The Financial Conduct Authority (FCA) has launched a review of child trust fund providers to ensure they are treating savers fairly and making sufficient efforts to reunite young people with their lost accounts. Approximately 760,000 accounts, with an average value of around £2,000 each, remain unclaimed, amounting to more than £1.5 billion in total.

Child trust funds were introduced as part of a government saving scheme for children born between September 1, 2002, and January 2, 2011. Under the scheme, which ended in 2011, families were given at least £250 upfront to encourage saving. Accounts continue to mature until 2029 as the account holders reach 18 years old. In total, around 6.3 million children had accounts opened under the scheme.

The FCA’s review will involve 55 providers and will focus on how they are attempting to trace customers who have lost contact with their child trust funds. The regulator will also examine any obstacles faced by parents and guardians of vulnerable individuals in accessing these funds. Additionally, the FCA will assess the fairness of fees and charges applied, in line with the 2023 consumer duty rules designed to ensure good customer outcomes.

Chris Knight, the FCA’s director of insurance, emphasized the importance of child trust funds in supporting young people’s financial futures but warned that many risk losing access to money that belongs to them. The FCA also cautioned against claims management companies that charge fees for tracing lost accounts, noting it has seen cases where individuals were charged up to £400 or subjected to ongoing subscription fees for one-off tracing services. The FCA encourages parents and young adults to use the free checking service offered by HM Revenue and Customs (HMRC) to locate any unclaimed savings.

The regulator’s actions aim to strengthen consumer protection, improve the reconnection of savers with their funds, and prevent unfair charging practices related to the recovery of child trust fund savings.