Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Accepted
In many cases, the providers are likely to be making profits off savings mostly composed...
Conclusion
In many cases, the providers are likely to be making profits off savings mostly composed of government money. From the start of the scheme until 2010, just over one- third of Child Trust Funds (37%) received additional payments into them other than from the government. More recently, in the 2020–21 tax year, 4.6 million Child Trust Fund accounts out of the 5.5 million accounts on which HMRC had data received no additional money. One of our witnesses, who had previous experience working at a Child Trust Fund provider, told us that providers are likely to be incurring very few costs from managing a typical Child Trust Fund.14 Since April 2011, providers do not have to produce annual statements for accounts which have not received any payments (except for any from government) in the previous 12 months. However, providers are still required to provide statements in the year following the children’s 10th, 15th and 17th birthdays.15
Government Response Summary
The government agrees with the 'recommendation' (which was a conclusion) and states it's implemented, explaining that HMRC is actively involved in a working group to ensure Child Trust Fund providers trace and engage with account holders under FCA rules.
Government Response
Accepted
HM Government
Accepted
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.