Child Trust Funds: Millions of pounds stuck in 80,000 accounts - report

Tens of millions of pounds belonging to about 80,000 young people without capacity to make financial decisions could be locked in trust funds, a report suggests.

Those families must go through court to access the savings when accounts mature - a process which can take months and cost hundreds of pounds.

Only 15 accounts were accessed this way in 2021. The government says it is unable to share more recent figures.

It says it is trying to speed up cases.

One mum told BBC News she wishes she had never gone through the "hugely stressful" process, and has advised others against it.

Michele Creed's dining room table is covered in documents, as she takes me through the year-long process of accessing her daughter Alana's savings account.

"I just can't believe I've had to do all this just to access the birthday money, Christmas money and other savings we've been putting away for her," she says.

Like the millions of others born between 2002 and 2011, Alana was given between £250 and £500 through the then-Labour government's Child Trust Fund scheme.

Families could then add their own contributions to help the savings pot grow.

Alana now has £7,500 in her account.

The 19-year-old has severe learning disabilities and lacks the capacity to make financial decisions. So, instead of being able to withdraw the money when she turned 18 like most of her peers, her family have had to spend nearly £750 going through the Court of Protection.

Michele says it was so complicated she had to go through the court process twice - costing £371 in fees each time - to make sure both she and her husband could access her daughter's savings. It took a year in total.

"It's so frustrating. Her older sister was just able to get her money without a problem, but with Alana, there was this huge block that we had to fight to get past," Michele says.

Michele is one of the few parents who has managed to withdraw her daughter's money through the Court of Protection. Ministry of Justice (MoJ) figures show only 15 accounts were accessed through the court process in 2021.

Michele wishes she "had never started" the "long, bureaucratic and expensive" process to get Alana her money, and advises other families who may be about to go to court to think twice.

"If you can leave the money where it is, and hopefully things will change one day, I would do that because it changes everything."

When a parent or carer is granted access to their child's savings, the Court of Protection makes them a deputy of the child's financial affairs.

This means Michele now has a lifelong legal duty to account for every penny she spends of her daughter's money.

She says the ongoing scrutiny feels like a "slur" on her character, pointing to her pile of receipts and spreadsheets, which are evidence of how she is spending Alana's benefits and savings.

"For many years I have been trusted to manage Alana's disability benefits as her appointee. But now, because I have had to become a deputy, I'm not trusted to manage her money," she says.

Alana loves going to Caffe Nero, so Michele sometimes spends £100 a month on going for coffees with her.

"It's her favourite thing to do, and now I feel like I've got to justify it."

A report by Renaissance Legal, a firm that supports families through the process, seen exclusively by BBC News, suggests there are more than 80,000 accounts that cannot be accessed without going through the Court of Protection.

By 2029, the year in which all of these accounts will have matured, there could be up to £210m locked away in Child Trust Funds that families have been unable to access.

Philip Warford, the firm's managing director, says in some cases young people have £75,000 worth of savings effectively locked away.

"Many of [these] families are fighting on all fronts, for the right education for their child, for the right amount in benefits, for better healthcare, and now they are fighting to get their own money back," he says.

"The financial risk posed by these families is zero - it's their money in the first place."

Laura Williams has been adding money to her 17-year-old son's account since he was born.

But she has decided not to apply to access Joel's savings of £6,000 because she doesn't want to face the "ordeal" of the court case and becoming a deputy.

Joel has Malan Syndrome, a rare chromosomal condition, and does not have capacity to make any decisions about his finances.

Laura transferred his Child Trust Fund into a Junior ISA several years ago, but the same rules around accessing the money apply.

"It's so unfair. Just because my child has a disability, he is going to be the one to suffer," she says.

Lord Blunkett told the BBC that "mistakes were made" by the Labour government that set up Child Trust Funds.

He says he and his colleagues did not foresee how the Mental Capacity Act would make it difficult for families to access the money.

"But now we need to get a bit of common sense into the issue," he adds.

"These families are trusted to handle their children's benefits - government money - by the Department of Work and Pensions. They can be trusted with their own savings."

The Ministry of Justice (MoJ) has previously considered proposals to change the process so families would not have to go to court.

But in February, after a year long consultation, it decided to keep the process as it is, in order to "protect against fraud and abuse".

The MoJ says it is simplifying the system to speed up the process. It added that most families who apply would get their fees waived but for some, if the account has more than £3,000, then it would be decided on a case-by-case basis.

When Michele went through the process last year, she was told she would have to pay the court fees.

Surrounded by her pile of receipts, she says becoming Alana's deputy has been hugely detrimental to their lives.

"Alana's savings were supposed to be something positive, but instead, what's come out of it is a life of feeling like we are being watched by Big Brother."