Thousands of children locked out of Child Trust Fund cash

Up to 78,000 youngsters with mental disabilities may be unable to get their money unless their parents go to court.

Thousands of young people with mental disabilities could be locked out of Child Trust Funds (CTFs) that their parents have spent years contributing to.

CTFs were launched by the Labour government in 2002 to let parents contribute to a tax-free savings pot that their child could access from age 18.

The first products began maturing this month, but it has emerged that up to 78,000 children with mental disabilities who cannot make decisions for themselves are unable to access the accounts. 

Their parents cannot either due to the wording of the Mental Capacity Act 2005. This says that if children do not have the mental ability to handle this money, their families or carers must go to the Court of Protection to manage it for them.

This can cost more than £350, and takes at least six months.

The cost of this could eat up all or most of the value of a CTF cash pot. Maturing accounts are normally worth anywhere between £500 and £1,600.

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Law firm Renaissance Legal first warned of this issue in 2016 and is again highlighting it through a petition and social media.

Philip Warford, managing director of Renaissance Legal, confirmed that he and a number of families who are impacted are continuing to campaign.

They are calling for legal change so all families affected are treated fairly.

“This means that families with disabled children, who are already dealing with complex and challenging lives, will need to spend their own money to access the fund,” a petition from Renaissance Legal said.

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Around six million children born between 1 September 2002 and 2 January 2011 were eligible for the tax-free accounts, which were replaced by Junior ISAs in 2011.

The government added £250 into a CTF during a child’s first year, then for a short period added another £250 when they reached the age of seven. For lower-income families, the payment was £500.

But more than £1 billion is sitting in one million CTFs that have been lost, according to The Investing and Saving Alliance.

Providers have lost touch with the owners of these deals, many of whom never put money into them after government contributions.