Government plans direct Child Trust Fund access for families of adults lacking capacity

Parents and carers of young adults who lack mental capacity are expected to reach Child Trust Fund savings directly through providers, the Government said on Tuesday.

The change would replace the Court of Protection process, which ministers called complex and often costly, although that court will remain available as an alternative route.

The Government estimates that 63,000 to 126,000 young adults are affected, and economic secretary Lucy Rigby put the average value of a Child Trust Fund at £2,600.

Rigby said the changes would help tens of thousands more young people connect with funds “worth on average £2,600 each”.

At present, a family or carer in England and Wales must apply to the Court of Protection for a deputyship order before they can manage the account.

The Commons Public Accounts Committee found that the court approved only 15 such applications during 2021.

Fees are waived when families apply only to reach a Child Trust Fund, but the committee heard of other barriers, including a six-page GP letter.

Some providers have, at their own risk, let families of young people without capacity take out up to £5,000, the committee said.

The Ministry of Justice had consulted on easier access to small funds, but decided not to proceed with those proposals.

Child Trust Funds are tax-free savings accounts for children born between 1 September 2002 and 2 January 2011.

The money belongs to the child, who can take control of the account at 16 but can only withdraw it at 18.

The scheme closed in 2011, and Junior ISAs are now the option for new savings, though existing accounts can still receive up to £9,000 a year.

Treasury said the scheme made no provision for 18-year-olds who lacked the capacity to manage their finances, leaving families without a straightforward route to the savings.

Justice minister Jake Richards said young people lacking capacity should be able to reach their savings “as easily as possible”.

Anna Bird, chief executive of Contact, called the plan “a significant breakthrough” after six years of campaigning led by parent carer Andrew Turner.

Turner described the move as “extremely positive news for tens of thousands of young people” who have been locked out of their savings.

The Government will bring forward an amendment to the Financial Services and Markets Bill, with the details set out in secondary legislation after Parliamentary approval.

No start date has been set, and ministers will work with campaigners, disability charities and the financial services sector on the design.

Questions still to be settled include who can access funds, what evidence is required and what proportionate safeguards are needed to protect young people.