Community-based finance organisations are calling for the right to offer the government's child trust fund to their members.
The trust fund is a savings and investment account for children. The government makes payments to children through this account to help build up a stock of assets for when they reach 18.

Credit unions cannot offer the product, which combines cash savings with equities, because they cannot trade in shares.

The unions provide cheap savings and loans services, often for people on low incomes or those at risk of exploitation by loan sharks. They fear they could lose members as parents withdraw their children's savings and open a child trust fund with a bank.

If the unions did lose members, this would diminish the savings income that can be lent as loans.

Susan Davenport, chief executive of Leeds City Credit Union, believes it should be able to offer the savings element of the product. The equities part could be supplied by another bank.

She said: "The government is saying the provider has to be able to offer saving and equities. But there should be a choice. There's a big financial market out there."

A Treasury spokesman said: "If they want to submit proposals to us we will look at them. A company wishing to offer child trust funds must offer the stakeholder product, which has a portion of equities and a portion of cash. We have no plans to change this."

Source

Housing Today