Is your retention held in trust
The clause is in the contract. The separate account usually is not, because nobody asked for it while the money was still safe.
QScope Team · 7 January 2026 · 4 min read
Under the JCT Standard Building Contract, the employer’s interest in the retention is fiduciary as trustee for the contractor. The contractor can require the retention to be placed in a separate bank account, identified as holding retention money.
The provision is there for one reason: to protect the money if the employer becomes insolvent.
Why it matters so much
Money held on trust in an identified account does not form part of an insolvent party’s general assets. It is held for the beneficiary and is returned to them.
Money that is merely a book entry in the employer’s accounts is not. It sits with everything else, the contractor becomes an unsecured creditor, and unsecured creditors in construction insolvencies typically recover very little.
The request has to be made
The provision is usually not automatic. The contractor has to ask, and in practice almost nobody does, because asking at the start of a project feels like an accusation and by the time it stops feeling like one the money is already at risk.
The right moment is at contract stage, as a routine administrative step alongside insurances and bonds, before anybody has a reason to read anything into it.
Local authorities are often excluded
Many JCT editions disapply the trust and separate account provisions where the employer is a local authority, on the basis that a local authority is not going to become insolvent in the way a private employer might.
Check which applies. The clause is often amended, and amendments removing trust status are among the more common employer-side changes.
Down the chain
The same question arises on subcontracts, and the answer is more often unfavourable. Subcontract retention held by a main contractor is frequently not held on trust at all, and main contractor insolvency is considerably more likely than employer insolvency.
A subcontractor with retention held across several contracts with one main contractor has a concentration of unsecured exposure that is worth quantifying.
What to do about it
Read the clause. If trust status exists, request the separate account in writing at contract stage. If it has been amended out, price the risk, or ask for a retention bond instead, which removes the question by removing the cash.
QScope shows what retention is held on every project, which is the figure to quote when asking for it to be placed in a separate account.