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National Savings to administer Court Funds Office assets

By Michelle McGagh | 08:15:11 | 23 November 2009

The government has proposed switching the administration of £4.6 billion held by the Court Funds Office (CFO) in the Ministry of Justice to National Savings & Investments (NSI).

The CFO holds money awarded in court to children or those who lack the capacity to manage their own financial affairs, and looks after any investment made with that money. Currently 150,000 individuals have funds with CFO.

Although policy and rates will continue to be set by the CFO, the proposal in last week's financial services bill is that Treasury-backed NSI will administer the money and handle setting up new accounts and dealing with instructions.

Individuals with money at CFO will not be moved into NSI savings accoungts which pay higher interest than the 0.5% rate CFO has offered since January. The rate was previously 6%.

NSI has outsourced its administration to Siemens for 10 years. Under the arrangement Siemens staff in call centres in Blackpool, Durham and Glasgow will also take on the back office work for the CFO. The government believes it can save £4 million or 35% of CFO's budget from the move.

A spokesman for the CFO stressed that customer data would be ring fenced and that CFO staff would not be able to access information on NSI savers nor would NSI staff have access to CFO customers.

Independent financial advisers are taking an increasing interest in the sector. Bury-based Nestor Partnership recently launched a Personal Injury fund with Seven Investment Management to invest the lump sum damages awards made to personal injury claimants.

Nick Martin, partner at Nestor Partnership, welcomed the proposal saying the CFO was 'somewhat old-fashioned' although he had concerns over potential administrative mishaps during the transition. 'We hope that any such administrative issues are adequately managed during the transition, but doubtless there will be some unfortunate incidents. Having been involved in this market for a number of years and experienced many changes, the government’s previous track record of the management of such a big change has not always been smooth.’

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Comments (1)

Richard Neale - CFO - Scandal

11:15 | 23 Nov 2009

It is scandalous that the CFO is paying a paltry 0.5% on £4.6Bn of assets that it is supposed to be "administering". I have a clients with a close, very elderly relative in a nursing home, who because she had not set up a Power of Attorney, had her assets taken over by the Court of Protection.

My clients were required to liquidate all her investments, including ISAs, her home and other savings, and pass them over to the Court. They were advised that they would receive a 6% p.a. (fully taxable, although this was not made clear at the time). They were give very little notice that the interest rate would be reduced and are now in the situation that the capital value of the savings is being rapidly depleted by nursing home fees and there seems to be very little that they can do about it. They are having considerable difficulty in getting any response from the CFO.

When you consider the sums involved and the many thousands of vulnerability people to whom it belongs, many of them wthout advocates to fight their cause, this is absolutely outrageous. These are the most vulnerable people in our society and ones that this government claims to support, but are actually shafting.

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