Explanatory note

These Regulations amend the Child Trust Funds Regulations 2004 (S.I. 2004/1450: “the main Regulations”) which provide for the setting up of Child Trust Fund accounts. It is intended that they will be brought into force in April 2005. The main effect of the amendments is to allow early withdrawals from accounts before the child reaches 18 where he or she is terminally ill. There are also technical amendments and adjustments to the main Regulations.

Regulation 1 provides for citation and commencement.

Regulations 2 to 11, 13 and 14 provide for technical amendments to the main Regulations (most of which have been the subject of consultation with the financial services industry). It is intended that the provision made by regulation 14(b) will be temporary, hence the inserted provision signals that it will be revoked in future.

Regulation 12 makes provision for early withdrawals from accounts of terminally ill children.

Regulation 15 makes amendments to the provisions for stakeholder accounts. The main amendments are to exclude direct holdings in shares, to specify a minimum rate of interest on cash in deposit or share accounts, and to introduce safeguards for investments in securities.

A full Regulatory Impact Assessment was prepared and issued on the introduction to Parliament of the Child Trust Funds Bill (passed as the 2004 Act) in November 2003.