Government plans to streamline access to child trust funds

The Government is proposing a new scheme to help families access funds belonging to loved ones who lack mental capacity, such as child trust funds, without need to go to court.

Families seeking access to small funds belonging to loved ones who lack mental capacity will benefit from a simpler and quicker system, under plans set out by ministers.

A new streamlined process would allow withdrawals and payments from cash-based accounts, such as a matured Child Trust Fund or a Junior ISA, up to £2,500 – without the need to get permission from the Court of Protection.

Currently, if a person lacks mental capacity and as a result cannot manage their finances, a family member or guardian must apply to the Court to manage these funds. This is to protect vulnerable people from fraud or abuse. However, concerns have been raised that this can be a disproportionately costly and lengthy process to access relatively small amounts of money.

The government has therefore launched a consultation on a new system to ease the administrative burden on families.

The proposed scheme would be run by the financial services sector, for example by banks or building societies and crucially, maintain important safeguards. This could include requiring medical evidence to certify the account holder lacks mental capacity to manage their own financial affairs, verification that funds will be used in the best interests of the account holder and paying money directly to the provider of goods and services as opposed to the applicant.

Under the proposals:

  • Payments or withdrawals would be up to a total value of £2,500 over a 6 month period, with the possibility of a single extension if the full value of the account had not been withdrawn.
  • An applicant would have to prove their suitability to access the fund on behalf of the individual, rather than it being limited to only family members. For example a guardian.
  • Once the maximum £2,500 has been withdrawn from an account no further withdrawals can be made.
  • The scheme would be run by financial services firms, such as banks or building societies.
  • In cases where longer term management of accounts is needed, families and guardians will be encouraged to consider a deputyship and to apply to the Court of Protection if necessary.

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.

It is essential that any change is considered carefully and based on evidence. I urge those with an interest to respond to this important consultation.”

Dan Scorer, Head of Policy and Public Affairs at the learning disability charity Mencap, said:

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.”

The consultation will run until 12th January 2022 after when the Government will determine whether legislative change is required.

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