UK government will not change MCA 2005 to give parents access to small savings accounts
The government consulted on the plan in 2021–2022, mainly due to parents' difficulties in accessing child trust funds (CTFs) held by banks in the name of children who had turned 18 but lacked capacity. The same issues also affect anyone who cares for someone who lacks mental capacity and may require access to small amounts of money to support the specific needs of that person. The current system requires a family member or guardian to apply to the England and Wales Court of Protection (EWCOP) to manage such funds, but obtaining the required form of legal authority under the MCA 2005 can be disproportionately costly and lengthy, considering the small amounts of money usually involved. At the time of the consultation, the process took over 20 weeks and cost GBP371 in fees.
The ministry's proposal was to allow withdrawals and payments of up to GBP2,500 from cash-based accounts, such as a CTF or junior ISA, without needing the EWCOP’s permission. Although most of the consultation's responses supported the idea, it did not reach a consensus on how to achieve it. Some respondents stressed the importance of maintaining the principle that adults must obtain proper legal authority to access or deal with the property belonging to another adult and suggested that the proposed safeguards against abuse, fraud and coercion were insufficient.
Others pointed out that many people did not understand the need to have legal authority to access funds for the people they care for and parents were not adequately informed about the steps they must take to make decisions on their child's behalf when they reach adulthood. This left many parents feeling frustrated that they could not access their children's accounts once they reach 18. Moreover, some would be deterred from applying to the EWCOP by the length, number and complexity of the application forms, the perceived costs and the long delays, as well as the fear of having to physically attend court and the feeling of being 'judged'.
The Ministry of Justice has now concluded that this lack of understanding is the root cause preventing people from accessing funds on behalf of another individual. Instead of amending the MCA 2005 by adding a small payments scheme, it intends to encourage the EWCOP to improve the application process through digital access. The EWCOP has already made significant progress in this area in the past three years, cutting processing times from 24 weeks to two months. The ministry will also try to raise awareness among parents and other carers through their engagement with the Department for Work and Pensions, special educational needs and disabilities schools, social workers and banks.
The Ministry's consultation response notes in passing that some banks and other financial institutions have operated 'informal or exceptional' policies to release child trust fund monies held on behalf of young adults to their family members. Alex Ruck Keene KC (Hon) TEP, Barrister at 39 Essex Chambers, urged such institutions to 'consider carefully the basis upon which they are releasing such monies, and the advice that they are giving to the family members to whom they releasing it'.
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