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Children's Account Review

Helpdesk:  0845 345 6656

Children's Fund Accounts

The Court Funds Office (CFO), an associated office of the Ministry of Justice, provides a banking and investment service for funds held in court. It manages monies lodged in respect of children, including equity investments. A recent review of the children's damages awards that are administered by the CFO identified a requirement to correct a number of children's accounts, to ensure that the award is appropriately invested. 

In a number of cases the appropriate investment in equities did not take place.
We are reviewing all of our Children's accounts to identify all affected cases to ensure beneficiaries are not financially disadvantaged. The system failures, which led to this situation, are being put right to ensure awards are invested in accordance with the courts' directions without delay.

A written Ministerial Statement (WMS) in respect of this issue has today been made by Bridget Prentice, the Parliamentary Under Secretary of State in the House of Commons and Lord Hunt of Kings Heath in the House of Lords.

If you would like to read the WMS in full please click here

If you would like further information relating to this issue then please click here


Below you will find a number of questions and answers that we hope you will find helpful in better understanding whether your child's account has been affected and what is being done to correct it.  This account review exercise relates only to Children's accounts, no other clients of the CFO are affected.

We estimate that approximately 4,000 current and closed accounts are affected and that the full cost of corrective payments will be approximately £12.5m.  This is out of a total of 90,000 current children's cases holding nearly £650m in cash and investments, and 1.1 million closed accounts.

Please do not hesitate to contact one of our Response Handling Team advisors on 0845 345 6656 should you have any additional questions or concerns relating to this account review exercise.

You can also contact us in writing using the contact details below:

Children's Account Review Team
Court Funds Office
22 Kingsway
London
WC2B 6LE

Or e-mail:  helpdesk@courtfunds.gsi.gov.uk

 

Questions and Answers

If you would like to download a word version of these questions and answers, please click here.

 

1.  Is my child's account affected?

That depends on a variety of factors.  Essentially if your child was awarded £5,000 or more and was under 13 at the time of the award, their account could be affected and will be reviewed as part of this process. 

 

2.  When will I hear whether my child's account is affected and what has been done to correct it?

During the next few weeks, we will be writing to the Litigation Friends in affected cases.  Each client will receive a letter, which is personal to them. It sets out the problem, the corrective action taken, how the corrective action has been calculated in their particular case and a copy of their corrected statement of account.

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3.  Is there a number or contact address that current clients who are worried about their investment or fund can call for reassurance and clarity?

Past and present clients who feel that they fit into the category of investment because they were originally awarded £5,000 or more should contact one of our Customer Service advisors on:  0845 345 6656. Then they can write to: Children's Account Review Team, Court Funds Office, 22 Kingsway, London.  WC2B 6LE.  There is no need to contact the court that made the award.

 

4.  What actually went wrong with the accounts that are affected?

We have established that the following critical steps did not take place. Either:

 

  1. No investment direction was received from the court, or;
  2. No investment advice was sought or implemented, or;
  3. There was a significant delay in receipt of the investment directions, or;
  4. The investment direction was received but no investment advice was sought, or;
  5. The investment advice was requested and provided but was not implemented

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The cases that are affected represent a small proportion of the total amount of accounts that we manage successfully. 

 

5.  How are you correcting the accounts?

The Court Funds Office Management Board has established a dedicated Project Team to manage the recovery action necessary using internal staff.

Additionally a specialist team has been assembled to reduce and eradicate the risk involved in processing children's accounts. The systems and procedures have been exhaustively tested and validated by the compliance team and approved by the Senior Management Board.  A City firm of accountants has reviewed the computer programme that will calculate how each account needs to be corrected.  The Strategic Investment Board, which advises the Ministry of Justice on investment strategy and performance monitoring have also validated our approach.

Where we have failed to purchase any units in the Equity Index Tracker Fund, we will now purchase those units but the beneficiary will only pay the price that applied when this purchase should have taken place, with some adjustment for dividends and interest.   Where the issue is one of delayed purchase we will be paying back to the beneficiary the difference between what they paid for their units and what they should have paid.

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6.  I have already received my fund, will you be reviewing closed account?

Yes.  We will be correcting all open accounts first and will then begin the review and correction of those accounts where the beneficiary has reached the age of majority (18 years of age) and where we have already closed the account and paid out the fund.  The review of accounts is a complex and time consuming process but all accounts will be reviewed and beneficiaries contacted where corrections need to be made.

 

7.  When were these problems discovered?

In November last year a special exercise was undertaken to review and re-balance children's portfolios.  During this exercise it became evident that in a number of cases we had failed to make the necessary investments.  Consequently we initiated a review of all cases to ensure that no child beneficiary is financial disadvantaged.

 

8.  What has been done to ensure that this does not happen again?

This affects a small minority of the cases that we manage.   The system failures (and the problems go back some 20 years) are being put right. We are working with the judiciary, the Civil Procedure Rule Committee and colleagues in Her Majesty's Court Service (HMCS) in working up and implementing robust and effective procedures to ensure all cases are correctly managed in the future.