Parents and grandparents will be able to top up the funds to an annual limit of £1,000.
Adrian Coles, director general of the BSA, was enthusiastic about this announcement. “Building societies are ideally placed to offer child trust funds, as they have traditionally provided simple savings accounts at good value. As collectively owned mutual institutions, building societies can offer better rates to their savers, rather than paying a dividend to shareholders.”
However, Ken Rayner, investment expert for The MarketPlace, said: "It's an unprecedented move and one which looks a good idea at first sight - but many questions need answering before we can form a more detailed judgement. For example, how can providers viably deliver this product as an advised proposition, taking into account of course set up and running costs when annual contributions are relatively small? As an industry already suffering from poor performing stock markets and low interest rates there needs to be clarification as to how commercial companies can deliver such a trust fund."
