There is only so much legislators can do to ensure the safety of investors' assets, according to Paul Smith, managing director financial institutions at Bermuda Trust (Far East), a subsidiary of The Bank of Bermuda. 'The key issue comes down to the quality of the person delivering the service,' he said, adding that no amount of legislation could entirely prevent the loss of assets through dishonesty or incompetence. Mr Smith said there were, however, a range of checks and balances that could help safeguard the interests of small investors - whether they were beneficiaries of a pension fund or unit trust investors. One of these was the corporate trustee who was charged with ensuring the 'proper running of a scheme in accordance with its trust deed'. In other words, 'to hold the ring between those factions [running an investment scheme] and ensure that the beneficiaries of the trust are dealt a fair hand at the end of the day'. The importance of selecting a trustee to act as guardian for an investment scheme was of primary importance given the seriousness of the consequences in the event that something should go amiss, he said. The spectre of a disaster on the scale of that affecting pensioners of the Mirror Group in Britain offered a salutary lesson in the value of the trustee's role. Mr Smith said that unfortunately the role of the trustee was all too often undervalued and unappreciated. 'As a rule, the client does not necessarily value the trustee function,' he said, adding that the trustee really earned his money in times of trouble. Mr Smith said the trustee business was moving away from private trustees as the scope and size of trust funds grew. 'At the end of the day, the liability of the trustee if something goes wrong is potentially so huge that it is unwise for an individual to undertake it,' he said. Similarly, clients seeking a corporate trustee should ensure the company had sufficient asset backing to cover the potential liability of any trust. Employing a US$100 million company for a US$200 million trust scheme made little sense. But size was not everything, Mr Smith said. A safe pair of hands was also central to safeguarding assets. The correct and legal separation of the underlying assets in a trust fund was essential in ensuring the rights of the beneficiaries were protected should the issuer collapse or find itself in difficulties. Mr Smith said Bermuda Trust preferred to undertake the dual role of custodian and trustee, allowing it to keep legal control of the underlying assets and so ensure 'up-front' compliance with the terms of the trust deed.