The Financial Conduct Authority has initiated a review of child trust fund providers to assess their compliance with consumer protection standards and effectiveness in reuniting account holders with their savings. The regulator identified approximately 760,000 unclaimed accounts valued at an average of £2,000, representing more than £1.5bn in total funds.
Child trust funds were established as part of a government savings initiative targeting children born between 1 September 2002 and 2 January 2011. Approximately 6.3 million youngsters received accounts under the scheme, which concluded in 2011. Initial government contributions of at least £250 were provided to each account, with families encouraged to make additional deposits. The accounts will continue to mature until 2029 as their owners reach age 18.
The FCA’s review will examine all 55 providers, including banks, insurers, and fund managers, to determine whether they are undertaking adequate measures to locate customers who have lost contact with their accounts. The regulator will also investigate potential barriers faced by guardians of vulnerable individuals seeking to access funds and assess whether charges and fees comply with consumer duty requirements introduced in 2023.
Regulators cautioned consumers about claims management companies charging substantial fees for tracing services, noting cases where customers were charged £400 or subjected to monthly subscriptions for one-time tracing assistance. The FCA emphasized that account tracing through HM Revenue and Customs is available at no cost. The regulator indicated it will file a report following the review and may pursue enforcement action against providers if necessary.
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