Trustees, have you got your LEIs?

Emily Deane TEPThe Global Legal Entity Identification Foundation (GLEIF) has designed a system whereby every ‘legal entity’ will need to register and obtain a unique identification number – a Legal Entity Identifier (LEI) when new European legislation, the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR) takes effect in the UK.

If the entity does not obtain an LEI it will not be able to trade on the financial markets in the UK after 3 January 2018.

The London Stock Exchange (LSE) requires investors who are deemed to be legal entities to obtain the LEI, which is a 20-character alphanumeric reference code unique to the legal entity.

Legal entities include trusts, companies (public and private), pension funds (but not self-invested personal pensions), charities and unincorporated bodies that are parties to financial transactions. If the LEI has not been obtained by 3 January 2018, the investment firms will not be able to meet their obligations and provide the legal entity with investment services.

What is the purpose of LEIs?

All LEI data will be consolidated in one database in an effort to improve global entity identification and standardisation, which will enable regulators and organisations to measure and manage counterparty exposure. In addition it will enable every legal entity or structure with an LEI to be identified in any jurisdiction. Once the legal entity has the LEI, it will be required to quote it to the requisite service provider when it enters into a reportable financial transaction. Every financial transaction will require sight of the LEI in order for it to be processed.

Do trusts need one?

The regulations require trustees who are using capital markets in relation to trust funds to obtain the LEI for the trust. We understand that bare trusts may have been excluded from the requirement to obtain an LEI (depending on whether the firm classifies bare trusts as legal entities or as individual/joint accounts) but all other trusts will be obliged to obtain one if they are parties to financial transactions.

In the case of discretionary trusts which have legal restrictions and cannot disclose trust details, the LSE will accept a validation from the trust itself, and will not require sight of the trust deed. However, in all other cases the LSE will generally accept a scanned copy of the first couple of pages of the trust deed in the same way that many banks do for AML compliance. Entities other than trusts are obliged to provide information such as their official registry details and business address.

Issues around trusts

When you apply for the LEI you will be asked to reference the source of its identity, such as Companies House if it is a company registered there. However, there is no equivalent register for trusts. It may be possible to use the trust’s Unique Tax Reference (UTR) from HMRC’s tax return to identify it. This would appear to be a sensible approach for the purpose of minimising the number of LEIs for a trust with multiple funds; however some larger trusts may apply for an LEI covering all of the sub-funds regardless of the UTR. There is still no guidance available on this point.


Every entity will be required to renew its LEI on an annual basis and there will be a charge for renewal. To renew your LEI you must provide the Local Operating Unit with updated information, so that it may verify the data held.

However the FCA update dated 2 August 2017 clarifies that the requirement under MiFID II to renew the LEI on an annual basis applies to firms that are subject to MiFIR transaction reporting obligations, and in the UK, under our implementation of MiFID II, to UK branches of non-EEA firms when providing investment services and activities.

This recent update clarifies that trusts will not need to renew their LEIs on an annual basis unless they want to continue undertaking financial transactions.

What if I don’t apply?

If the LEI has not been obtained by 3 January 2018, investment firms will not be able to provide the legal entity with investment services. The legal entity itself is ultimately responsible for obtaining the LEI, but some investment firms may agree to apply for the LEI on behalf of their legal entity clients. The LSE has produced a draft format which will be acceptable in order to transfer the application authority from the entity to a third party such as a management company, if preferred.

Registration information

Each Local Operating Unit (LOU) may charge a fee for arranging the LEI and the fee may variable at each Operating Unit. You can find a LOU on the GLEIF website.

For more details on how to request your LEI, see the guides:

Quick User guide (pdf)
Full LEI User Guide (pdf)

It is widely acknowledged that guidance is lacking in this area, and the private client sector is keen to see some more prescriptive guidance in relation to trusts before the end of the year.

Emily Deane TEP is STEP Technical Counsel

5 thoughts on “Trustees, have you got your LEIs?

  1. I am one of the trustees of my late father’s will trust. The institution that provides the trust with financial services tells me I must obtain a LEI. I am having difficulty both in understanding the need for this and in actually obtaining a LEI.

    None of the literature I have seen identifies the instrument in domestic legislation that requires me to obtain a LEI, so I haven’t been able to assess for myself the scope of my obligations – can someone please tell me what that instrument is? In any case, it is difficult to understand why a trust should require a LEI, because a trust is not a legal person in its own right. Of course, I shan’t object if trusts are now deemed to have acquired an independent legal personality of their own so that some of my prospective liabilities as a trustee have consequently passed to the trust itself!

    I note that I am required to make a fairly outrageous annual contribution to the issuer’s coffers for the privilege of retaining nothing more than an identification code. Moreover, given an initial fee of £115.00 plus VAT, I would expect the issuing body to be competent to validate for itself the details of a will which, having been probated, is now in the public domain. However, having supplied to the issuer all the details necessary to bespeak a copy of the will via the government’s probate search website, I am told it is ‘still unable’ to validate entity details in the public domain.

    I have also supplied the issuer with what I take to be the unique reference assigned to my father’s will trust by HMRC, but have received no indication that the issuer is prepared to act on this.

  2. I am in the same boat and totally agree with your comments.

    Reluctantly accepting the requirement to register a discretionary trust for an LEI, I would at least have expected the application documents to be written in such a way as they were relevant to trustees rather than just companies…..they are not and seem totally inappropriate for such use if errors and inadvertently entered false information are tot be avoided.

    I’m told that you don’t have need of an LEI if you concentrate your investments into unit trusts. If you don’t have to face too much by the way of CGT through selling share holdings, it is to me at least a form of investment that will become distinctly more attractive than succumbing to this increased level of bureaucracy.

    1. Yup, Mr Crow, I suspect you have hit the nail on the head, there. I, too, am a principal acting trustee of a discretionary trust. It used to be two, but I wound one up at disgust of registration and other requirements. My analysis is same as yours: if discretionary trustees only invest in unit trusts or OEICS, via the fund manager itself, then they are not trading on a market and they do not need an LEI. Thus saving £115 + VAT every year you need to trade, for example, to make use of annual trust CGT exempt amount.
      I take it you have gone through hmrc’s laborious online trust registration process to register the trust, even though it may have been registered decades ago?
      Also, doing any business as a discretionary trustee appears to be getting more and more arduous. Most banks will not allow bank accounts. Getting a decent rate of interest on cash held on trust is very difficult. Meanwhile, if you are a criminal any bank will welcome you with open arms so you can open an account and commit fraud by stealing money by misrepresentation and the bank then hides the identity of the criminal!
      The only upshot is that fewer and fewer people will bother engaging with their own financial futures because it is all too difficult. The “workplace pension” is an excellent example of something that will end in tears, not least because many low paid workers will be better off avoiding trying to provide for themselves. This will then result , ultimately, in more old people qualifying for housing benefit and other state benefits as time goes on.

  3. I echo your sentiments. Will the author of this article please help answer the questions raised or at least point in the direction of someone who can give a reliable answer. I note that the LEI ROC Statement talks of “Individuals Acting in a Business Capacity”. Surely the trustees (who are often family members) of a small family trust are not acting “in business” capacity? After all the unremunerated Trustee is acting in individual capacity and not as a corporate trustee? The Trust is not its own separate legal entity and any transactions are done in the individual name/names of a Trustee. The Trustee being personally liable for any debts and/or liabilities of the Trust (unlike a Corporate Trustee). So why would the National Insurance & Tax identifier of the individual Trustee not suffice?

  4. Also as one of the Settlor’s of a Discretionary Loan Trust it is my understanding (from Hargreaves Lansdown), that provided the Trust investments are unit trust or OEIC’s, there is no need for this document, but was told that if shares and IT’s were used, then they cannot be traded without the LEI.

    Having only just come across this by moving from one platform to another, it does seem to be ‘over the top’ particularly for family Trusts and certainly the costs seem rather high and varied. I also believe that if a Trustee does obtain one of these documents, it is not normally required to renew annually. Just a question of initial identification

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