Mat Prince
Max shortly before his £250 Child Trust Fund reached £12.39 after 18 years of investing
When Max Prince turned 18, he got the Child Trust Fund his parents opened when he was born – only to discover by surprise that the fees had left him with just £12.39.
He was one of around six million babies, born between September 2002 and January 2011, who all received at least £250 from the government to boost their economies.
The idea was that the tax-free long-term savings pot would increase in value before their 18th birthday.
When Max's fund matured, the investment company Columbia Threadneedle was in charge. He said he had written to his parents regarding an annual sum of £30, but the letters were returned unopened. The family had moved, and over the years the costs ate up almost all the savings.
Children's trust funds were set up by the then chancellor Gordon Brown with strict rules on the amount of fees that could be charged.
The first of these funds began maturing four years ago, when these babies started to turn 18 and, like Max, were informed that they could finally access their savings.
“We've been waiting for this letter for a while, I mean, we've been waiting for it for 18 years basically,” Max said.
“So one morning when me and my family opened this letter, hoping to find at least £300 or so, we instead saw the figure £12.39. Not £120, nothing… just £12.39 .
“It was certainly shocking to say the least, and it’s also a bit scandalous.”
Mat Prince
Max's mother and father initially set up the Child Trust Fund with F&C Investments, but after a series of buyouts in the sector, the fund eventually ended up with Columbia Threadneedle.
“It’s inexplicable”
Statements seen by the BBC show the fund was worth just over £300 in 2012.
But from 2013, an annual £30 administration fee started on the account which Max's parents said they knew nothing about.
The maximum fee allowed on children's trust funds was set at 1.5%, but the BBC calculated that the maximum was actually charged 10% and more each year.
The fund was initially administered by F&C Investments, but after a series of buyouts in the sector it ended up at multi-billion pound investment firm Columbia Threadneedle as it matured.
He told the BBC that the type of account Max's parents chose was a CTF Shares account, which has a different fee model. Subsequently, the £25 plus VAT fee was for the administration of the account and not the underlying investment.
The company told the BBC it tried to contact Max's parents when it set up “the current billing structure” but his letters were returned unopened.
Max's parents said they had moved and had not received the letters despite having a forwarding system in place. They said they knew the details of Max's fund and knew when it was due to mature, but did not expect to be contacted before then.
Columbia Threadneedle said its Child Trusts Funds “require clients to actively make their own investment decisions and without client authorization and communication, we are unable to take action on their behalf.”
Mat Prince
Max Prince as a child shortly after his parents opened their government-backed children's trust fund to him.
Max's parents told the BBC they were unhappy with this explanation and would contact the company to complain.
Max said: “The money was originally intended by Gordon Brown to help future adults get off the ground a bit, to move forward in life.
“All in all, it can't be a lot of money for the company, can it? It's only around £300, so it's unfair in my opinion.
“You could say cruel. It's inexplicable, I think that would be the best way to put it.”
Unclaimed Money
The average amount of children's trust funds is estimated to be around £2,000 due to growth over the years and additional money invested by family and friends.
But many funds go unclaimed because people simply don't know about them.
Gavin Oldham is an investment expert with decades of industry experience who now runs a government-backed organization that helps locate lost children's trust funds. He is campaigning to help hundreds of thousands of young adults from low-income households access an estimated £800 million held in lost funds.
He said Max's story was “a pretty shocking story”.
“The investment company… certainly had the discretion to get rid of that £25 plus VAT a year, and they now have the discretion to refund the full (fee) plus compensation as well,” he said. he declared. said.
“The next step for this family is to go and speak to the (Financial Ombudsman Service) and they would take a dim view of that, I imagine.”
Columbia Threadneedle told the BBC: “As we evaluate our children's trust funds, we will be particularly focused on identifying other similar situations to assess what, if any, action we can take.
“Our ongoing duty to the consumer is important to us and we thank Money Box for raising this case with us.”
