not only the nature
and character of the estate, trust or other matter, but also the
work conducted in respect of which the fee is charged and the
potential impact of the fee upon a beneficiary or beneficiaries.
29. These increases will halve the current shortfall
between fee income received and the cost of providing the Public
Trustee service. It is anticipated that next year there will be
a further Fees Order, and this will introduce a new charging regime
linking fees more directly to the costs of doing the work involved,
which should largely replace scale fees.