United Kingdom

Government urged to change rules over disabled Child Trust Fund injustice

The Government has failed to respond to proposals aimed at offering the families of thousands of disabled children a way to access locked Child Trust Fund savings for a month, despite the Prime Minister last week pledging to do everything he could to help.

Child Trust Fund providers and trade bodies handed the Ministry of Justice proposals last month which would let those with up to around £5,000 access money in cases where family members could prove they are 'fit and proper' to look after a disabled young person's finances.

The proposals were devised after campaigners raised concerns that as many as 200,000 disabled young people could be locked out of their own savings as they are incapable of managing money, unless their families pay hundreds or even thousands of pounds in court fees.

Boris Johnson at Prime Minister's Questions last Wednesday was asked by Liberal Democrat leader Sir Ed Davey about the hundreds of thousands of disabled children locked out of CTFs

But This is Money has been told the Government has failed to respond to the new proposals even though they were submitted a month ago, leaving individual Child Trust Fund providers unsure as to whether they are breaking the rules by allowing parents' access to the money.

This is despite the fact Boris Johnson, responding to a question in Parliament last Wednesday from the Liberal Democrat leader Sir Ed Davey, said he would do 'whatever I can to help in the particular case that he raises'.

Davey, whose own 12-year-old son John is also disabled and has a Child Trust Fund, had raised the case of an 18-year-old with a neurodegenerative condition who wanted to use his CTF money to buy a specially adapted tricycle but could not as he was locked out of his Child Trust Fund.

In a letter to the Prime Minister, the Lib Dem leader called for the Government to 'urgently' change the rules 'to allow parents to access Child Trust Fund and Junior Isas where the child lacks the mental capacity to do it themselves.'

Currently, parents must make an application to the Court of Protection so that they can be appointed as a deputy for their child's affairs, which can cost £365 plus up to £2,500 in solicitors' fees. 

One mother who wrote to This is Money after we reported on the problems facing those affected last month said she felt her son, now 18, who has a genetic condition, was 'being penalised for having a disability.'

The Ministry of Justice has failed to respond to proposals put forward by Child Trust Fund providers a month ago to try and help disabled children get access to their funds

The costs in many cases can wipe out the amount held in a trust fund, while campaigners fear up to 25,000 children a year, or 200,000 over the next decade, could have to go through the court system, leading to a huge backlog.

Andrew Turner, from West Sussex, who has a disabled son, said he was told it could 'take up to a year' to secure approval from the courts due to coronavirus delays.

The problem of accessing the money dates back to the launch of Child Trust Funds in 2005, even though the parents of disabled children were given extra money until 2011 by the Government. 

It also affects holders of Junior Isas, which replaced CTFs, and many parents were never told their child would never be able to access the money at 18.

Industry bodies are seeking to try and help partially solve the problem for many families by allowing them to access the funds without a court order, in cases where a CTF is worth up to around £5,000 and parents can prove that their child lacks mental capacity and that they are fit and proper to manage their finances on their behalf.

Sir Ed Davey wrote a letter to Boris Johnson in which he urged the Prime Minister to work with campaigners and enact proposals which would 'end this injustice' for disabled young people

Jon Lee, head of investments at the mutual One Family, which runs around a quarter of Child Trust Funds, said: 'Industry bodies agreed new industry guidelines around a month ago and presented them via government to the Ministry of Justice and HMRC. 

'These take a pragmatic and proportionate risk-based approach that will mean the court process can be avoided in a number of situations.'

He said the mutual was currently following those guidelines itself, but that there had been no assurance from the Government 'that there would be no challenges if this guidance was followed', which he called 'frustrating'.

But campaigners have also called for the law to be changed.

A petition started by the law firm Renaissance Legal has now received nearly 5,200 signatures, 700 of which have come since This is Money reported on the Child Trust Fund problems last month

Philip Warford, the managing director of law firm Renaissance Legal, which has been raising awareness of the problem since 2016, told This is Money that the current solution proposed by savings providers could leave behind those with pots bigger than £5,000 and whose CTF provider had not opted in, as well as the fact it was not legally binding.

His proposal, which was backed by Sir Ed Davey last week, would be to expand rules which let parents access money in cases where a child has less than six months to live, provided they get confirmation from a doctor, to cover those who lacked mental capacity.

In his letter to the Prime Minister, the Lib Dem leader said the two proposals 'would make the process far quicker, simpler, cheaper and fairer for families with disabled children.

'Crucially, they would mean families no longer have to go to court so their child can spend their own money.'

The Government has previously insisted the barriers are necessary to protect vulnerable children from being exploited.

This is Money has contacted the Ministry of Justice for comment.

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