Modern trusts are no more vulnerable to fraud than other models and help firms to operate their businesses more profitably and more effectively, an expert panel claimed.
Speaking on a special Travel Weekly Roadmap to Recovery webinar, director of PT Trustees Sudheer Sharma said that during the Covid-19 crisis a large tour operator client asked to use PT Trustees’ transaction reports to manage its refunds process because its own systems were found to be deficient.
He said a properly set up trust with independent oversight brings with it a level of understanding of company finances that can add real value to owners.
“Examining transactions at a granular level surely has to have a much higher value than just getting a bond and then nobody ever looking at their system,” he said.
“To have somebody sitting outside, looking at your records in a holistic manner, is really a great benefit.”
Sharma believes the virus crisis will prompt “monumental change” in the sector and that trusts will ensure businesses introduce a level of discipline in how they manage cashflow not seen before.
Chris Photi, senior partner at White Hart Associates, said fraud concerns were valid prior to regulatory changes in 2018 because before that company directors could also be trustees of the trust.
“Any situation is open to fraud,” he said. “Abta and the CAA cannot say they’ve not had failed operators outside of the trust arena where fraud hasn’t been committed. Fraud is a fact of modern life. But the whole independence aspect [of trusts] is a protection.”
Daniel Landen, managing director of Protected Trust Services, agreed, saying PTS checks every bank detail, sort code, account number and invoice prior to releasing funds from trust.
“PTS are the trust providers but our trustees are independent of PTS and act on behalf of the agent or the tour operator. You need to have that separation.”