Source · Select Committees · Public Accounts Committee
Recommendation 8
8
Deferred
Providers can charge fees up to a cap of 1.5% per year on ‘stakeholder’ accounts,...
Conclusion
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
Government Response 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 new consumer duty for fair value.
Government Response
Deferred
HM Government
Deferred
2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 Child Trust Fund (CTF) providers have the lead responsibility in making sure account holders are aware of and have access to their accounts. 2.3 HMRC is an active participant in the dedicated CTF working group which comprises trade bodies such as The Investing and Saving Alliance and UK Finance, and CTF providers such as OneFamily and Nationwide Building Society. 2.4 As set out above, the need for CTF providers to trace, and engage with, account holders is an established feature of discussions. HMRC will continue to use these meetings to encourage further activity on the part of CTF providers, who are aware of their responsibilities to their customers under Financial Conduct Authority (FCA) rules. While terms and conditions are a matter for the industry, the new FCA consumer duty rules require firms to act to deliver good outcomes for retail customers and provide products and services which offer fair value. 2.5 HMRC also acts on any intelligence it receives from FCA or others regarding compliance problems with CTFs.