Teens with learning disabilities locked out of savings

By Alex Lewis and Dan Whitworth
Money Box

  • Published
James and his mother Anne with their dogImage source, Anne
Image caption,
James is one of the thousands of teenagers prevented from accessing his money

Tens of thousands of young people are effectively being locked out of savings accounts they should gain access to as they turn 18.

People like James, who has about £7,000 in his savings account.

There is no mechanism in place to allow parents of children with learning disabilities to access Child Trust Funds as they start to pay out.

So after his 18th birthday in June, James's money will just stay where it is.

The first government-backed Child Trust Funds, which were set up 18 years ago, began to pay out this month.

At the time, no mechanism was put in place for parents with children who had learning disabilities to access the money if their child was unable to.

Due to the Mental Capacity Act 2005 - designed to protect people who can't make decisions for themselves - that only leaves court action, which is a slow and expensive process, often costing more than the fund is worth.

Anne's son James has about £7,000 in his fund thanks to family and friends investing. He's one of approximately 6.3 million people who should benefit.

But because James has severe learning disabilities, is non-verbal and on the autistic spectrum, he does not have the mental capacity to make financial decisions.

'A very large exit fee'

"I contacted the company managing his trust fund and asked them what I should do. They advised me to get power of attorney, but James can't give that," said Anne.

"The only option I was given was to approach the Court of Protection to become a financial deputy.

"The court fees are almost £400 if you do it yourself, but obviously if you use a lawyer, it's much more expensive.

"I just felt that was a very large exit fee to pay to access his money."

What is a Child Trust Fund?

Children born from September 2002 were given vouchers by the then Labour government to invest for the future, with the money only accessible at the age of 18.

The savings pots could now be worth £1,000, or more if parents added contributions.

The government initially put £250 into the tax-free account during a child's first year, then added another £250 when he or she reached the age of seven.

For lower-income families, the payment was £500.

All disabled children receiving Disability Living Allowance will have received an extra payment of £100 or £200 in 2010/11 before the scheme was scrapped.

Parents, family and friends could also contribute to the account, up to set limits.

The scheme was watered down, then scrapped entirely by the coalition government.

It's estimated around 180,000 teenagers like James won't be able to access the money in their Child Trust Funds themselves.

But Labour MP Vicky Foxcroft, shadow minister for disabled people, is worried the problem may extend to other schemes, such as the Junior Isa programme.

"The government really needs to get civil servants to look into this.

"This carries on into Junior Isas in the future so they really do need to get to resolving this as soon as possible," she said.

Image source, Turner
Image caption,
Andrew and Jenny Turner say it's incredibly upsetting they'll only be able to access money meant for their severely disabled son, Mikey, when he dies

Responding to the fact it was a Labour government which set up the original scheme, she said: "I think this wasn't something that we foresaw at the time. It's something that's been raised quite a bit since 2017, so I think it's up to the current government to find solutions to this."

'Incredibly upsetting'

It's a similar story for Mikey and his parents, Andrew and Jenny Turner.

"We opened a trust fund back in 2005 but sadly, in 2011, we got a diagnosis that Mikey has a neuro-degenerative condition… so he's now severely disabled.

"The money we invested should be something he can benefit from.

"He'd like to buy a new bike with that money but [for Mikey] they are specialist pieces of equipment.

"We only found out quite recently - in order to access his savings on his behalf, we'd have to go to the Court of Protection.

"But the amount of money in his account is quite modest, so it would cost more than what he has in his savings account. So for us, it's a complete non-starter.

"The only way we can access that money for free is when Mikey dies, and we find that incredibly upsetting."

It was very difficult to get a response from the government on this subject.

HMRC referred Money Box to the Ministry of Justice, as did the Treasury.

The Ministry of Justice just referred us to the present scheme, saying it is "vital to ensure the vulnerable are not exploited".

In Scotland parents or carers would need to obtain either an intervention order or guardianship via the sheriff courts, using a solicitor.