View more on these topics

Investment trusts are banned from stakeholder CTF

Parents opening a stakeholder child trust fund will not be able to use investment trusts but will be allowed to invest in unit trusts.

The decision to exclude investment trusts has angered IFAs who believe investors should be able to choose the investments they believe will generate the best returns.

Product providers in the CTF market will have to offer the 1.5 per cent capped stakeholder scheme which invests predominantly in equities.

Firms can choose to offer a non-stakeholder equity-based CTF with no price cap and a cash scheme, similar to a tax-free savings account.

Some IFAs say they favour investment trusts over unit trusts as ITs tend to offer lower charges.

The Association of Investment Trust Companies says the move to exclude investment trusts is related to single-pricing and it is planning to negotiate with the Treasury.

Communications director Annabel Brodie-Smith says: “Waters have been muddied over how single-pricing works. Investment trusts already work with single-pricing as part of the Cat-standard Isa.”

Michael Philips proprietor Michael Both says: “As a sceptical parent, I would say the Government seems to be gaining a lot of political capital from CTFs but parents will gain very little. Isas would offer them greater flexibility.”

Recommended

&#39Switch to DC is set to rebound on employers&#39

Employers will suffer a fallout from the switch to defined-contribution pension schemes when today&#39s workers find out they have not saved enough to retire, says Hewitt Bacon & Woodrow. Research by the employee benefits consultancy shows only 3 per cent of employers think DC members have a good understanding of the funding levels needed to […]

Divorce Bureau offers franchise deal to IFAs

Wolverhampton firm Alexander James is developing a business that generates relationships with solicitors for IFAs. The firm is looking to franchise its Divorce Bureau operation to IFAs wanting to build up relationships with solicitors. The Divorce Bureau enables IFAs to establish professional relationships with solicitors by referring advisers&#39 clients who are going through divorce to […]

Scotts fined by FSA

The FSA has fined Scotts Private Client Services Ltd £25,000 for serious failings which led to the firm introducing US $9.7m (£6.7m) of investors&#39 funds into an authorised and apparently unlawful investment scheme. Between December 2001 and October 2002 Scotts failed to carry out adequate due diligence and introduced 34 investors to an investment scheme […]

Verity&#39s view

When the FSA first got its powers, it was all too easy to view the new, statutory watchdog as having fewer teeth and a more docile nature than its self-regulating predecessor the Securities and Investments Board. After all, SIB had launched the biggest and most expensive compensation exercise ever attempted – the £15bn-plus review of […]

Graphic content – December; the countries most exposed to a rise in protectionism

President-elect Trump has suggested withdrawing from the North American Free Trade Agreement (NAFTA) and ending negotiations over the Trans-Pacific Partnership (TPP), albeit there is considerable uncertainty over what he will, or even can, do. If one of the main consequences of the election of Donald Trump is US protectionism, it’s worth considering who stands to […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment