Ever since the child trust fund was announced, I have been trying to work out how my business can afford to take any profitable interest in this new product and Government benefit.
I now conclude that, irrespective of the lack of any real prospect of sufficient remuneration to make it worthwhile, this is a future misselling nightmare waiting to happen.
I am driven to this conclusion on reading a summary of the regulatory notes on this government invented product. 1) It must be predominantly an equity investment, 2) the child's risk profile must be assumed to be reasonably cautious.
I can just see the complaint to the ombudsman in the future and the adjudicator's response.”You were clearly told this was to be a low-risk investment, yet you recommended an equity-based product – case ruled against your firm, compensate the client”.
I suggest that as IFAs we cannot afford to accept the compliance contradictions of the child trust fund. The Treasury`s invention is a non-compliant event – and consequently a complaint waiting to happen.
Alastair Lyon Credenda& IFA Direct
Horsell, Woking, Surrey