He said that families who do not shop around will have to endure a poor deal on CTFs until “at least” April 2014 when new rules would take effect.
Mr Cutbill said most banks and building societies had “slashed” interest on CTFs after they were closed to new customers by the government in 2011. The Treasury introduced Junior Isas in 2011 and they offer better rates.
He added: “While the Furness always treated its junior savers fairly and continued to pay a good interest rate on CTFs, even though it was known that no new CTFs would be opened after the end of 2010, other lenders literally lost interest in them, slashing the rate that the sums invested earned.”
Adviser view
Danny Cox, head of financial planning for Bristol-based Hargreaves Lansdown, said: “It makes a lot of sense to allow transfers to start on a voluntary basis at first with the view to a full merger in the future. At the moment this two-tier system is unsatisfactory for those who have CTFs but want the wider choice of a Junior Isa.”
