Change to the way clients are contacted, for providers of Revenue-allocated Child Trust Funds.

The Child Trust Fund (CTF) Regulations (the Regulations) make provisions for CTF accounts under the Child Trust Funds Act 2004. 'Regulation 6' provides for the opening of accounts by HM Revenue & Customs (HMRC). The vast majority of these accounts will be opened by HMRC on behalf of children whose parents have failed to use their CTF voucher before it expired.

Regulation 6 requires account providers to open a stakeholder account in the name of the child as soon as they receive instructions from HMRC. Under its process, HMRC should tell the responsible person (for example, the parent) that the Revenue-allocated CTF has been opened, before the account provider contacts that person.

What is the purpose of the modification?

This modification will enable firms to provide safe custody services in respect of Revenue-allocated CTFs, before obtaining written agreement or giving notice as required by our rules CASS 2.3.4R and 2.3.2R.

Which firms does this apply to?

This modification is applicable only to firms that provide Revenue-allocated CTFs.

What does this mean for firms?

The practical effect of the modification is that firms can provide safe custody services in respect of Revenue-allocated CTFs, before providing the notice or obtaining the written agreement outlined in the rules. The changes are set out in detail in the modification direction.

FSA consultation process

We previously said we would consult on the amendments to these rules in the months leading up to October 2007, with the aim of making any changes at the same time as the implementation of the new Conduct of Business Sourcebook. However, we now expect to consult on the CASS regime in March 2008, which will include the application/scope of provisions for child trust funds. So we are extending the duration of this modification by consent until 31 December 2008, to cover the period of our consultation process. Firms will not be required to apply for extensions to the modification beyond 31 December 2008.

How do firms take this forward?

If your firm wishes to take advantage of this modification please write to the Waivers Team, FSA, 25 The North Colonnade, Canary Wharf, London E14 5HS, or email centralwaiversteam@fsa.gov.uk. We will write to confirm if we grant your firm a modification and we will publish each modification we grant on our website.