Following months of campaigning led by a Sussex family and experts at Renaissance Legal, the Ministry of Justice announced on 1st December 2020 an update to the Child Trust Fund scheme, but fails to provide any hope of a swift resolution for the growing number of disabled teenagers being locked out of their savings.
Due to an acknowledged oversight in the Child Trust Fund launched in 2005, the families of disabled children who lack mental capacity and need the support of their parents with finance are being forced to apply to the Court of Protection. This is a time-consuming and expensive process that involves lengthy form filling, medical assessment fees, payment of a Court fee of up to £365 and a potential 8-month process to get Court approval. There have never been any warnings given to parents about this exit penalty. The average fund value is c.£2k.
On 1st September 2020 the first children with Child Trust Funds started to turn 18 – the point at which all of them should be able to access and take control of their savings. Disabled teenagers who need support with finances are instead being locked out of their accounts. Parents are unable to authorise any transactions on the account after a child turns 18 and if the child cannot issue instructions to a finance company, then it is not even possible to change the address on the account. Campaigners are asking the Government to resolve this inequality by introducing a simpler process to allow children with disabilities who lack capacity- where their only asset is a Child Trust Fund – to access their savings without needing to go through the full Court process.
Details of the announcement
The announcement from the Ministry of Justice on 1st December offers the ability for parents to apply for a fee waiver in exceptional circumstances. But the statement firmly encourages parents down a different route by asking them to submit a Court application before the child turns 18. This means that no Court fee would apply due to the funds being valued at zero as they have not matured. Exploiting this loophole to remove the Court fee, instead means that parents will be required to become full financial deputies to be able to access the savings when the child turns 18. This will involve the payment of a £100 registration fee, as well as annual supervisory fees. Parents who have already applied to the Court are being asked to apply for a refund.
Campaigner Andrew Turner said:
‘Three months after the maturity date of the Child Trust Fund, this announcement offers nothing tangible for families supporting a disabled child. Encouraging them to apply to Court before they turn 18 is just a more convoluted process which replaces one set of fees with another. The majority of accounts are valued at £2,000k or less. The huge barrier of a long and complex court process will mean that many disabled teens will still never be able to enjoy their own savings. Millions of pounds of benefit will remain locked away for ever. The lack of any clarity about the objectives or timescales for the working party means parents now have no idea whether they should wait before launching into a full court application.’
The Ministry of Justice has not confirmed whether supervision fees that would need to be paid annually for the duration of the deputyship for parents are to be removed for families applying only for one Child Trust Fund. Parents may also be required to purchase a security bond from an insurer every year. It is a convenient solution for the Government, but not for families supporting a disabled child.
The Ministry of Justice refers to the creation of a ‘working group’ to further explore the possible solutions for families but offers nothing in the way of detail or timescales. The Child Trust Fund scheme was launched in 2005 and there is still no obvious solution in prospect.
It is understood that proposals presented by the finance industry to Government back in September would offer an immediate solution for families. Two firms – OneFamily and BMO – announced last week that they would start to operate the new process to help families access their savings without the exit penalty of court action.
Philip Warford, Managing Director at Renaissance Legal, said:
“We have been campaigning since 2016 for the Government to look at the process of Child Trust Funds which, when set up, had no regard for the needs of children with disabilities who cannot manage their savings and what would happen once they turn 18. Whilst we are encouraged that the issue has made it on to the Government’s agenda, following months of media coverage, we are very disappointed with the latest announcement which we believe to be further evidence that policy makers simply do not understand the key issue at stake.
The needs of families, and the stark reality of the tremendous amount of support, emotional and otherwise, that is needed to care for a child with disabilities, has always been at the heart of this campaign. It’s not as simple as removing the Court fee. Parents will still have to undertake an enormous amount of time-consuming, complex work to apply to the Court of Protection which, as we are seeing day in and day out as legal professionals, is not able to process the applications it receives quickly enough.”
Commenting on what he believes to be a more suitable solution, Philip continues:
“The process we first proposed back in August, which is to extend the existing process within the Child Trust Fund for terminal illness to cover mental capacity, would allow funds to be withdrawn before the child reaches 18. It’s a much simpler process and creates a lasting solution which we believe still achieves the vital aim of the Mental Capacity Act which is to protect the interests of the vulnerable. However, this solution does require a Statutory Instrument to be passed in Parliament, and we are concerned that there is a reluctance in the Government to explore this solution and lack of cooperation between key departments to get to the heart of this issue.”
Andrew Turner, a father campaigning for a fairer, more efficient process for disabled children and their families has drawn on his personal experience to engage policy makers and has had extensive communication with both the MOJ and HMRC, as well as with various financial bodies and Child Trust Fund providers.
Andrews’s son, Mikey, has a rare, life-limiting condition and turned 18 in September. He has not been able to access the money in his Child Trust Fund for equipment he needs, and this was raised in Parliament by Sir Ed Davey during Prime Minister’s Questions on 21st October.
“Over the past three months we have seen nothing tangible from Government to fix this issue. Today’s announcement offers nothing more than an ambiguous message about court fees and the vague promise of a working party. This campaign has never been about trying to remove or damage the protection that is essential to protect vulnerable people. The Mental Capacity Act places a focus on acting in a person’s ‘best interests’. Forcing parents into a long and daunting court process for a single savings account valued at around £1,500 is not acting in the best interests of a disabled child. Protection must be appropriate to the circumstances. Disabled young people and their families deserve better than this”.
The team at Renaissance are grateful to OneFamily for their proactive stance and support of the campaign. Paul Bridgwater, OneFamily’s Head of Investments said:
“We are disappointed by today’s statement from the Ministry of Justice. We feel it does not go far enough in supporting the families of child trust fund holders who do not have the mental capacity to be able to manage their own finances.
“Whilst it is a step in the right direction, we believe that more can be done to level the playing field for families in this position”.
The Child Trust Fund Access online petition now has in excess of 5,400 signatures and is growing daily. The petition remains a key element of the campaign, helping to demonstrate the number of families who disagree with how the system works currently and feel passionate that change is essential.
Renaissance Legal are encouraging 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 the required pressure to convince the Government and providers that the system must be changed before more children turn 18 and find themselves unable to access savings that their parents invested in for their future.
What should parents do immediately?
Renaissance Legal are urging families not to delay taking action. If parents don’t know which provider holds the Child Trust Fund then they can check with HM Revenue & Customs by logging in or registering on their Government Gateway.
The Child Trust Fund provider will have their own requirements for releasing or managing the funds and we suggest contacting the provider directly to get all of the details. The same process applies to any JISAs.
Further information about the campaign can be accessed here: https://www.renaissancelegal.co.uk/child-trust-fund-access/