An 18-year-old boy was shocked to discover his child trust fund, originally valued at £300, had been reduced to just £12.39 due to hidden fees. Max Prince from the UK was gifted the fund at birth as part of a government initiative, but recently discovered that the £30 annual administration fee was eating up almost all of his family’s expected savings. Ta.
Columbia Threadneedle, the investment firm that manages the account, had been charging an annual management fee of £30 since 2013. Prince’s family didn’t receive a notice after the move, but they didn’t know about it.
“We’ve been waiting for this for 18 years,” Prince told the BBC. “We were hoping to find something like at least £300, but instead we saw a figure of £12.39.”
“It was certainly shocking and outrageous in some ways, to say the least,” he said.
The fund is part of the Children’s Trust Fund (CTF) scheme, launched by then Chancellor of the Exchequer Gordon Brown in 2002 to encourage long-term savings for children born between September 2002 and January 2011. It was part of it. Each eligible child received at least £250 from the government. . But after the family moved, the letter detailing the new charges never arrived.
Columbia Threadneedle said it contacted the family but did not receive a response, adding that the returned mail meant it was unable to update Prince’s parents about the fee structure. “This is not the outcome we want for any of our customers,” the company said.
Mr Prince’s account was worth more than £300 by 2012, but it gradually depleted with the introduction of a £30 fee starting in 2013, according to scrutinized statements. By this year’s expiration, almost the entire amount had been absorbed into fees, significantly exceeding the program’s annual fee cap of 1.5%. Mr Prince’s fund faces an effective fee rate of more than 10% a year, according to BBC estimates.
Columbia Threadneedle said Mr Prince’s CTF share account had a special fee model with an annual management fee of £25 plus VAT. The company noted that the account requires families to “actively make investment decisions,” adding that fees cannot be adjusted without direct communication from the customer.
Prince’s family, who now live in Cambridge, claimed they had updated their information with the postal service and set up mail forwarding but had not received any notifications. The company is currently considering filing a lawsuit, calling the fee structure “unreasonable.”
In response to the incident, Columbia Threadneedle said it would investigate similar accounts and identify other customers who may be affected. “When assessing children’s trust funds, we place particular emphasis on identifying other similar situations and assessing what action, if necessary, can be taken,” it added.
“Our ongoing obligation to consumers is important to us.”
