Nationwide Future Saver (child account) rate drop

retepetsir

I received letters this morning too, regarding our children's Future Savers. I knew the BoE rates dropped from 0.75 to 0.25 then 0.10% but very surprised its then dropped their rate by 2.5%? Disappointed for the kids really. 

michaels

Bit I dislike is putting the bit about the boe rate in the letter like we are all stupid and think that a 0.65% boe reduction equates to a 2.5% reduction - why not just be honest and say commercial decision?

DiggerUK

michaels said:.........why not just be honest and say commercial decision?

It's even more deceitful then that.
Following GFC1 in 2007/8, banks were forced to separate vanilla retail operations from the riskier investment arms. BOE base rates do not impact on savings a/c interest rate status.
All they are trying to do is fool people..._

carotearoa

I was super frustrated to get these letters this morning too, having only jumped through the hoops to open the accounts a couple of months ago. I've got the Coventry JISA and Halifax Kids RS and Saver open, but I'm assuming those rates will plummet shortly too. The thing I really liked about the Future Saver was that there was an element of retained parental control when the children turn 18 - "The account will remain in the name of the adult (with parental responsibility) until the adult transfers the new account, into the child’s sole name", whereas with an ISA they get informed at 18 and can do what they want with it straight away. I've seen some other accounts explaining the account is 'in trust', but they're not as explicit about how it will be handled as Nationwide are. As far as I understand, having the account 'in trust' would still mean they gain instant access when they turn 18.
Grateful for any advice, or if anyone knows of an account with a similar approach to the Future Saver.

wmb194

carotearoa said:

I was super frustrated to get these letters this morning too, having only jumped through the hoops to open the accounts a couple of months ago. I've got the Coventry JISA and Halifax Kids RS and Saver open, but I'm assuming those rates will plummet shortly too. The thing I really liked about the Future Saver was that there was an element of retained parental control when the children turn 18 - "The account will remain in the name of the adult (with parental responsibility) until the adult transfers the new account, into the child’s sole name", whereas with an ISA they get informed at 18 and can do what they want with it straight away. I've seen some other accounts explaining the account is 'in trust', but they're not as explicit about how it will be handled as Nationwide are. As far as I understand, having the account 'in trust' would still mean they gain instant access when they turn 18.
Grateful for any advice, or if anyone knows of an account with a similar approach to the Future Saver.

You can argue about the legalities - if it has indefeasibly vested then it’s theirs at 18 or 16 in Scotland and they could sue you for it - but I know Barclays has the same approach:

” 3. Terms that apply after the Children’s Instant Saver Issue 1 Terms

3.3 Until you giveinstructionsforthefundsintheaccount to be transferred to the child, the account will remain in your name and the trust will continue. It is your responsibility to determine when the funds in the account should be transferred to the child under the terms of the trust and give us the necessary instructions shortly before that date. As soon as the funds in the account are transferred to the child, any bare trust will terminate and your obligations as trustee will come to an end.”

bowlhead99

carotearoa said:

The thing I really liked about the Future Saver was that there was an element of retained parental control when the children turn 18 - "The account will remain in the name of the adult (with parental responsibility) until the adult transfers the new account, into the child’s sole name", whereas with an ISA they get informed at 18 and can do what they want with it straight away.

I've seen some other accounts explaining the account is 'in trust', but they're not as explicit about how it will be handled as Nationwide are. As far as I understand, having the account 'in trust' would still mean they gain instant access when they turn 18.

An account in trust doesn't give instant access, it only gives access when the trustee agrees that it will no longer be a trust. The simplified version of the explanation is below (warning - still quite long ) 

As children don't have legal capacity, childrens' accounts have an adult on the account too and are usually established as a 'bare trust' where the parent or guardian is trustee (and the legal owner of the account) and can sign up to terms and conditions and give instructions under those terms and conditions, while the child is the only beneficial owner of the account and ultimately owns the money and the interest earned from it. 

Once the child is old enough to have their own legal capacity, the fact that it's a bare trust with them as the only beneficiary means that they can demand that the parent or other person who has the position of trustee takes the money out of trust and gives it to them to manage for themselves. To save the bank from having to literally take the money out of the 'trust' account and send it to a new account, that's usually accomplished by the trustee signing a form to say they are handing over the whole account and are no longer responsible for it, and the (former) child will become both the legal owner of the account and beneficial owner of the account, rather than just the beneficial owner of the account. And at the same time the T&Cs will often get updated for it to be operated as a 'grown-up' account perhaps with different interest rate etc.

As wmb says above, it's common that the bank or building society like Barclays or Nationwide will need an explicit agreement from the trustee to let the child have it, even if the child is old enough, and this will often be in the T&Cs to avoid doubt.  Because the trustee is the legal owner of the account and its contents, even though the child is beneficiary, so the trustee needs to give instructions to change it. When they have legal capacity, the former child can demand to the trustee that the money is released to them, and if the trustee doesn't initially go along with that , the former child can sue the trustee for the return of its rightful property. But they can't demand to the bank  that it's released to them, because if it's a trust, the beneficiary doesn't have control over the account - it's the trustee that has the control relationship with the bank.

So although you say that Nationwide has an 'element of retained control' once the child is an adult, that doesn't mean it's fine for you to deny access to the money to your child until you feel like it at age 21 or whatever you have in mind. If they're old enough under the law, then the moment they say they want it, the law says you have to give it to them as soon as practically possible because the trustee of a bare trust must hand over the assets to the beneficiary if the beneficiary has legal capacity and asks for it. The bank or building society will know that you have to hand it over as soon as you're asked to do that, but they will wait for you to tell them that you're willing to do it. If you're not willing to do it and won't instruct them, and you are the only person who is authorised to give instructions, then by default they would do nothing. They will simply follow the law, which means if you're the trustee, then only you, or a court, could tell them to change the legal ownership of the account to someone else, even if that someone else is known by them to be the ultimate beneficial owner.

A 'bare trust' does not mean that the beneficiary is under 18, it just means that the trust is specifically set up with a known individual as the beneficial owner of all the assets and liabilities of the trust. So having established a trust when the account was first opened, the default position from the perspective of the bank or building society (or investment firm, if it's an investment account) is that the trust continues even if the beneficial owner become age 18+, until the trustee signs off that it should not continue. Adults can be beneficiaries of bare trusts just like children can. 

So in practice you could say to the 18 or 19 or 20 year old child: yes I've got your money, and yes you're an adult, and yes you read on Google that I have to hand it over to you if you want it... but I put all the money into this account and I don't want you to spend it on beers and a beach holiday with your friends , so if you're still living under my roof you will just accept that you should follow my rules - and the bank won't listen to you because it's 'my' account (from the perspective of who legally controls it) until I tell them to change it. So you are going to have to sue me if you want it. A rebellious child may then choose to look up on Google how to go about suing a parent to get hold of their rightful property, but most would just go along with what their parents say because it is generally a lot more lucrative to have parental support for a lifetime than to sue your parents and move out.

A Junior ISA is different from a standard child's bank account,  because the government and HMRC constructed a product where an eligible child can have an account opened for them by a registered contact where the registered contact is the person who agrees to the financial services provider's T&Cs and gives instructions from time to time. The registered contact if the child is under 16 will be a person with parental responsibility, but once the child is 16 they can simply apply to become their own registered contact.

No money can be taken out until 18, but once the person is 18 they will have free access to it and the person who was formerly the registered contact will lose that status because the product will convert into an adult ISA in the beneficiary's name, and adult ISAs don't have a 'registered contact' concept, so the parent will automatically lose control. That's different from the standard position of a bare trust where the trustee always has control until they give it up voluntarily or when they give it up after being forced to do that by a court.

It is feasible that an account being opened for a child by a parent in trust could have an agreement explicitly in the T&C that says that the trust will only run until the child is 18 (16 Scotland) and will convert into an account that's exclusively in the name of the child at age 18. In that way, the parent as trustee has already pre-agreed to dissolve the trust and change the legal owner of the account, just with a delay to 18th birthday, so it is all fine and above board. However, it is easier for banks if they don't have to operate savings accounts that have changes of  legal owner agreed several years in advance, and it could be a pain when they know where the parent/ trustee lives but have never had any personal contact with the child and don't know where the child is.

So you can see that Nationwide and Barclays T&Cs adopt the standard and simple approach that until the parent says to change it, it won't change. If you read the account opening documents and T&Cs for any child account and it doesn't mention some sort of auto-transfer of control at age 18, there can't be one.

Which means the parent can spin out the control of the account to beyond age 18, even though in law, they shouldn't, and would have to give up on that course of action if the child knew their rights.

HTH

cloud_dog

I am wondering about simply moving the NW Future Saver in to the Coventry JISA.

Anyone any experience with Coventry BS and how quickly they are to confirm rate reductions?  Would rather not move it (to Coventry) if they may act with a similar violent cut as NW.  I appreciate a cut is likely but in theory they could afford to reduce it to 2.5% for example, rather than the 1% of NW.

michaels

bowlhead99 said:

carotearoa said:

The thing I really liked about the Future Saver was that there was an element of retained parental control when the children turn 18 - "The account will remain in the name of the adult (with parental responsibility) until the adult transfers the new account, into the child’s sole name", whereas with an ISA they get informed at 18 and can do what they want with it straight away.

I've seen some other accounts explaining the account is 'in trust', but they're not as explicit about how it will be handled as Nationwide are. As far as I understand, having the account 'in trust' would still mean they gain instant access when they turn 18.

An account in trust doesn't give instant access, it only gives access when the trustee agrees that it will no longer be a trust. The simplified version of the explanation is below (warning - still quite long ) 

As children don't have legal capacity, childrens' accounts have an adult on the account too and are usually established as a 'bare trust' where the parent or guardian is trustee (and the legal owner of the account) and can sign up to terms and conditions and give instructions under those terms and conditions, while the child is the only beneficial owner of the account and ultimately owns the money and the interest earned from it. 

Once the child is old enough to have their own legal capacity, the fact that it's a bare trust with them as the only beneficiary means that they can demand that the parent or other person who has the position of trustee takes the money out of trust and gives it to them to manage for themselves. To save the bank from having to literally take the money out of the 'trust' account and send it to a new account, that's usually accomplished by the trustee signing a form to say they are handing over the whole account and are no longer responsible for it, and the (former) child will become both the legal owner of the account and beneficial owner of the account, rather than just the beneficial owner of the account. And at the same time the T&Cs will often get updated for it to be operated as a 'grown-up' account perhaps with different interest rate etc.

As wmb says above, it's common that the bank or building society like Barclays or Nationwide will need an explicit agreement from the trustee to let the child have it, even if the child is old enough, and this will often be in the T&Cs to avoid doubt.  Because the trustee is the legal owner of the account and its contents, even though the child is beneficiary, so the trustee needs to give instructions to change it. When they have legal capacity, the former child can demand to the trustee that the money is released to them, and if the trustee doesn't initially go along with that , the former child can sue the trustee for the return of its rightful property. But they can't demand to the bank  that it's released to them, because if it's a trust, the beneficiary doesn't have control over the account - it's the trustee that has the control relationship with the bank.

So although you say that Nationwide has an 'element of retained control' once the child is an adult, that doesn't mean it's fine for you to deny access to the money to your child until you feel like it at age 21 or whatever you have in mind. If they're old enough under the law, then the moment they say they want it, the law says you have to give it to them as soon as practically possible because the trustee of a bare trust must hand over the assets to the beneficiary if the beneficiary has legal capacity and asks for it. The bank or building society will know that you have to hand it over as soon as you're asked to do that, but they will wait for you to tell them that you're willing to do it. If you're not willing to do it and won't instruct them, and you are the only person who is authorised to give instructions, then by default they would do nothing. They will simply follow the law, which means if you're the trustee, then only you, or a court, could tell them to change the legal ownership of the account to someone else, even if that someone else is known by them to be the ultimate beneficial owner.

A 'bare trust' does not mean that the beneficiary is under 18, it just means that the trust is specifically set up with a known individual as the beneficial owner of all the assets and liabilities of the trust. So having established a trust when the account was first opened, the default position from the perspective of the bank or building society (or investment firm, if it's an investment account) is that the trust continues even if the beneficial owner become age 18+, until the trustee signs off that it should not continue. Adults can be beneficiaries of bare trusts just like children can. 

So in practice you could say to the 18 or 19 or 20 year old child: yes I've got your money, and yes you're an adult, and yes you read on Google that I have to hand it over to you if you want it... but I put all the money into this account and I don't want you to spend it on beers and a beach holiday with your friends , so if you're still living under my roof you will just accept that you should follow my rules - and the bank won't listen to you because it's 'my' account (from the perspective of who legally controls it) until I tell them to change it. So you are going to have to sue me if you want it. A rebellious child may then choose to look up on Google how to go about suing a parent to get hold of their rightful property, but most would just go along with what their parents say because it is generally a lot more lucrative to have parental support for a lifetime than to sue your parents and move out.

A Junior ISA is different from a standard child's bank account,  because the government and HMRC constructed a product where an eligible child can have an account opened for them by a registered contact where the registered contact is the person who agrees to the financial services provider's T&Cs and gives instructions from time to time. The registered contact if the child is under 16 will be a person with parental responsibility, but once the child is 16 they can simply apply to become their own registered contact.

No money can be taken out until 18, but once the person is 18 they will have free access to it and the person who was formerly the registered contact will lose that status because the product will convert into an adult ISA in the beneficiary's name, and adult ISAs don't have a 'registered contact' concept, so the parent will automatically lose control. That's different from the standard position of a bare trust where the trustee always has control until they give it up voluntarily or when they give it up after being forced to do that by a court.

It is feasible that an account being opened for a child by a parent in trust could have an agreement explicitly in the T&C that says that the trust will only run until the child is 18 (16 Scotland) and will convert into an account that's exclusively in the name of the child at age 18. In that way, the parent as trustee has already pre-agreed to dissolve the trust and change the legal owner of the account, just with a delay to 18th birthday, so it is all fine and above board. However, it is easier for banks if they don't have to operate savings accounts that have changes of  legal owner agreed several years in advance, and it could be a pain when they know where the parent/ trustee lives but have never had any personal contact with the child and don't know where the child is.

So you can see that Nationwide and Barclays T&Cs adopt the standard and simple approach that until the parent says to change it, it won't change. If you read the account opening documents and T&Cs for any child account and it doesn't mention some sort of auto-transfer of control at age 18, there can't be one.

Which means the parent can spin out the control of the account to beyond age 18, even though in law, they shouldn't, and would have to give up on that course of action if the child knew their rights.

HTH

Of course if the child doesn't know about the money then they won't have the option to demand it until the trustee feels it is a suitable moment to hand it over....

cloud_dog

cloud_dog said:

I am wondering about simply moving the NW Future Saver in to the Coventry JISA.

Anyone any experience with Coventry BS and how quickly they are to confirm rate reductions?  Would rather not move it (to Coventry) if they may act with a similar violent cut as NW.  I appreciate a cut is likely but in theory they could afford to reduce it to 2.5% for example, rather than the 1% of NW.

That's a very good question cloud_dog...
Well, thank you cloud_dog....
And do you have an answer....
Why yes I do cloud_dog....
Do tell cloud_dog....
Well...  
<<<someone remind me how many days we've been in isolation now>>>

As per their recent communications a number of their savings accounts interest rates are being lowered by 0.65%, and the Coverntry BS cash JISA is no exception, so the new JISA rate is 2.95% (which is good enough for me).  

ratechaser

cloud_dog said:

cloud_dog said:

I am wondering about simply moving the NW Future Saver in to the Coventry JISA.

Anyone any experience with Coventry BS and how quickly they are to confirm rate reductions?  Would rather not move it (to Coventry) if they may act with a similar violent cut as NW.  I appreciate a cut is likely but in theory they could afford to reduce it to 2.5% for example, rather than the 1% of NW.

That's a very good question cloud_dog...
Well, thank you cloud_dog....
And do you have an answer....
Why yes I do cloud_dog....
Do tell cloud_dog....
Well...  
<<<someone remind me how many days we've been in isolation now>>>

As per their recent communications a number of their savings accounts interest rates are being lowered by 0.65%, and the Coverntry BS cash JISA is no exception, so the new JISA rate is 2.95% (which is good enough for me).  

At least (unlike NW) Coventry are playing it with a straight bat and only lowering in line with base rates... given they were the market leading JISA (I would have gone with them for my 2 cherubs if it weren't postal application only), it must have been tempting to nudge a little further downwards...

Or possibly they take the view that people won't transfer out to NS&I for the sake of an 0.3% difference in rate.