12 July 2007
Administrative errors that led to damages awarded to children not being properly invested are being corrected Justice Minister Bridget Prentice told Parliament today.
A recent review of children's damages awards held in court and administered by the Court Funds Office identified approximately 4000 children's accounts where the award had not been placed in an index tracker fund, as directed by the court. Instead it was placed into an interest paying CFO investment account. The cases concerned are those where the award is more than £5000 and the child was under 13 years of age, when the investment should have been made.
Bridget Prentice said:
'The welfare of children is of paramount importance.
'Immediate action has been taken to identify all affected cases and where the consequence has been a lower rate of return, to pay the balance necessary to ensure that no child is disadvantaged. No-one affected will lose out.'
The process for calculating the correction payments has been reviewed by a firm of city accountants and also by the Strategic Investment Board, which is an independent panel of financial experts that provides investment advice to the Ministry of justice in respect of its clients.
It is estimated that approximately 4,000 current and closed cases have been affected and that the full cost of corrective payments will be approximately £12.5m. This is out of a total of 90,000 current children's cases holding nearly £650m in cash and investments, and 1.1 million closed cases.
Letters providing full details of the corrected accounts are being sent to all parents or guardians of the children involved.
Notes to Editors
1. The Court Funds Office (CFO) is an associated office of the Ministry of Justice and provides a banking service for the Courts of England and Wales. It looks after the equity investments made with that money, acting on the directions of the Court, and this includes monies lodged in respect of Children. The work is governed by the Civil Procedure Rules and Court Funds Rules
2. The CFO manages some £4.5 billion in a mixture of cash and equity holdings. Investment on behalf of children is generally made into the Equity Index Tracker Fund, which is managed on behalf of the Ministry of Justice by Legal & General, who are one of the largest managers of index tracker funds in the UK.
3. The CFO has set up a dedicated team to contact affected clients. There is also a helpline contact number on: 0845 345 6656 or clients can write to: Court Funds Office, 22 Kingsway, London, WC2B 6LE.
4. The CFO is aware of cases that go back to the early 1990s. The review of children's damages awards is designed to ensure all cases are reviewed and in each case where a child has suffered a loss, the account will be rectified and corrected.
ENDS