Child Trust Fund: Could you claim free money worth up to £2,000?

What would you do with a lump sum cash worth around £2,000?

You could put the cash towards a new car, university, holiday or as part of a deposit for a home or just help with the cost of living.

Thousands of young adults could unlock this cash by claiming their forgotten Child Trust Fund.

The financial regulator is now urging people to check as figures from HMRC show that a huge 760,000 matured Child Trust Funds have been forgotten about, with an average value of £2,000 each.

The account can be traced for free through gov.uk.

Here's everything you need to know about Child Trust Funds and how to find out if you have one.

What is a Child Trust Fund?

A Child Trust Fund (CTF) is a long-term tax-free savings account that was set up for eligible children after they born in the UK.

The scheme was introduced by the government in 2005. Around 6.3 million Child Trust Fund accounts were opened.

The accounts mature when the child turns 18, at which point the young person can access the money.

Existing Child Trust Funds will continue to mature until 2029, as the scheme closed in 2011.

Who can claim a Child Trust Fund?

You could have a Child Trust Fund if you were born between 1 September 2002 and 2 January 2011.

If you're aged 18 or over and were born during this period, it's worth checking whether you have an account, even if you don't remember opening one.

A parent or guardian may have opened the account for you, or HMRC may have automatically opened one if you were eligible.

How much is a Child Trust Fund worth?

The average matured Child Trust Fund that remains unclaimed is worth around £2,000, according to HMRC figures.

However, the amount in individual accounts vary significantly.

How much you have will depend on factors including how much was paid into the account and how the money was invested.

Some families may also have added their own contributions over the years.

This means your Child Trust Fund could be worth more or less than £2,000.

How do I find my Child Trust Fund?

You can trace a Child Trust Fund for free using HMRC's online service on GOV.UK.

You don't need to pay a claims company or another business to find the account for you.

If you know which provider holds your Child Trust Fund, you can contact them directly to arrange a withdrawal or transfer.

If you don't know who the provider is, HMRC's free tracing service can help you find out where the account is held.

You'll then need to contact the provider and prove your identity before accessing the money.

Don't pay a company to find your Child Trust Fund

The FCA is warning young adults to be wary of companies offering to find and claim Child Trust Funds on their behalf.

Some firms, including companies advertising through social media, charge a fee or take a percentage of the money recovered.

The FCA says it has seen cases where customers were charged £400 simply to locate their account. It has also seen firms charging a monthly subscription for what is effectively a one-off tracing service.

But you don't need to pay this money because you can trace your Child Trust Fund yourself for free through gov.uk.

This means you could lose a significant chunk of your savings unnecessarily if you use a claims company.

Why is the FCA investigating Child Trust Funds?

The FCA is launching a review into Child Trust Funds after concerns that some young adults are losing touch with their savings when they turn 18.

The review will look at whether firms are doing enough to contact young people when their accounts mature and whether customers are receiving fair value under the FCA's Consumer Duty.

It will also consider whether there are barriers preventing vulnerable young adults from accessing their money.

The FCA says its review will report next year.