Child Trust Funds (CTFs) are tax-free saving accounts for children set up by the Government in 2005. This long-term investment belongs to the child and can be accessed on turning 18.
While the primary responsibility for communicating with account holders and their parents lies with CTF providers, the Government is committed to helping people access the savings they are entitled to and continues to explore new routes to reunite young people with their mature CTFs.
If a child lacks the mental capacity to manage their matured CTF account when they turn 18, a parent, carer or third party must apply to the Court of Protection (or equivalents in Scotland and Northern Ireland) for a one-off financial affairs order, or for an ongoing financial affairs deputyship order if more appropriate. If made, the order will confer legal authority to withdraw the funds or to reinvest them.
I note the concerns about the Court of Protection process. As you may know, the Government consulted on an alternate system for managing small payments such as those from Child Trust Funds. This found a lack of consistency among respondents regarding how access to mature CTFs should be reformed. Indeed, some respondents wanted to add additional safeguards to the alternate system, making it far more cumbersome than the existing court process.
However, following this consultation, the Parliamentary Under-Secretary of State for Courts and Legal Services, Mike Freer, engaged with The Investing and Saving Alliance (TISA), the major representative body for CTF providers, and agreed that it would encourage its members, as part of their mandatory pre-maturity mailing, to include advice and information about how to access and use the Court of Protection to get the relevant legal powers in place. The Government also published its parents and carers’ toolkit in July 2023 to help parents and carers understand and navigate the court process.
Importantly, the Mental Capacity Act 2005 for England and Wales applies to a person who lacks capacity from age 16. An application may therefore be made to the court to obtain legal authority in advance of their CTF maturing at age 18, so that this is already in place.
More broadly, His Majesty's Revenue and Customs actively engage with TISA, the financial services industry, other Government departments, organisations such as the Money and Pensions Service, and youth-focused charities to ensure that young people are aware of, and can access, their CTFs.
I understand that the Government will monitor how many matured accounts remain open and judge when it is appropriate to intervene in other ways.
You may be interested to read the debate which recently took place in Westminster Hall on this subject. . I was particularly interested to read what the Minister responding had to say, as I hope you will be too. The link to the debate can be found here:
Child Trust Funds - Hansard - UK Parliament
