FCA Warns Consumers on Tracing Fees for Child Trust Funds and Launches Sector Review

The UK Financial Conduct Authority (FCA), in coordination with HM Revenue & Customs (HMRC), has issued a warning to consumers regarding third-party claims companies charging high fees to locate unclaimed Child Trust Funds (CTFs). According to figures from HMRC, around 760,000 matured Child Trust Funds remain unclaimed, with an average value of £2,000 per account. The FCA noted that commercial firms, including those advertising across social media platforms, have been charging significant fees or taking a percentage of payouts to locate these pots. In some instances, consumers have been charged up to £400 or enrolled into ongoing monthly subscription models for a one-time search service. The regulator stressed that tracing accounts is entirely free through official government channels on GOV.UK, warning consumers against handing over portions of their savings to intermediaries. Chris Knight, Director of Insurance at the FCA, stated that account holders should not pay third parties for an administrative process they can easily execute themselves at no cost. From a regulatory standpoint, the FCA highlighted a key jurisdictional limitation: while claims management companies offering tracing services may hold FCA authorization for other business lines, tracing a Child Trust Fund itself generally does not require FCA authorization. Consequently, consumers using these tracing services may not benefit from regulatory fee caps or retain the right to escalate complaints to the Financial Ombudsman Service. Alongside the public alert, the FCA announced that it is launching a formal review into the Child Trust Fund sector. The review will assess how providers maintain contact with account holders when they reach age 18, whether barriers exist for vulnerable young adults attempting to access their funds, and how firms are fulfilling their obligations to deliver fair value under the Consumer Duty. The regulator plans to publish its findings next year.