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Treasury widens field for child funds to societies after snub from providers

The Government wants building societies and IFAs to offer child trust funds following a lack of interest in the schemes from product providers.

Speaking in the House of Commons last week, Treasury Financial Secretary Ruth Kelly said the proposals have been modified to allow more providers in to the field.

The final details of the regulatory regime mean that a group of around 13 building societies will now be able to run CTFs. Some of the smaller societies will still not be able to offer the plans because they will not be eligible for the necessary FSA permission.

Although Norwich Union, Scottish Widows and Fidelity intend to offer CTFs and believe the plans are workable within a 1.5 per cent price cap, the idea remains unpopular with many providers.

Kelly said: “Changes that have been made include the wording of the requirement for providers to offer a stakeholder account. This has been revised to allow more providers to enter the child trust fund market.” The Treasury has also said it hopes that IFAs will sell the funds.

BSA spokeswoman Rachel Blackmore says: “Building societies should be a perfect distributor for CTFs and have considerable experience in the children&#39s savings market.”

Michael Philips proprietor Michael Both says: “I think IFAs will be interested in selling CTFs but I should imagine they ought to be sold on a fee basis. I would not expect many advisers to be interested in selling the stakeholder account though.”

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