Although not an obligation of the Trust Entity and not insured with the Philippine Deposit Insurance Corporation, money placed with a reputable trust entity is just as safe, if not safer, than money in a savings or time deposit account with a bank. There are enough safeguards instituted through current government regulations and industry practice.

• Capitalization Requirements/License

Under a circular issued by the Monetary Board, an applicant for a trust and investment management license must have a combined capital account of not less than P250 million .

• Reserves

Before a trust entity with trust license can actually accept money in trust, an initial deposit of at least P500,000.00 with the BSP, in the form of eligible government securities, as security for the trust entity’s faithful performance of its trust duties is likewise required. If assets managed exceeds P50 Million, the trust entity must place with the BSP additional government securities to maintain its deposit at the equivalent of at least 1.0% of total value of assets managed. This deposit likewise serves as security that the trust entity will perform its duties well. At no time can the security deposit be less than P500.000.00.

• “ Prudent-Man” Rule

Under this rule, the trust entity is required to “administer the funds or property under its custody with the skill, care, prudence and diligence necessary under the circumstances then prevailing that a prudent man, acting in like capacity and familiar with such matters, would exercise in the conduct of an enterprise of a like character and with similar aims”

Investment Restrictions/Disclosure- The BSP regulations on trust and investment management spell out some of the specifics of the Prudent-Man rule in a set of investment rules that limit the placement of funds and upholds disclosure and transparency in investments.

• Periodic Reports to Client/BSP

Informative reports are required to be made by the trustee to the client and other parties who have legitimate interest in the trust. These reports must be given at least quarterly, and must consist of a balance sheet, an income statement, a schedule of earning assets and an investment activity report. The trust entity likewise submits to the BSP periodic reports on the trustee’s trust business.

• Yearly Triple Audit

The trust entity is required to submit itself to an annual triple audit: one by its own internal auditors, a second by the independent external auditors of the trust entity, and the third by the examiners of the Bangko Sentral ng Pilipinas. These audits, which have the common purpose of determining whether the trust business of the financial institution is being conducted in accordance with the law and regulations, serve as effective deterrents against unsound practices and fraudulent schemes.

• Earmarking/Separation of Accounts

Trust assets are required to be kept separate and distinct from all other assets of the trust entity’s business; trust books and records are separate and independent from other books and records of the trust entity. The records of each trust account are separate from those of all other accounts and are adequately identified.

• Preference of Claims

No assets held by the trust entity as trustee shall be subject to any claims other than those of the parties (trustor/beneficiaries) interested in the specific trust accounts.

• Check-and-Balance Mechanism/Group Judgment

No single person controls the entire process of administration of a trust /investment management fund. The Board of Directors, the Trust Committee and the Trust Officer are all involved. Normally, transactions involving the trust account require dual signatories for implementation and trust assets are under the joint custody of at least two persons, one of whom shall be an officer of the trust entity, designated for that purpose by the Board of Directors.

• Reasonable Trust Fees

The fees are based on the cost of services rendered and the responsibilities assumed; not based on the excess of the income derived from the investment of trust fund over a certain amount of percentage.

• Reputation of the Trust Entity

No respectable trust entity would want to have its name sullied by scandals and scams perpetrated by its own people. Every trust entity now operating would like, instead, to develop and maintain a reputation of prudent investment and efficient administration. A trust entity worthy of its name “Trust”, works hard to ensure that always make sure that the client’s account is safe, that it achieves reasonable growth for the funds it manages and that its accounts yield adequate income for its clients.