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Max just before a £250 child trust fund matures to £12.39 after 18 years of investment
When Max Prince turned 18, he took possession of the child trust fund his parents had set up when he was born, but the shocking fee left him with just £12.39. did.
He is one of around six million babies born between September 2002 and January 2011, all of whom received at least £250 from the government to start saving.
The idea was that your long-term tax-free savings pot would increase in value by your 18th birthday.
When Max’s fund matured, investment firm Columbia Threadneedle took charge of it. He said he had written to his parents about the £30-a-year bill, but the letter was returned unopened. The family moved, but over the years the fees used up most of their savings.
The Child Trust Fund was established by the then Chancellor of the Exchequer, Gordon Brown, with strict rules on the amount of fees.
The first fund started maturing four years ago when the babies started turning 18 and, like Max, I was notified that I could finally access my savings.
“We’ve been waiting for this letter for a while. I mean we’ve been waiting for it basically 18 years,” Max said.
“So when I opened the letter one morning thinking my family and I would have at least £300, we instead saw £12.39. Not even £120… just £12.39. did.
“It was certainly shocking and kind of outrageous, to say the least.”
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Max’s mother and father originally founded Child Trust Fund with F&C Investments, but after a series of industry acquisitions, they eventually partnered with Columbia Threadneedle.
“It’s inexplicable.”
By 2012, the value of the fund had reached just over £300, according to a statement obtained by the BBC.
But in 2013, unbeknownst to Max’s parents, the account began to charge £30 a year in maintenance fees.
The maximum fee Child Trust Funds could charge was set at 1.5%, but the BBC calculated that Max was effectively being charged more than 10% each year.
The fund was initially managed by F&C Investments, but after a series of industry takeovers, by maturity it became part of multi-billion pound investment firm Columbia Threadneedle.
The paper told the BBC that the type of account chosen by Max’s parents was a CTF share account, which had a different fee model. The subsequent charge of £25 plus VAT was for the management of the account rather than the underlying investment.
The company told the BBC it had tried to contact Max’s parents when introducing the “current pricing structure”, but the letters were returned unopened.
Max’s parents said they had moved and had not received the letter despite setting up a forwarding system. They said they knew the details of Max’s fund and knew when it would mature, but did not expect to hear back from them before then.
Columbia Threadneedle says its Child Trust Fund “requires clients to actively make their own investment decisions, and we do not take any action on their behalf without their permission or communication.” I can’t wake you up.”
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Max Prince as a toddler, shortly after his parents established a government-backed Child Trust Fund
Max’s parents told the BBC they were unhappy with the explanation and planned to contact the company to complain.
Max said: “This money was originally intended by Gordon Brown to be used to help future adults get a little bit of their footing and get ahead.
“In the grand scheme of things, it’s not a huge amount for the company, is it? It’s only around £300, so it’s unfair in my opinion.
“You could call it cruel. I think the best way to describe it is inexplicable.”
Money sitting unclaimed
The average size of a child trust fund is estimated to be around £2,000 due to growth over the years and additional funding from family and friends.
However, a lot of funds are left unclaimed because people simply don’t know about it.
Gavin Oldham is an investment professional with decades of experience in the industry and currently runs a government-backed organization that helps find lost children’s trust funds. He is campaigning to help hundreds of thousands of young people from low-income households access the estimated £800m held in the Lost Fund.
He said Max’s story was “pretty shocking”.
“The investment company… certainly had the discretion to waive the £25 plus VAT per year and now has the discretion to refund the full amount (of the fee) along with compensation,” he said. Said.
“The next step for the family would be to talk to the (Financial Ombudsman Office), who would probably take a pretty dim view of the matter.”
Columbia Threadneedle told the BBC: “When we assess the Children’s Trust Fund, we will put particular emphasis on identifying other similar situations and assess what action can be taken if necessary. ” he said.
“Our ongoing obligations to consumers are important to us and we thank Money Box for raising this matter.”
