8
Conclusion
Sixty-Seventh Report - Child Trust Funds
Deferred
Providers can charge fees up to a cap of 1.5% per year on ‘stakeholder’ accounts, the most common type of Child Trust Fund account, which The Share Foundation described as equating to nearly £30 per year on a typical account. HMRC does not track how much providers are charging. The …
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Providers can charge fees up to a cap of 1.5% per year on ‘stakeholder’ accounts, the most common type of Child Trust Fund account, which The Share Foundation described as equating to nearly £30 per year on a typical account. HMRC does not track how much providers are charging. The NAO found that the largest providers are likely to be charging the maximum rate and estimated that providers could be earning collectively up to £100 million per year through charges on Child Trust Funds. The Share Foundation described the charges as “very high indeed for fund management”, but HMRC claimed the charges are less than the annual growth of these investments.12
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Government response AI summary
The government agrees with the Committee's observation on CTF provider fees but states that providers have the lead responsibility for terms and conditions, which are industry matters. HMRC will encourage providers via a working group to adhere to their responsibilities under FCA rules, including the …
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HM Treasury
9
Conclusion
Sixty-Seventh Report - Child Trust Funds
Deferred
Providers are making even more money from some Child Trust Funds in other ways, as other types of Child Trust Fund have no cap on fees. Around 1.3 million Child Trust Funds (0.3 million stocks and shares accounts and 1.0 million cash deposit accounts) are not subject to the cap …
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Providers are making even more money from some Child Trust Funds in other ways, as other types of Child Trust Fund have no cap on fees. Around 1.3 million Child Trust Funds (0.3 million stocks and shares accounts and 1.0 million cash deposit accounts) are not subject to the cap on fees. The Share Foundation described a case in which a provider had asked the charity to pay £20 for a single account statement, which it declined to do.13 7 Qq 24, 37, 56 8 Q 26, C&AG’s Report, para 2.4 9 Qq 25, 26 and 34 10 Qq 40–42 11 Qq 28, 46–47, 55; Correspondence from HMRC to PAC dated 7 June 2023 12 Qq 33, 35, 37; C&AG’s Report, para 3.8 13 Qq 35–36; C&AG’s Report, Figure 2 Child Trust Funds 11
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Government response AI summary
The government agrees with the Committee's observation on uncapped CTF fees but states that providers have the lead responsibility for terms and conditions, which are industry matters. HMRC will encourage providers via a working group to adhere to their responsibilities under FCA rules, including the …
Read full response →
HM Treasury
11
Conclusion
Sixty-Seventh Report - Child Trust Funds
Deferred
We heard that only four providers, out of around 55 in total, have been proactive and voluntarily worked in partnership with the Tracing Group—a commercial service for tracing the owners of dormant accounts—to set up a Child Trust Fund register separate to the one held by HMRC. The register contains …
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We heard that only four providers, out of around 55 in total, have been proactive and voluntarily worked in partnership with the Tracing Group—a commercial service for tracing the owners of dormant accounts—to set up a Child Trust Fund register separate to the one held by HMRC. The register contains details of around 60% of all Child Trust Funds and is proving to be an effective way for young people to trace their accounts. However, the Share Foundation told us that most account providers are not showing much enthusiasm for helping young people to trace their accounts.16 Access for young people lacking the mental capacity to manage their savings
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Government response AI summary
The government agrees with the Committee's observation regarding provider proactivity in tracing accounts but states that CTF providers have the lead responsibility for tracing. HMRC will continue to encourage providers through a working group to adhere to their responsibilities under FCA rules, including the new …
Read full response →
HM Treasury