Max Prince was devastated when he discovered that his Child Trust Fund, which his parents had opened for him when he was born, had matured with a balance of only £12.39. Like six million other babies born between September 2002 and January 2011, Max received at least £250 from the government to start their savings. Investment firm Columbia Threadneedle was managing Max’s fund when it matured, and surprise charges wiped most of the savings over the years.
Child Trust Funds came into being when Gordon Brown was Chancellor, with specific rules about the amount of fees that could be charged. The first of these funds started maturing four years ago, as those who received them started turning 18 and were notified that they could finally access the savings. Max’s parents set up the fund originally with F&C Investments, but the account was eventually transferred to Columbia Threadneedle, a multi-billion pound investment firm.
In 2013, a £30 annual administration charge began on the account, which Max’s parents said they knew nothing about. The maximum fee permitted on Child Trust Funds was 1.5%, but the BBC has calculated that at present, Max was effectively charged more than 10% a year. The company advised the BBC that the account was a CTF Shares account, but that it had a different fee model, and the £25 plus VAT charge was for administering the account, not for the underlying investment.
Max’s parents said they had moved house and did not get the messages despite setting up a forwarding system. They said they knew the details of Max’s fund and knew when it was scheduled to mature, but had not expected to receive a letter before then. Columbia Threadneedle said that its Child Trusts Funds “require customers to actively make their own investment decisions and without authorisation and communication from customers, we are unable to take action on their behalf.”
Many Child Trust Funds are now unclaimed because individuals are unaware of them, although the average sum in these funds is predicted to be about £2,000 due to growth and additional investments made by families and friends. Gavin Oldham, an investment expert with decades of industry experience who now runs a government-funded organisation aiming to locate lost Child Trust Funds, called Max’s case “a fairly shocking story.
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