Advisers have slammed F&C Asset Managment for its decision to introduce a £25 annual charge plus VAT on investment holdings in its child trust fund range.
The asset manager, which was one of the biggest players in the CTF market, says it is giving investors two months’ notice of the pending charge. Two charges of £12.50 each will be levied through the year with the first charge being made on 5 October 2013, covering the April 2013 to October 2013 period.
F&C head of investment trusts Marrack Tonkin says: “The charges are being introduced in order to help F&C cover the administrative costs of running our savings plans, such as the processing and servicing of accounts. These are costs which have previously been borne by F&C and the investment trusts themselves.
“Should they choose to close their account an investor needs to provide written instruction to F&C. There is no charge applied to any investor wishing to transfer their CTF holding from F&C.”
An F&C spokesman refused to disclose its assets under management in the CTF market.
Chelsea Financial Services managing director Darius McDermott says: “One of the reasons you want access to investment trusts is because there were no additional charges. I think it is wrong of F&C and gives further evidence that CTFs should be merged with Junior Isas. There is very little alternative choice for investors in these funds.”
Informed Choice managing director Martin Bamford says: “F&C is failing investors over costs and it is putting pressure on those investors with small CTF pots which will be eroded into very quickly. There is an element of the Government being to blame here but when someone invests in a product for 18 years you expect consistent costs and not to see the goalposts moved. The asset manager would be better placed selling its CTF book.”
F&C says it will give a £20 top-up CTF investment to those looking to transfer with up to £250 in a CTF.
CTFs were initially launched in 2005 with children born after 1 September 2002 receiving an initial subscription from the government in the form of a voucher for at least £250.
In May 2010, the Government announced that the products would be scrapped in a raft of spending cuts. CTFs were initially scaled back from £250 to £50 in August 2010 before being abondoned completely in January 2011 and replaced with Junior Isas.