MSE News: Banks shun junior Isa launch

JimmyTheWig

chesky369 wrote: »

It's a pity the original MSE article only discusses the fact that the banks aren't producing junior ISA products yet but doesn't take the opportunity to list and review the products that ARE available - I discovered a link through the BBC money box website which does list a few products (posted on another thread on this subject) but it isn't by any means complete. I would have very much welcomed this in my decision-making process.

From the list on MSE I'd be tempted to wait a few months before choosing the "best" one.

chesky369

JimmyTheWig wrote: »

From the list on MSE I'd be tempted to wait a few months before choosing the "best" one.

That's my point though, there wasn't really a list as such - only two. No mention of Fidelity or Hargreaves Lansdowne - both of whom have sent me info. I'm not in any huge hurry but I do hope MSE get around to some kind of evaluation after 1 November.

jamesd

opinions4u wrote: »

What I don't get is why a Junior ISA paying 3% is going to be better than a, say, Northern Rock account for kids paying 3% where you can sign an R85.

With the R85 the total interest could exceed the limit that is ignored and be taxed as if it's the income of the parents. You avoid that issue with the JISA.

opinions4u wrote: »

While the £100 rule is archaic, allowing the wealthy to evade tax by sticking £60k+ in the name of each child seems a ridiculous swing in the other direction.

£3600 a year isn't that much for parents trying to do things like invest to pay university fees. I expect that lots of middle class parents will be using them to invest for that reason.

jamesd

The story is partially wrong about both the eligibility for a Junior ISA and who is within the scope of the CTF scheme.

Quoting from the very latest (until 1 November...) Guidance Notes for ISA Managers the Junior ISA eligibility is:

18.1.3 A child is an eligible child for a JISA if, when the account application is made
· they are under age 18
· they were born on or after 3 Jan 2011 or do not have a CTF account
· they are resident and ordinarily resident in the UK, or are a UK Crown servant, married to or in a civil partnership with a Crown servant, or a dependent of a Crown servant.

The story incorrectly inserts a before 1 September 2002 date that is not present in the rules. Added text: the trouble is that this excludes those who are born after then and don't have a CTF, but who are eligible for a JISA.

Moving on to the CTF scheme, the creation of new CTF accounts was barred from 3 January 2011 so it is not true that "Any child who does not qualify for a junior Isa is within the Child Trust Fund system". That is the inverse of the true picture: any (resident etc.) child without a CTF is eligible for a JISA. You can see this in the 3 Jan date: from that date it is impossible to have a new CTF account created so it is certain that the child is eligible for a Junior ISA, without any need to wonder whether they already have a CTF.

Quoting from the Savings Accounts and Health in Pregnancy Grant Act 2010 that barred new CTF account setups:

"(5A)A child born before 3rd January 2011 who would otherwise have become an eligible child on or after that date is not an eligible child".

[STRIKE]Quite a few press reports have featured that incorrect 1 September 2002 date so it is possible that it was in an earlier version of the rules and is now just being repeated by people who don't go to the primary sources.[/STRIKE]

There's simple description that can be used instead: "children without a CTF". No dates needed, so it's great for editorial use.

alanq

"National Counties BS

NEW 1ST ISSUE CASH JUNIOR ISA: paying from 1.81% to 3.01% yearly; branch, telephone and postal operated; transfers in from both cash JISAs and stocks & Shares JISAs accepted; additions permitted; transfers out on 45 day notice; min investment £1 w.e.f. 1.11.11."
https://www.emoneyfacts.co.uk/news/savings-news.aspx?newsarticleid=210135

Interesting that it will be possible to transfer S&S JISA funds into Cash JISA accounts something that is not possible between an adult S&S ISA and Cash ISA.

A^S

JamesD - is the Sep 2002 date relating to when CTF was introduced ? Hence simply expanding a little on this criteria as to who would not have a CTF account ?

* they were born on or after 3 Jan 2011 or do not have a CTF account

My daughter was born long before Jan2011 and has no CTF as she is too old for that. I expect to be able to open JuniorISA for her.

competitionscafe

chesky369 wrote: »

No mention of Fidelity or Hargreaves Lansdowne - both of whom have sent me info. I'm not in any huge hurry but I do hope MSE get around to some kind of evaluation after 1 November.

For a stocks and shares JISA, Cavendish (Fidelity or Cofunds platform) is likely to be cheaper than Hargreaves or going direct to Fidelity. http://www.cavendishonline.co.uk/investments/isas-oeics/junior-isa/

http://www.candidmoney.com/questions/question568.aspx

jamesd

A^S wrote: »

JamesD - is the Sep 2002 date relating to when CTF was introduced ? Hence simply expanding a little on this criteria as to who would not have a CTF account ?

That may have been the intent. The trouble is that those born after Sep 2002 are eligible to open a JISA if they don't have a CTF and the description given excludes them.

The simplest possible date-related description is simply "children who don't have a CTF".

jamesd

competitionscafe wrote: »

For a stocks and shares JISA, Cavendish (Fidelity or Cofunds platform) is likely to be cheaper than Hargreaves

That is unlikely to be the case:

1. Cofunds : Cavendish doesn't currently offer the option of using Cofunds for a JISA.

2. Fidelity has a 0.25% fund switching charge, HL doesn't: "If you are switching between funds rather than making a new investment, you will normally pay a switching fee of 0.25% instead of the initial charge". [STRIKE]While my checks weren't exhaustive, whenever I've checked HL against Fidelity, HL has offered matching or greater ISA fund discounts than Fidelity. [/STRIKE]So whether HL is cheaper or not will depend on the fund choice and how often money is switched between investments - [STRIKE]one[/STRIKE] two switches a year might make HL cheaper, [STRIKE]two[/STRIKE] three would make it no less than equal, usually cheaper. For buy and hold investors Fidelity via Cavendish should come out ahead, depending on funds choices, for those who switch based on economic cycles, market conditions or whatever, it is likely to be the other way around.

competitionscafe wrote: »

or going direct to Fidelity.

But this is almost certainly true because of the premium Fidelity charges for accounts created directly with them.

competitionscafe

jamesd wrote: »

That is unlikely to be the case:

1. Cofunds : Cavendish doesn't currently offer the option of using Cofunds for a JISA.

Thanks, I didn't realise Cavendish didn't offer them on the cofunds platform (I use Fidelity). However Hargreaves Lansdown are not paying any loyalty bonus on their JISA wrapper whereas Cavendish are offering the same full rebate as they do on ISAs.
http://www.cavendishonline.co.uk/why-cavendish-online/press-coverage/oct-2011-junior-isas-now-available/