Child Trust Fund to Junior ISA consultation update

Posted by Jason Chapman in Goverment and taxation category on 02 Oct 13

The consultation process is now closed and Government are currently analysing the results you and others provided.

Reponses from our customers were both interesting and varied, although unsurprisingly 100% of you wanted the ability to transfer funds from CTF to Junior ISAs.

For those interested, I thought I’d share some of the feedback. The responses below are neither correct nor favoured responses, just merely a snapshot of what you are thinking.

Do respondents believe that the transfer of funds from a CTF to a Junior ISA should be permitted?
'Yes. Speaking as a grandparent and great grandparent who has given over the years starter funds to all eight grandchildren and eight great grandchildren, anything that simplifies the present situation has to be a good thing. It will also achieve much appreciated uniformity of treatment between my offspring.'

Would allowing CTF funds to be transferred to Junior ISA have any significant impact upon the viability of the wider CTF market, including on the availability of suitable products for children whose funds remain with CTF?
'The viability of the CTF market is already at risk given they are no longer open to new accounts and Junior ISA's exist.  Allowing a transfer would at least give parents with CTF's the option to move elsewhere to maximise return.'

Would the proposed approach outlined above under ‘voluntary transfers’ provide a workable basis to allow the transfer of funds from CTF to Junior ISA?
'Yes. The system must be very simple and easy to operate for the many people who will be deterred by financial jargon and red tape. (quite unlike the complications of capital gains tax, for instance). Government assurances will not be enough.'

What would be the impact of the proposed approach, including one-off or ongoing costs and benefits for accountholders and providers?
'Clearly there would be costs associated with transfer which should be on the providers side only, but it will allow providers to increase net inflow to Junior ISAs.'

If the Government proceeds with changes to the current rules on transferability, do respondents agree that its proposal to allow the transfer of funds on a voluntary basis is the best course of action?
'My preference would be a mandatory transfer so that the CTF scheme can be fully closed down by providers. Failing this, then a voluntary transfer scheme should be introduced.'

Are there any circumstances under which a merger of CTF into Junior ISA would be preferable?
'Not if it adds even more complication. These are childrens' accounts so keep them simple. Only a tiny proportion of the most sophisticated parent investors will have any interest in a system that is more complicated than a simple ISA savings account.'

Do respondents agree with the approach to legislate to allow voluntary transfers in the first instance, but also to provide scope for further intervention at a later date, should this prove necessary as a result of developments in the CTF market?
'This seems the most rational approach. Voluntary action from those wishing it with a later review option open.'

Any further comments...
'Allowing the transfer of CTFs to Junior ISAs MUST go ahead. It is discriminatory not to allow such a move. CTFs are VERY poor value and opaque products which do no suit the majority of investors.'


Since the consultation closed, we’ve contacted Government seeking timescales on their potential next steps. Their response is below. Although, having read it, it doesn’t sound like we’ll get any quick answers!

All consultation responses received are in the process of being analysed. Once Government has decided on how to proceed, a summary of responses document will be published outlining next steps. This will be published alongside the consultation document at  
It is anticipated that any changes arising as a result of the consultation will require primary legislation, and it this that will dictate the timetable for any change.

We’ll keep you posted and hopefully have some good news for all Child Trust Fund investors in the near future.


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