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Trustees must not make unauthorised investment and in selecting those which are authorized they must exercise the usual standard of care, bearing in mind that the trustees are not acting for themselves, but for others. In this context, the usual standard of care is that which ‘an ordinary prudent man would take if he were minded to make an investment for the benefit of other people for whom he felt morally bound to provide (in Re Whitely and later affirmed in Bartlett v Barclays Bank Trust Co. Ltd (No. 1). This may require the trustee to set aside their personal views as to the desirability of particular investments. They must not refuse to invest in armament or South Africa, if such investment is in the best financial interests of the beneficiaries, although if all the beneficiaries were adult they might take into account their views on the impropriety of a proposed investment (in Cowan v Scargill). The trustee must aim to seek the best return for the beneficiaries, judged in relation to the risks of the investment in question. For instance, they should not invest merely to accommodate the wishes of the settler (ibid).

By virtue of Section 6(1) of the Trustee At 1949, trustees are required to have regard both to the need for diversification and the suitability of the proposed investment to the trust. Any investment in a manner specified in Section 4 of the Trustee Act must be made on the basis of advice on the question of whether the investment is satisfactory with the matters of suitability and the need for diversification (subsection 2). The advice must be in writing (subsection 5) and must come from either a stockbroker obtained through the trustee’s bank manager, or the advice of an authorized accountant (subsection 3) unless the advice is being given by a trustee to his fellow trustees (subsection 6).

Obtaining advice does not permit the trustee to place blind faith in his adviser because the final decision cannot be delegated. He must consider the advice, and reach his own decision as a prudent man of business (subsection 2). Where advice was initially required, trustees must also consider at what intervals further advice should be sought upon the retention of the investment (subsection 4) and may incur liability if failure to exercise due consideration result in a loss.

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