The Financial Conduct Authority has initiated a market review of child trust fund providers, citing concerns over significant sums remaining unclaimed. Approximately 760,000 accounts totaling more than £1.5 billion have yet to be claimed by their owners, with individual accounts averaging £2,000 in value.
The child trust fund scheme was established by the government to encourage saving for children born between 1 September 2002 and 2 January 2011. Approximately 6.3 million children had accounts opened under this initiative, with families receiving at least £250 in initial contributions and the option to add additional savings. When the scheme closed in 2011, existing accounts were permitted to continue maturing until 2029, at which point account holders will reach the age of 18.
The FCA will review all 55 providers to assess their efforts in locating customers who have lost contact with their accounts. The examination will focus on whether banks, insurers, and fund managers are taking sufficient steps to trace account holders and facilitate access to funds. The review will also evaluate how providers are addressing barriers that may prevent parents and guardians of vulnerable individuals from accessing their accounts, as well as examining fee structures under the consumer duty rules introduced in 2023.
The regulator cautioned consumers against using claims management companies that charge fees for tracing services, noting cases where customers were charged £400 or enrolled in monthly subscriptions for one-time tracing assistance. The FCA emphasized that tracing and accessing child trust funds is available at no cost through HMRC. The regulatory body indicated it will request additional information from firms with large market shares or those showing potential indicators of consumer harm, with findings expected next year and possible enforcement action if warranted.
Article Attribution | Read More at Article Source
Article summary produced by Claude AI