Financial Planners and Junior ISA providers have been urged to support disabled young people who struggle to access their savings accounts due to lack of mental capacity.
Experts have long warned of the problem of disabled youngsters being unable to access Child Trust Funds when they reach adulthood because they lack the mental capacity to make financial decisions.
They now warn that the same structural problem could emerge through Junior ISAs, which have replaced Child Trust Funds as the main long-term savings vehicle for children. More than 1.37m Junior ISA accounts were subscribed to in the 2023–24 tax year.
The warning follows a cross-sector meeting held in the House of Commons this month, where charities, campaign groups, financial providers, policymakers and regulators came together to discuss the growing problem.
The meeting was told that an estimated £210m remains locked in Child Trust Funds belonging to disabled young people who have struggled to access their accounts.
Campaigners at consultancy SENDA, which helps advisers protect children with special needs, say families are not made aware of the challenges children may have of accessing funds when they invest.
The result is families who have invested for their disabled child’s future, experience difficulties accessing the money urgently required, which undermines their financial resilience and trust in the financial sector, says SENDA.
It points out that under Consumer Duty firms must deliver good outcomes for vulnerable customers and design products and processes that serve their target market. Where a consumer group faces forceable harm, these obligations are not being met.
Rhiannon Gogh, CEO of SENDA and specialist in disability Financial Planning, said: “The situation raises substantial questions in relation to Consumer Duty, which requires firms to identify and prevent foreseeable harm to vulnerable consumers”
“The Child Trust Fund experience highlights that this is not a theoretical issue and many families across the country, are struggling to access their Child Trust Funds as a result being unaware of the different approaches adopted by providers.
“With over a million Junior ISAs opened every year, we need to ask whether the foreseeable harm has been properly identified and addressed by providers and advisers.”
She said the risk is particularly significant given the scale of disability among young people. “Around one in five children have special educational needs at some point during their education. If the financial system does not consider how these products operate for disabled young people, who may lack mental capacity, the same barriers we are seeing with Child Trust Funds risk being repeated on a much larger scale.”
Ali Fanshawe, COO of SENDA, said the scale of the Junior ISA market means the potential impact could be significant if preventative action is not taken. She said: “With the tax year end approaching and families continuing to open Junior ISAs for their children, it is vital that the profession considers how these products operate for disabled young people long before accounts reach maturity.”