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.”