A reform announced by Andy Burnham's government will allow simpler access to Child Trust Funds (CTFs) for young people lacking the mental capacity to make financial decisions, potentially affecting up to 126,000 young adults. The new legislation, announced on Tuesday, November 3, will let parents and carers approach CTF providers directly to access savings, avoiding complex court processes that campaigners had long criticised.
Who is affected by the change
CTFs are long-term, tax-free savings accounts designed to provide a savings boost early in life. They were aimed at people born between September 1, 2002, and January 2, 2011, with savers able to access the account when they turn 18. The reforms are expected to solve problems for an estimated 63,000 to 126,000 young adults, the Government said.
Justice minister Jake Richards said: “Young people who lack the mental capacity to make financial decisions should be able to access their savings as easily as possible – especially when this money was put aside by loved ones to help them take their first steps into adulthood.” He added: “This is simply an injustice that we’re finally putting right and as campaigners have argued for years, change is long overdue. This legislation will ensure this group of young adults no longer face difficulty from accessing money that is rightfully theirs.”
Next steps for implementation
Economic secretary to the Treasury, Lucy Rigby, said: “The changes that we’re introducing will help tens of thousands more young people to connect with their child trust funds – worth on average £2,600 each.” In the Commons, she said: “The last Labour government introduced child trust funds with the intention that every child in this country could access a financial asset as they enter adulthood, and almost three million young people have already accessed their funds, currently containing an average of £2,600 each.” She added: “I am going to be bringing forward an amendment to the Financial Services Bill. The second reading of which is next week, which will enable the Ministry of Justice to make regulations to put this in action.”
The Government said it will work with others to explore how the new process is designed, including who can access funds, what evidence is required and what proportionate safeguards are necessary to protect young people who lack mental capacity. The Court of Protection will remain available as an alternative route to protect the financial interests of adults lacking the mental capacity to make financial decisions.
Anna Bird, chief executive of Contact, said: “For too long, tens of thousands of young disabled people and their families have faced a complicated and costly process to access money that rightfully belongs to them.”
