Dear Minister,
80,000 young adults with mental incapacity will be locked out of £200m of savings
As leaders in the financial services industry, we are calling on the government to make an urgent change to a system that unfairly discriminates against young people who lack mental capacity.
The families of an estimated 80,000 teenagers and young adults, who are unable to manage their financial affairs, face a lengthy, difficult and stressful application to the Court of Protection to access their child trust fund (CTF) savings.
This may be money that parents and carers have been putting aside for 18 years to support their vulnerable child once they reach adulthood. But, based on government figures, campaigners believe that approximately £200m of these savings could be left untouched in dormant CTF accounts if nothing has changed by the time the CTF maturity period comes to an end in 2029. In addition, junior ISA accounts opened after 2011 are subject to the same difficulties.
We absolutely respect the Mental Capacity Act and its importance in protecting the assets of vulnerable people – especially where the assets are substantial, such as property or investments. However, the amounts held in CTFs are often small - generally around £2,000 - yet families still have to apply to the Court of Protection. Whilst costs associated with Court of Protection applications may be waived, there are other associated fees such as practitioner fees for completing documents or the possibility of needing to pay for deputy fees or a surety bond that are confusing and worrying for families.
Having identified the problem in 2020, the UK’s biggest CTF providers, OneFamily and Foresters worked with The Investing and Saving Alliance (TISA) and other CTF providers to remedy this problem by creating an industry-led solution. This enables families to access their children’s savings using a rigorous process based on the Department for Work and Pensions’ way of working.
Since 2020 OneFamily and Foresters have helped around 2,000 families to access savings on behalf of their children using the industry’s solution. In contrast, just 70 Court of Protection applications were made that related to a single CTF in the period from September 2020 to May 2023. This indicates that only a minimal number of those whose only asset is a CTF are accessing the money that is rightfully theirs through the Court of Protection process.
Anecdotal evidence, from disability charities, suggests that some families are abandoning their child trust fund savings altogether because they believe the Court of Protection process is too difficult to contemplate. Campaigners have calculated that approximately £80m of savings are currently locked away because families cannot justify going to court. One parent told OneFamily that they had considered doing exactly this, even though their daughter’s account had a balance of £6,000 – luckily OneFamily was able to help this family.
What is extremely sad is that many of these young people have life-limiting conditions and the money that is trapped in their CTFs could purchase an important piece of life-improving equipment or be used to create happy family memories before it is too late.
CTF providers and key industry voices have been campaigning for years for a government-led solution to be found. In 2021 the Ministry of Justice presented the Mental Capacity Small Payments Scheme to government and a consultation began. In February 2023 the consultation response was published. Despite 87% of respondents confirming that the scheme was needed and would benefit vulnerable children, the Small Payments Scheme was rejected.
We would like the new administration to revisit the problems experienced by the families of our most vulnerable young people, with the hope that this situation can be swiftly resolved - putting millions of pounds into the pockets of the families of those who need it the most.
We look forward to hearing from you.
Yours sincerely,
Jim Islam,
Chief Executive Officer, OneFamily
