UK Teen Discovers Child Trust Fund Left With Just 12 Pounds After Surprise Fees

An 18-year-old was shocked to discover that his Child Trust Fund, initially valued at 300 pounds, was reduced to just 12.39 pounds due to a hidden fee. UK's Max Prince, gifted the fund at birth as part of a government initiative, recently found that a 30-pound annual administration fee eroded nearly all the savings his family expected to grow.

Columbia Threadneedle, the investment firm managing the account, charged a 30-pound annual administration fee starting in 2013, something Mr Prince's family was unaware of after they moved and didn't receive notifications.

“We'd been waiting 18 years for this,” Mr Prince told the BBC, “expecting to find at the very least 300 pounds or so, we instead saw the number 12.39 pounds.”

"It was certainly shocking, to say the least, and it's kind of outrageous as well,” he said. 

The fund was part of the Child Trust Fund (CTF) scheme, launched by then-Chancellor Gordon Brown in 2002 to encourage long-term savings for children born between September 2002 and January 2011. Each eligible child received at least 250 pounds from the government. However, after the family moved, they didn't receive letters detailing the new charges. 

Columbia Threadneedle explained that attempts to contact the family went unanswered, adding that returned mail meant they couldn't update Mr Prince's parents on the fee structure. “This is not the outcome we want for any of our customers,” the firm said. 

Statements reviewed show that by 2012, Mr Prince's account was worth over 300 pounds, but the introduction of the 30 pounds fee, which started in 2013, slowly depleted it. By the time it matured this year, nearly the entire amount was absorbed by charges, significantly exceeding the programme's 1.5 per cent cap on annual fees. The BBC calculated that Mr Prince's fund faced an effective fee rate of over 10 per cent annually.

Columbia Threadneedle explained that Mr Prince's CTF Shares account was subject to a specific fee model, including a 25 pounds plus VAT charge annually for administration. The firm noted that the account required the family to “actively make investment decisions,” adding that it couldn't adjust fees without direct communication from customers.

Mr Prince's family, who now lives in Cambridge, argued they updated their information with the postal service and set up mail forwarding but did not receive any notifications. They are now considering a complaint, calling the fee structure “unreasonable.”

In response to the case, Columbia Threadneedle said it would review similar accounts to identify other customers potentially affected. “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,” the firm added.

“Our ongoing duty to the consumer is important to us.”