Vulnerable young adults to be given easier access to Child Trust Fund savings
Tens of thousands of young people with special educational needs and disabilities who are currently locked out of their savings held in Child Trust Funds may soon be granted easier access to them, under new Government plans. It's a change many have been calling for, including campaigner Andrew Turner, charity Contact, MoneySavingExpert.com founder Martin Lewis and others.
Between 2002 and 2011, most children born in the UK were given £100s in a tax-free Child Trust Fund (CTF) by the state, which parents could then add more on top. The money was set to be accessible when the child turned 18 – giving everyone some cash to start their adult life.
However, for between 63,000 to 126,000 young adults in England and Wales with special educational needs or disabilities, accessing this cash can be a nightmare and can only be done via a costly, often unaffordable, court process. In many cases, accessing a CTF can cost nearly £1,000, which can outweigh the amount saved.
Thankfully, under plans announced by the Government today (Tuesday 3 November), parents and carers may soon be able to bypass the court route and instead go directly to their CTF provider to access any savings.
New process to be put in place "as quickly as possible"
The new rules will be brought forward as an amendment to the Financial Services and Markets Bill, which is currently awaiting Parliamentary approval.
Once this has been granted, the Government says further details on how exactly the reforms will work will be set out, adding that it will be "working as quickly as possible with the financial sector, charities and campaigners to finalise the scheme".
In response to the announcement, parent and campaigner Andrew Turner said: "This bold move from the Government is extremely positive news for tens of thousands of young people who have been locked out of their Child Trust Fund savings.
"A simpler process for accessing these savings will release millions of pounds of benefit and help reduce the administrative burden on parents supporting a disabled child."
We asked the Government if this rule change will also apply to Junior ISAs, where there are similar issues, and it told us it wouldn't.
Martin Lewis: 'Having to go through court is a nightmare for parents and carers'
In 2023, Martin wrote a letter to the Government calling for more to be done to support those affected. You can read the letter in full to see the solutions Martin put forward, but we've included a snippet below where he explains the issue in greater detail:
... Due to protections put in place by the Mental Capacity Act, the only way for parents of young people with learning disabilities to access this money on their behalf is through a Deputyship Order (DO) via the courts. The same issues also apply to Junior ISAs.
For many – especially the most disadvantaged – the amount of money it costs to gain access to the accounts outweighs the amount saved. Parents need access to legal advice or lawyers, they must have forms filled out by a GP (often at cost), as well as often paying fees directly to the court, and then additional annual fees to the Office of the Public Guardian (OPG) – which can be hundreds of pounds a year. This can add up all-in-all to an initial cost of nearly £1,000 – not including legal help – plus ongoing yearly payments.
But clearly, it's not just about the cost. The time it takes to go through the court is a nightmare for parents who are already often living time-squeezed, stressful, difficult lives – there can be as many as 90 pages of forms to read and fill out, and court delays mean it can take up to six months to get the DO. Even then, an already-stretched Deputy also needs to submit reports on financial expenditure every year.
On top of this, those young people with learning disabilities who could benefit from using their funds, but are unable to access them, could also see their Universal Credit entitlement cut if they have more than £6,000 stuck in these accounts.
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