Compensation Award to a Minor - Are childrens 'best interests' really being met?

butterflymum

Recent involvement in a child being awarded a small settlement via court, following an RTA, leads me to question does the system really have the best interest of children at heart? The following link is to a Northern Ireland leaflet explaining the system, albeit I understand that a similar system is in place in rest of UK.

http://www.courtsni.gov.uk/en-GB/Services_New/FundsHeldInCourt/Introduction+to+the+Court+Funds+Office/?UserPref=culture^en-GB

Basically, in the case of a small award, the money is placed in a Deposit Account at the Court Funds Office, and kept there until the child turns 18. The leaflet above states, "We aim to provide an efficient service , paying interest rates that are competitive to those paid by private institutions" and then adds "rates are currently 0.5% for Minors".

Herein lies my concern. To me, this rate does not seem competitive at all. For instance, our children have Halifax Save4it accounts, which at the moment pay 1.05%, and even this is probably low compared to some other current savings accounts for children (note to self: check if we need to move their accounts).

So, even from this example, it is not difficult to work out that any monies awarded to a child through the court and held by the court until they are 18, could earn much better interest elsewhere. And given that in some cases the money could be being held for a number of years (say 5 or 10 or more), then with conventional accounts, there is the possibility of a higher rate in a 'fixed rate' account (albeit there are risks if interests rates rise during the fixed term).


I do fully appreciate and understand that monies a child is awarded in compensation are rightfully for the child and that in dealing with them in the way they do, the courts intention is to avoid any parent or guardian benefiting from same by gaining the funds and using them for themself, however, I do not think that this should entitle the courts to invest such monies on behalf of children in an account which is allegedly 'competitive' but clearly is not and so long term does not fulfil the 'best interest at heart' ethos.

A new campaign for Martin to consider, perhaps?

What do others think?

Mikeyorks

I don't think you quite gave the complete picture? :-

We invest minors’ funds in two ways depending on the amount of the award and the age of the minor:

1. We seek advice from our stockbrokers on the investment of the funds in Government Gilts and certain Investment Trusts (for amounts over £5,000 where the minor is under 14 years of age).
2. If under £5,000 the funds will be placed in a Deposit Account which pays competitive gross rates, currently 0.5%, with instant access (required if a payment out is granted by the Court).

- both the instant access / the fact that this is Ireland and the need to take excessive care of money 'in trust' all legislates against anything other than safe - therefore fairly mediocre cash rates.

And - I think you will find the Save4it is about the best instant access account for under 11 years (source http://www.moneysavingexpert.com/savings/child-savings-tax-free#normal )

dunstonh

You can make proposals to the court for alternatives. They have to approve it but that is easy enough with a sound proposal.

fairyprincess

Hi

I have recently been through the process of requesting that the funds for my son be transferred to a higher interest account. It was a lengthy but easy enough procedure to go through. You have to contact the court funds with your request, then attend a meeting with your child, if requested, and put your case across to the Master in charge of the funds. It was all agreed and the funds are now in a bond, however, it was my responsibility to sort this out and several bonds were withdrawn before the funds were paid out which was a pain. The procedure is in place to protect the funds for the children which is understandable. However, I do agree that the 0.5% interest rate being paid is not really in the interest of the child, however, the security of the money is and this seems to be the main concern. It cannot be guaranteed that the court will agree to release the money as each case is individual.

butterflymum

Thanks for input, folks......and especially thanks for sharing your experiences, princess, well done you, albeit I do still feel that there shouldn't be a need for a lengthy procedure if the 'best interest of children' ethos was being adhered to in first place...yes, keep the money secure, but the Court Funds Office should also pay what they say they will, ie rates that are competitive to those paid by private institutions ...it is on this point they are sadly lacking.

Mikey, erm, there was no intention on my part to mislead, if indeed that is what you assumed I did by querying had I given the complete picture.

I gave the 'picture' in respect of one issue, and assumed (yes, dangerous to do, I know, as some folks will always say it is better to spell things out in black and white, even if it makes for a much longer post), that 'small' and comparison with instant access savings account, would have indicated that my concerns were with the 2nd way of investing funds ie a Deposit Account. The 1st method had no bearing on the issue I was raising (albeit might in itself also raise issues for concern), and I assume, anyhow, that it would pay entirely different rates. So, whilst I perhaps did not draw attention to it specifically, or base my post on it, the link I provided covered all aspects of the system, including method one.

Further, I am not sure what you mean by 'the fact that this is Ireland', as the link is to the system in Northern Ireland, as was stated in my opening paragraph. Northern Ireland is part of the UK, whilst Ireland is not. And, as I also said, I think the system in NI is similar to that in rest of UK.

I am glad that you do seem to agree the rate seems rather mediocre, but disagree that this should have to be the case, given that the Court Funds Office themselves state, as I quoted, We aim to provide an efficient service , paying interest rates that are competitive to those paid by private institutions.

Part of my reason for feeling strongly on the matter is that the principles laid down in the United Nations Convention on the Rights of the Child includes:

• Art 2, Children shall not be discriminated against and shall have equal access to protection.
• Art 3, All decisions taken which affect children's lives should be taken in child's best interest.

And whilst the keeping of the monies until the child is 18 can be considered a good thing and one which I don't have a problem with, surely then, they are being discriminated against if they are not being given the chance for their monies to be in an account that is paying the best possible interest at that given time, and their 'best interest' criteria is only fully met if it is done in such a way as to be comparable with the best of other Children's accounts to which, under normal circumstances, a child can save in.

Picture it, in say 10 years time or however long their monies have been held, a child, having been encouraged by the new emphasis on Financial Education in schools that Martin is pushing for (the now closed http://www.financialeducationpetition.com/ was part of this) and having perhaps had parents who also encouraged wise choices regarding money issues, discovers they have a sum due to them from a Compensation Award, but that those with their 'best interest at heart', allowed the monies to sit in an account that only accrued mediocre interest. I wonder how they will feel and what respect they will have for what they have been (hopefully) taught.