CashNews.co
A man has been left “shocked” to find that surprise fees slashed the money in his £250 savings account to just £12.39.
Max Prince was one of the six million babies born between September 2002 and January 2011, granted a Child Trust Fund.
The Government contributed £250 to each account to jump start savings, aiming for the funds to grow by the time the child turns 18.
The first group of funds began to mature around four years ago, prompting providers to send letters notifying individuals that they could finally access their accounts.
This is when Mr Prince was informed he had only £12.39 left to withdraw, BBC Moneybox reported. Mr Prince told the BBC: “It was certainly shocking, to say the least, and it’s kind of outrageous as well.”
The BBC obtained statements showing the fund was valued at just over £300 in 2012. However, in 2013, a £30 annual administration fee began, which Mr Prince’s parents were not aware of.
While Child Trust Funds have a maximum charge of 1.5%, the BBC found that Mr Prince faced annual fees exceeding 10%. Initially managed by F&C Investments, the fund eventually came under the management of Columbia Threadneedle.
Columbia Threadneedle explained that Mr Prince’s parents chose a CTF Shares account with a different fee structure. The company said it attempted to contact them regarding the new fees, but the letters were returned unopened.
Mr Prince’s parents, living in Cambridge, indicated they did not receive this correspondence after moving, despite setting up a mail forwarding system. Columbia Threadneedle noted that customers must actively make their own investment decisions, and without proper communication, they cannot act on their behalf.
Gavin Oldham, an investment expert who runs a government-backed organisation that helps locate lost Child Trust Funds, described Mr Prince’s story as “fairly shocking”.
He noted that the investment company “certainly did have the discretion” to get rid of that £25 plus VAT charge per year, before suggesting the family contact the Financial Ombudsman Service.
Columbia Threadneedle told the BBC: “As we assess our Child Trust Funds, we will place a specific focus on identifying other similar situations to assess, as appropriate, what action we can take. Our ongoing duty to the consumer is important to us and thank Money Box for raising this case with us.”
Hundreds of thousands of people are yet to cash in their Child Trust Funds, which are worth an average of £2,212 each, according to HM Revenue and Customs (HMRC).
Those who do not know where their account is can use the online tool on GOV.UK to find out. Claimants will need their National Insurance number – which can be found easily using the HMRC App – and their date of birth to access the information.