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's 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' 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's wealth, it should be the state that bears the cost of any
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.”