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&#39Baby bonds&#39 for all but single firm for gateway

Product providers from across the market would be encouraged to offer child trust funds while the savings gateway would be limited to one provider under Treasury proposals released in its pre-Budget report on Tuesday afternoon.

The child trust fund would either be available through an open market where providers could compete to offer the products or a limited pool of five to 10 providers which would vie for licences to market them.

The industry is strongly in favour of an open market, saying a pool would limit the opportunities for IFAs and would end up being dominated by the biggest players.

But final proposals for the savings gateway, aimed at increasing savings for the poor, point towards a single provider because the Govern-ment believes that providers would not find them commercially viable.

The CTF could be invested in a wide variety of savings vehicles, including passive and actively managed collective investments.

Test pilots for the savings gateway are planned for three to four undisclosed communities to test their viability.

Autif director general Anne McMeehan says: “Autif is pro-free market. We would have concerns about an automatic restriction as to the number of companies allowed to compete. I suspect that an organisation such as Consignia would suit the savings gateway well.”

Aifa director general Paul Smee says: “With limited pools you would get the market dominated by the biggest players. There is nothing in this that would squeeze advice out. However, I do not think the savings gateway would be wildly exciting to IFAs.”

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