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Autif plea for no cap on baby bonds

Autif is urging the Government not to impose a 1 per cent charging cap on

child trust funds but believes that, even with higher charges, there will

not be room for advice.

In a response to the Treasury&#39s consultation paper, Savings and Assets For

All, Autif makes a strong argument for child trusts to allow equity

investment but stresses that the small sums involved will provide few

economies of scale for fund managers.

As a result, it says investment houses should be allowed to charge at

least 2 per cent a year but says even this would not be enough to

incorporate fees or commission for advisers.

Instead, Autif suggests that the Treasury bypasses IFAs with the

introduction of baby bond decision trees similar to those provided by the

FSA for stakeholder pensions.

Autif is also calling on the Government to allow siblings&#39 trust funds to

be consolidated and for parents and grandparents to be given income tax

relief on top-ups to the funds.

It says if the Government decides to give bonds of varying sizes depending

on each family&#39s wealth, it should be the state that bears the cost of any

means testing.

Autif director general Dick Saunders says: “Several of our member firms

are exploring the development of appropriate products. We call on the

Government to ensure that the scheme is des-igned to enable equity-based

funds to participate.”

Aifa director general Paul Smee says: “This seems to be downplaying the

need for advice. The more choice – and the Treasury seems keen to offer

choice with these – the more that advice will be needed.”

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