How we’re helping disabled teens access their Child Trust Funds

How we’re helping teens with limited mental capacity access their Child Trust Funds, and what we think should happen next.

The history

Child Trust Funds are long term savings and investment accounts granted to every child born in the UK between 1 September 2002 and the end of 2010.

The scheme aimed to ensure that UK children had savings at the age of 18 and to encourage them to develop good financial habits.

Children were issued vouchers by the Government that their parent or guardian could deposit with a financial services provider to grow until the child can take ownership at 18 and decide what to do with their money.

Child Trust Fund’s coming of age

Child Trust Funds came of age in 2020 when the first generation of Child Trust Fund account holders – born in 2002 – reached the age of 18 and were able to start managing their money.

But it emerged that as many as 200,000 disabled children would potentially be unable to claim their Child Trust Funds because they lacked the mental capacity to manage their money. Parents or guardians were expected to apply to the Court of Protection in order to manage the money on their teen’s behalf.

While the rules help to safeguard vulnerable people from fraud or abuse, it means parents and guardians spending hundreds of pounds in order to help their teens enjoy their money. Channel Four covered the story in August 2020 and media coverage of the issue grew.

How we responded

It is very important that we protect all customers including those who are most vulnerable.

While a Court of Protection document provides the highest level of confidence, and in the first instance this is sought, we are willing to explore other documentation that the parent or guardian may to have to evidence that they are responsible for managing their teen’s financial affairs.

How the Ministry of Justice responded

In December the Ministry of Justice waived court fees for parents or guardians applying to the Court of Protection seeking access to a Child Trust Fund for this reason.

We feel this does not go far enough

We recognise the need for vital safeguards to protect the child’s money however, the solution suggested by the Ministry of Justice necessitates complex legal paperwork that will take days to complete.

There may be other legal costs such as solicitors’ fees to cover and we believe these funds would be far better used to support the child’s needs.

We believe the time and cost implications of going to the Court of Protection are fundamentally unfair.  All young people deserve to be able to have equal access to their child trust fund savings and the process outlined by the Ministry of Justice clearly demonstrates that they would not.

Paul Bridgwater, OneFamily’s Head of Investments said:

“Whilst we look forward to the working group’s recommendations on streamlining the process, these will take some time and we feel that their conclusions will come too late for many families.

“We have already backed our industry bodies - TISA, UK Finance and the BSA - in lobbying the Ministry of Justice for new draft guidance for Child Trust Fund providers that would enable a simplification of the process for families.

“In the meantime, we have independently chosen to adopt a more flexible and customer focused approach, to see if there might be way for our customers to access their balances without the need of a Court of Protection Order.

“Every case is different, but in some circumstances it is possible for us to release the funds.  We can do this by considering the documents and identification that the person managing the young person’s financial affairs may already have.

“We would encourage other Child Trust Fund providers to follow our example.”

If you are in this situation, please give us a call on 0344 8 920 920. Calls are free from UK landlines. Lines are open Mon to Fri, 9am - 7pm, and Sat, 9am - 1pm