The Government has again refused to publicly back proposals designed to make it easier for the parents of disabled children to access Child Trust Fund savings, as it was warned as much as £107million could be ‘lost’ over the next decade.
Responding to questions in the House of Lords on Thursday, justice minister Lord Wolfson said it was not for the Government to ‘give its blessing to private sector schemes.’
It comes after parents of children with less than £5,000 in the bank were potentially spared the costly and time-consuming route of going through the Court of Protection thanks to proposals first reported by This is Money on Monday.
Those proposals would allow parents and guardians to access trust fund cash on their child’s behalf by filling out a five-page application form and getting a medical practitioner to fill out another one-page document.
Justice minister Lord Wolfson pledged to do everything he could to help disabled children locked out of their Child Trust Funds but refused to publicly back new industry proposals
But while they have now been greenlit by a majority of trust fund providers, including asset managers, banks and mutuals, with four in five balances covered, the Government has consistently refused to confirm whether they comply with the Mental Capacity Act 2005.
The legislation is designed to protect disabled children from financial abuse and one of the architects of the proposals, Nigel Banfield, from the Investing and Savings Alliance, said the proposals took into account ‘the principles’ of the act.
But while the Government has said it is considering TISA’s alternative route for parents, it has failed to confirm whether it is legal, despite having been handed details of it last September.
Mr Banfield had previously called the lack of formal Government approval ‘disappointing’ when the proposals were published in December 2020.
Asked twice by peers on Thursday why the Government had failed to give its blessing to TISA’s proposals, Lord Wolfson said: ‘It is not for the Ministry of Justice to give its blessing to private sector schemes and to say whether they do or do not comply with the relevant legislation.
‘The relevant legislation is important, it’s there to protect people. If the private sector wants to put in a scheme that is a matter for the private sector.
‘So far as my department is concerned, we need to make sure so far as we can that the court rules and procedures are both appropriate, proportionate and accessible.’
Mr Banfield hit back at Lord Wolfson’s remarks and said the industry had ‘been left with the choice to either meet the consumer needs with a robust process or sit back and wait for the Government to arrive at their own solution.’
The Government was also warned that as much as £107million could be lost to disabled children over the next decade if one in four parents gave up on trying to access them because of the ‘administrative burden’ it entailed.
Parents could access the keys to their disabled children’s Child Trust Funds under proposals greenlit by the savings industry last week
Applying to become a deputy and access their disabled child’s finances through the Court of Protection could entail 47 pages of forms, thousands of pounds and up to a year of waiting, although Government has pledged that no one applying to the court solely to access a CTF will pay fees.
Former pensions minister Baroness Altmann said the Government had a ‘special responsibility’ to up to 200,000 disabled young people locked out of their trust funds, after the Labour Government which set them up in 2005 handed extra money to those in receipt of disability living allowance.
While parents were handed extra money, those same disabilities mean those children lack the mental capacity to manage money and therefore cannot access their trust funds when they turn 18.
Lord Wolfson, who was appointed as a justice minister last December, insisted the Government was doing all it could, and said any solutions it came up with would apply to Junior Isas as well as Child Trust Funds.
Peers had previously rounded on the Government’s proposals to waive court fees but not make the process more straightforward in December.
Then-justice minister Baroness Scott had rejected a call from Tory peer Lord Young to look at the system used by the Department for Work and Pensions to let parents manage the benefits of their disabled children.
She said the system was ‘not appropriate’.
Nigel Banfield said: ‘TISA and CTF providers have developed an interim solution pending anything from the Government. This was offered back in September.
‘We sought feedback from them to arrive at something together. It was not designed to be a private sector solution but a way to offer immediate relief for affected consumers.
‘Since September, in the absence of any alternative and with the continued refusal to provide any regulatory support, however limited that might have been, we’ve been left with the choice to either meet the consumer needs with a robust process or sit back and wait for the Government to arrive at their own solution.
‘TISA and our members are committed to doing the right thing and not putting unnecessary barriers in the way of the consumer. This may not be the long-term solution but is appropriate for now and will allow parents to help their child gain access to their child trust fund and benefit from its proceeds.’
‘Make a change at the Budget’
Former Prime Minister Gordon Brown
Gordon Brown, who as Chancellor created the Child Trust Fund scheme, has urged his successor Rishi Sunak to use the 3 March Budget to help disabled children access their savings more easily.
Speaking to Channel 4 News this week, Mr Brown said: ‘I hope the Chancellor will actually do this in the Budget at the beginning of March so we can give some satisfaction and some comfort to those parents who know, and there are thousands of them, who know their children are unable to claim the money themselves.
‘Perhaps it’s the Ministry of Justice, perhaps it’s the Treasury but they should knock their heads together, get this done immediately. The people who are being denied it are the people who need that money most.’
