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Children’s Mutual suspends new business

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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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 2nd July 2010 at 2:27 pm

    Okay ~ if this suspension has nothing to do with solvency, then just what has it to do with?

  2. Davie Hotdogs 2nd July 2010 at 2:30 pm

    this wont affect me at all but may affect others hugely !

  3. 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

  4. 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!

  5. ..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

  6. 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!

  7. Simon Mansell 2nd July 2010 at 5:21 pm

    Maybe another FSA failure to regulate

  8. 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.

  9. 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…

  10. Patrick Schan 3rd July 2010 at 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.

  11. 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??

  12. Alan Littleswift 5th August 2010 at 4:56 pm

    Good people who worked for TWEFS and sacrificed their jobs (over 150 of them) to enable David White to embark on a wholly self serving and politically motivated rebranding to TCM.

    In the period since TWEFS was changed to TCM the bonuses paid out to with-profits investors (the cornerstone of the TWEFS equitable philosophy for over 100 years) have dwindled to next to nothing whilst his annual salary paid for out of the TWEFS coffers has doubled to well over £540,000 per annum. It is sad a man like David White has the audacity to raise his voice when he is the only winner in all of this.

    I guess the policyholders can content themselves with the thought they in effect funded Mr White hiring helicopters to take his children to their ostentatious birthday party a few years back. Champagne socialism in its purest form.

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