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New rules to simplify access to Child Trust Fund accounts of loved ones who lack mental capacity “without need to go to court”

New rules will make it possible for families to access the Child Trust Fund (CTF) accounts of loved ones who lack mental capacity without the need to go to court, it has been announced.

It comes after research revealed that thousands of children with disabilities are unable to access savings because of complicated rules.

CTFs – which were replaced by the Junior ISA scheme in 2011 – are long-term tax-free savings accounts available to children born between 01 September 2002 and 02 January 2011. Parents or guardians could set up an account on behalf of their child with a CTF provider, such as a bank, building society or investment manager.

At age 16, the account holder can choose to manage their CTF themself, and at age 18, can withdraw money from the fund.

However, the latest research suggests that “thousands of accounts” have yet to be claimed.

Under current legislation, a family member or guardian must apply to the court to manage funds if the account holder lacks mental capacity and cannot manage their finances.

While these rules are designed to protect vulnerable people from fraud or abuse, it means that families are forced to spend a disproportionate amount of time and money to gain access to children’s funds.

The new rules, announced by the Government this month, will introduce a “simpler and quicker” system that will ease the administrative burden on families while still maintaining important safeguards.

The consultation document proposes that the scheme will be run by the financial services sector, who will require medical evidence to certify that the account holder lacks the mental capacity to manage their own financial affairs, as well as verification that funds will be used in the best interests of the account holder.

Approved withdrawals may also be paid directly to the provider of goods and services instead of the applicant.

Commenting on the plans, Deputy Prime Minister, Lord Chancellor and Secretary of State for Justice, Dominic Raab, said: “I’m determined to reduce the obstacles families and guardians face when they are supporting vulnerable people who lack mental capacity.

“These plans will make it easier and less stressful to access small funds while maintaining vital safeguards to prevent abuse and fraud.”

Dan Scorer, Head of Policy and Public Affairs at the learning disability charity Mencap, added: “Over the last year families of young people with a learning disability have highlighted the significant barriers and cost faced in accessing Child Trust Fund money for their loved ones. It is welcome action is being taken to consult on proposals for a more proportionate process where small amounts of money are involved.

“The complexity of the legal system is a recognised barrier and the aim of a simpler and quicker process, which still has appropriate safeguards, is welcome. We will look carefully at the proposals in the consultation, but changes made must both make it easier for family members to access funds for their loved ones whilst including appropriate safeguards.”

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