The Financial Conduct Authority (FCA) has launched a review into the efforts of Child Trust Fund (CTF) providers to locate account holders, following reports that approximately 760,000 CTF accounts remain unclaimed, collectively worth around £1.5 billion.
Child Trust Funds were introduced by the Labour government, providing a tax-free savings account for every child born between September 2002 and 2 January 2011. Each eligible child received an initial government contribution of £250, or £500 for those from low-income families. When the child reached seven years of age, a further payment of £250 or £500, depending on family income, was added to the account.
Despite these provisions, many funds have yet to be accessed. The FCA is engaging with the 55 firms authorised to manage these accounts, including banks, insurers, and fund managers, requesting details about the actions they are taking to trace account holders who have lost contact with their providers.
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Chris Knight, FCA’s Director of Insurance, emphasised the importance of Child Trust Funds, stating, “Child trust funds can help set young people up for the future. But too many risk losing touch with money that is rightly theirs. Our review will look at how firms are helping customers access their funds, providing fair value, and supporting vulnerable consumers and their families.”
Knight also advised against paying third parties to reclaim these funds, adding, “You don’t need to pay someone else to claim what’s rightfully yours – tracing and accessing your own child trust fund costs nothing, so think twice about handing over a chunk of your savings to a claims firm for a job you can do yourself.”
Dan Coatsworth, Head of Markets at AJ Bell, highlighted the potential benefits for students, saying, “Students heading to college or university in September could have a welcome surprise of a few thousand pounds that’s been hidden away if their parents opened a Child Trust Fund that they’ve since forgotten exists.”
He further noted that the FCA’s data shows 760,000 matured CTFs, averaging £2,000 each, remain unclaimed-a significant sum that could provide valuable financial support to students facing the challenges of higher education.
The FCA’s review aims to ensure providers take robust steps to assist customers in reclaiming these funds, ultimately helping young people access money intended to support their future financial well-being.