The Financial Conduct Authority has initiated a comprehensive review of child trust fund providers to assess their fairness to savers and efforts to locate account holders. The review was prompted by data showing approximately 760,000 accounts totaling more than £1.5 billion remain unclaimed, with individual accounts averaging £2,000 in value.
The child trust fund scheme was established by the government to encourage savings among children born between 1 September 2002 and 2 January 2011. Under the program, approximately 6.3 million children had accounts opened, with families receiving minimum contributions of at least £250. Parents could add additional funds or allow the government to select a provider. The scheme concluded in 2011, though existing accounts will continue to mature until 2029 as account holders reach age 18.
The FCA will examine all 55 providers to evaluate their customer tracing efforts and assess barriers that may prevent parents and guardians of vulnerable individuals from accessing funds. The review will also examine whether charges and fees comply with fairness standards introduced through the consumer duty rule implemented in 2023, which requires financial firms to deliver positive customer outcomes.
Regulators have expressed concern about claims management companies charging substantial fees to help individuals locate dormant accounts. The FCA documented instances where customers were charged £400 to find an account and cases involving monthly subscription fees for one-time tracing services. Officials emphasized that free tracing services are available through HMRC, eliminating the need for paid intermediaries.
The regulator plans to conduct more intensive scrutiny of certain providers, particularly those with large market shares or indicators of potential consumer harm. The FCA anticipates publishing findings in the following year and indicated it may pursue enforcement action against providers if necessary.
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