Children’s Mutual suspends new business
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The Children’s Mutual has temporarily suspended all new business of with-profits, growing up bond and non-stakeholder Child Trust Funds.
In an online update, Children’s Mutual says it will temporarily suspend accepting new savings business from June 24, with the exception of its stakeholder CTF, which it must keep open by law to retain its CTF provider status. The coalition Government announced in May that it would scrap CTFs as part of its initial £6bn of spending cuts.
The provider says its decision to suspend new business was taken in response to the CTF changes brought in by the Government. It says the suspension will give it the chance to re-evaluate its business model.
Children’s Mutual says it will reappraise its situation in two months but stresses that the decision has nothing to do with the solvency of the firm. It says it remains committed to the with-profits market and says its with-profits fund will remain open and functioning, but will not accept new with-profits business. Children’s Mutual denies that it is one of the with-profits providers currently being investigated by the FSA. A spokeswoman says: “We are not under any FSA investigation. It is just an unfortunate coincidence of timing”.
The mutual says that all commission will continue to be paid as normal for both initial and trail commission. It will also accept new IFA CTF business until the end of July. Direct customers will still be able to use CTF vouchers until the start of 2011, when the scheme will end.
It says: “The Children’s Mutual believes that to continue to invest in sales and marketing activity for new business acquisition during this re-appraisal process and to accept new customers as members would not comply with its commitment to treat customers fairly.
“We realise that this may cause some complications for potential clients and advisers and will do what we can to assist with any difficulties caused.”
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Readers' comments (10)
Julian Stevens | 2 Jul 2010 2:27 pm
Okay ~ if this suspension has nothing to do with solvency, then just what has it to do with?
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Davie Hotdogs | 2 Jul 2010 2:30 pm
this wont affect me at all but may affect others hugely !
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Mc'swagger | 2 Jul 2010 2:46 pm
Davie hotdogs has a point.
Why the child pictured laughing? he will no longer recieve his £505 pounds for cider and a pair of jeans on his 18th birthday
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Roman Newman | 2 Jul 2010 2:46 pm
I think it is commendable that they are doing this because they are putting their existing clients before any profits they could potentially get while they taketime to asses their business model. Well done Children's Mutual for putting your customers first!
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Anonymous | 2 Jul 2010 3:22 pm
..and yet most companies manage to change their business model/restructure while remainig open for busniess...tend to be with Julian in the 'no smoke without fire' camp
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Anonymous | 2 Jul 2010 4:18 pm
They were too small to start with and have not really diversified. Sorry, but that's a high risk strategy when you're largely reliant on a single product that's govt funded!
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Harry Katz | 2 Jul 2010 6:44 pm
As I have been saying for the past 15 years (or so) these people have consistently ripped of the least well of and most vulnerable in society by flogging their third class wares by trumpeting the alleged tax advantages.
When you actually look at the returns – you could have done better in an ordinary bank account – after the tax had been deducted!
If the FSA are not investigating their lamentable With Profits they are welcome to get in touch and I’ll be pleased to show them some old cases which will likely make their hair curl. That they haven’t been hauled over the coals as yet has probably more to do with their previous director the luvvie and ex editor and consumer champion (who happen to have a hearty dislike of IFAS) - Andreas Whittam-Smith – or Andy Smith as he was during his Liverpool schooldays.
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Anonymous | 2 Jul 2010 8:29 pm
Judging by the charges they levy on my child's CTF (>5% pa on his modest monthly RP's) where do their profits go?
Time to re-assess methinks...
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Anonymous | 3 Jul 2010 7:10 am
I agree that it was stupid to start relying on, basically, one product, that was always on the cards to be abolished at sometime. Also, Mc'swagger, the reason the child is still laughing is that his parents haven't told him yet. The mother wanted the father to do the dirty deed but couldn't remember which dad he belonged to.
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Anonymous | 8 Jul 2010 7:30 am
Heads need to role over this debacle. Shall we start with the FSA for allowing Children's Mutual to fly too close to the sun??
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