The Government has decided against developing a scheme that could have allowed the parents of teenagers who lack mental capacity to access small payments from child trust funds without going through certain legal processes.
Concerns have particularly focused around parents wanting to access matured child trust fund (CTF) accounts belonging to young adults who lack mental capacity.
The Government explored whether there was a case for an alternative process for authorising the release of small payments from a range of cash-based accounts to suitable recipients, and, if so, what such a process could look like.
A previous Ministry of Justice consultation on small payments considered this proposal. Under the proposals, payments up to a total sum of £2,500 may have been allowed.
The Government said that, through the consultation responses, it became clear that the lack of access to small payments has arisen due to issues with operational requirements in the current court application process and a lack of awareness of the Mental Capacity Act.
This will be frustrating for the parents of teenagers who are locked out of their child trust funds— Sarah Coles, Hargreaves Lansdown
The Government added: “The Ministry of Justice will focus on addressing the key barriers to accessing payments, and not seek to develop a small payments scheme”.
It said that focusing on the application process to make it easier to complete and raising awareness of the Mental Capacity Act will address the root cause of the problem.
The Ministry of Justice will now embark on a programme of awareness raising and will engage with other Government departments, financial service providers and charities so that people are aware of the need to obtain legal authority for adults lacking capacity, and in the case of 16 to 17-year-olds who lack capacity, to do so in good time before they reach 18.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “This will be frustrating for the parents of teenagers who are locked out of their child trust funds.”
She added: “If you’re in this position, it’s worth checking with the organisation that holds the assets.
“At the moment financial institutions can make their own decisions to release small sums where there is an urgent need, so there may be a simpler approach on offer after all.”
