The Child Trust Funds (Amendment No 2) Regulations 2005
Opening page
In Budget 2003 the Chancellor announced the introduction of the Child Trust Fund (CTF) and that accounts would be available from April 2005. Children born from 1 September 2002 will be eligible for accounts if a child benefit award has been made for them and they are living in the UK.
The Child Trust Fund will :
- help people understand the benefits of savings and investing;
- encourage parents and children to develop the savings habit and engage with financial institutions;
- ensure that in future all children have a financial asset at the start of adult life to invest in their future; and
- build on financial education to help people make better financial choices
The Child Trust Funds Act 2004 received Royal Assent on 13 May 2004. This Act gives the Treasury power to make regulations in connection with various aspects of the CTF. The main CTF regulations, the Child Trust Funds Regulations 2004 (SI 2004/1450) were laid on 27 May 2004. Amending regulations the Child Trust Fund (Amendment) Regulations 2004 (SI 2004/2676) were laid on 14 October 2004, the Child Trust Funds (Amendment No 2) Regulations (SI 2004/3382) and the Child Trust Funds (Amendment) Regulations 2005 (SI 2005/1383) were made on 23 February 2005.
The present regulations were laid on 24 March. These make changes to the CTF regulations to allow credit unions to offer their cash deposit accounts for the CTF. The regulations also make a small change to the contents of the annual information return which providers will have to submit to the Revenue from April 2006 onwards.
The attached commentary provides the detail of these regulations.
Guidance notes for providers of CTF accounts are available.
Commentary
Citation and Commencement
Regulation 1 gives the title by which the regulations are to be known and the date on which the regulations come into force, which is 6 April 2005 when the Child Trust Fund scheme formally begins.
Regulation 2 provides that the Child Trust Funds Regulations 2004 shall be amended.
Regulation 3 inserts into the interpretation regulation a definition of “credit union”.
Regulation 4 inserts into Regulation 11 (5) of the Child Trust Funds Regulations 2004 wording that includes credit unions as a deposit-taker in the context of this regulation.
Regulation 5 inserts into Regulation 12(2) (k) which relates to cash deposit accounts as qualifying investments for the Child Trust Fund, a reference to credit unions.
Regulation 6 and 7 insert into the undertaking in Regulation 14 (2) (b) which relates to the acceptance of vouchers, a provision that in the case of a credit union, vouchers are to be accepted from a responsible or the child if aged over 16, who fulfils or is treated as fulfilling a qualification for admission to membership of that credit union. The qualification for admission – the common bond – is a fundamental aspect of credit unions and a credit union is not allowed to open an account for a non-member.
Regulation 8 inserts into Regulation 14 (2) (d) that a credit union who wishes to be a CTF account provider must be an authorised person within the meaning of section 31(1) (a) of the Financial Services and Market Act 2000 who has permission to carry on activities specified in Article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. This is to ensure that CTF depositors in credit unions are afforded the same level of protection had they invested with any other CTF provider.
Regulation 9 removes from Regulation 32
(2) the requirement for the annual information return from
providers to include the name and address of the child as
this information is already available through the child’s
unique reference number.
