On Tuesday 16th November, the Ministry of Justice announced the launch of a Consultation around a new, streamlined process that would allow withdrawals and payments up to £2,500 from cash-based savings accounts including Child Trust Funds and Junior ISAs without the need to get permission from the Court of Protection.
Here, we explore what this means for families and our view on this update in light of the wider Child Trust Fund Access campaign.
In 2016, we launched the Child Trust Fund Access campaign to highlight a critical problem with Child Trust Funds, which we believed would see thousands of disabled children disadvantaged. The UK Government introduced Child Trust Funds in 2005 with the aim of ensuring that every child has savings at the age of 18. However, there was no consideration made for the needs of disabled and vulnerable people, who may not have the mental capacity to be able to access and manage their funds at the age of 18. For those young adults that do not have the mental capacity to manage their finances, their families and carers will need to apply to the Court of Protection to act as the child’s deputy.
The newly announced proposal
The proposal from the Ministry of Justice is for a simplified procedure to allow families in England and Wales to get access to small sums in savings accounts belonging to a young person who lacks mental capacity, without having to apply to the Court of Protection.
This new process would allow withdrawals and payments from cash-based accounts, such as a Child Trust Fund or a Junior ISA, up to £2,500.
As outlined in the Consultation papers published by the Ministry of Justice, the key points are as follows:
- Payments or withdrawals would be up to a total value of £2,500 over a six-month period, with the possibility of a single extension if the full value of the account had not been withdrawn.
- An applicant would have to prove their suitability to access the fund on behalf of the individual, rather than it being limited to only family members. For example, a guardian.
- Once the maximum £2,500 has been withdrawn from an account no further withdrawals can be made.
- The scheme would be run by financial services firms, such as banks or building societies.
- In cases where longer term management of accounts is needed, families and guardians will be encouraged to consider a deputyship and to apply to the Court of Protection if necessary.
The proposed scheme would be run by the financial services sector, for example by banks or building societies who would maintain important safeguards to ensure that the money will be used in the best interests of the account holder.
Is this good news?
In simple terms, yes, as it will help thousands of families access their disabled child’s savings without having to apply for a Court order.
A key objective for the #ChildTrustFundAccess campaign all along has been the need to raise awareness of the issue, both in terms of ensuring the families who will be affected are informed, and in terms of lobbying the government, providers and key decision-makers to try and achieve a change to how the ‘rules’ work. As a team, we welcome the proposed change and are proud that the extensive campaigning that we have led for many years alongside a number of key stakeholders- including various families, OneFamily, Peers, Ministers, The Investing and Saving Alliance (TISA) and media publications – has led to this point.
However the proposals are far from perfect, as Philip Warford, Renaissance Legal’s Managing Director, explains:
“It’s vital to highlight that this latest development will make a difference for thousands of families who wish to access their child’s Child Trust Fund savings, but not all. As a campaign team we welcome the consultation but feel that the newly proposed scheme is far from flawless.
Back in February 2021 Lord Young and Lord Blunkett spoke of an ‘uneven playing field’ where children without disabilities can access their Child Trust Fund quickly, but those with disabilities cannot. With the limit being set at £2500, a new inequality emerges where those children with funds where the value exceeds this amount will still require their parents to summon energy, time and resource to engage with the same court process which we have believed all along to be unnecessarily complex and burdensome.
It is clear that the new proposals do not go far enough. Through our collaboration with key members of the finance industry we are aware that their recommendation to Government was for the limit be set to £5,000, which is something we would support in order to help a greater number of families. Incidentally, £5,000 is also the threshold of the existing Small Estates Probate procedure and so we can’t help but feel that the £2,500 figure feels unnecessary low and inconsistent with other, equally robust, legal procedures that are already in existence”.
What should parents do now?
The Government will consider the response to a formal consultation and then determine whether legislative change is required. The Consultation is open until 12 January 2022 and it is vital that parents’ voices are heard.We would encourage all parents, even those who are not directly impacted but who believe the current rules are unfair and must be changed, to take part in the consultation and share their views.
The online survey can be accessed here: https://consult.justice.gov.uk/digital-communications/mental-capacity-act-small-payments-scheme/
We invite parents, and other supporters of the campaign, to express their support of the proposals via the survey and join us in suggesting that the £2,500 limit be increased to £5,000 so that more families can avoid the burdensome Court of Protection process.
The Child Trust Fund Access online petition has in excess of 6300 signatures and has continued to grow steadily throughout the campaign. The petition is a key element of the campaign, demonstrating the number of families who are disadvantaged by the current system and who feel passionate that change is essential.
We still need to encourage all parents – not just those with a disabled child or who are directly impacted themselves – to pledge their support to the campaign as it helps apply continued pressure.
If you would like to sign the petition, you can do so here.
Keep up to date
If you would like to read further updates about the Child Trust Fund campaign, you can do so here: https://www.renaissancelegal.co.uk/blog/category/blog/child-trust-fund-access/
Social media is an important channel, and the best way to keep up to date is on Twitter, and by following the #ChildTrustFundAcccess hashtag.