The Savings Certificates (Children’s Bonus Bonds) (Amendment) Regulations 2012

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Savings Certificates (Children’s Bonus Bonds) Regulations 1991 (S.I. 1991/1407).

Regulation 3 inserts new definitions, including—

(a) “term”, which means a period of time for which a rate of interest has been fixed for a certificate;

(b) “Children’s Bond”, which means a certificate purchased after 19th September 2012, or a certificate purchased before 20th September 2012 which has commenced a new term after 19th September 2012; and

(c) “Children’s Bonus Bond”, which means a certificate purchased before 20th September 2012 for which a new term has yet to commence after 19th September 2012.

Regulation 5 amends provision limiting the people who may apply to purchase certificates. A certificate may only be purchased on behalf of a person who has not attained the age of sixteen by a parent, guardian, grandparent or great-grandparent.

Regulation 5 also prevents a person from continuing to hold a certificate beyond the end of a term, if that term ends after 19th September 2012 and at a time at which that person has attained the age of sixteen years.

Regulation 6 substitutes provision relating to the maximum holding of certificates. When determining whether a purchase may be made, the new provision requires the Director of Savings to look to the aggregate purchase price of the certificates already held. It also clarifies that the terms and conditions of certificates may make provision for the manner in which the aggregate purchase price is to be calculated.

Regulation 7 inserts provision relating to the return on certificates. It provides for the daily accrual of interest on Children’s Bonds and on Children’s Bonus Bonds from the anniversary of their date of purchase that falls after 19th September 2012 and before 20th September 2013.

It also provides that bonuses shall not be payable on Children’s Bonds. A bonus is any return on a certificate that is conditional on that certificate being held for an entire term.

Regulation 8 inserts provision requiring that for Children’s Bonds a partial repayment may only be given where the capital value of the part retained would be equal to or greater than £25, or such greater value as may be prescribed in the terms and conditions.

Regulation 9 amends provision relating to repayments made by the Director of Savings. The changes allow payments to be made by electronic transfer. They also remove the obligation to take steps to cancel a payment that has already been initiated.

When a partial repayment of certain certificates has occurred, regulation 10 requires the Director of Savings to make available to the person who requested the repayment a record of the amount repaid, the capital value of the part retained, the interest rate applying and the date on which the current term of the certificate will end. Regulation 10 also provides that nothing in the terms and conditions shall require the Director of Savings to issue certain certificates in documentary form.

Regulation 11 inserts provision for an early repayment penalty where the holder of a Children’s Bond requests repayment before the end of a term. The penalty is an amount equal to 90 days’ interest on the amount of the repayment requested. The penalty will not apply to an application for repayment made after the death of the holder, nor will it apply where the Director of Savings considers that it would be unjust in a particular case.

Regulation 14 inserts provision for the forfeiture of Children’s Bonds. The Director of Savings may direct that a Children’s Bond be forfeited where the Director thinks fit. Where a Children’s Bond is forfeited, an amount equal to the purchase price is repayable and the Director of Savings may pay any other amount that was payable under the terms and conditions if the Director thinks fit.

Regulation 16 revokes provision for the settlement of disputes. In consequence of the repeal of section 84 of the Friendly Societies Act 1992 (c. 40), disputes between the Director of Savings and the holder of a certificate can no longer be referred to an adjudicator appointed by the Treasury under that section.

Regulation 17 amends provision relating to the indemnification of the Treasury and the Director of Savings, so as to extend such provision to cover payments made on Children’s Bonds by electronic transfer. The changes include a provision that neither the Treasury nor the Director of Savings is to be liable where there is a delay or failure in the system through which electronic transfers are conducted that is outside of the control of the Director of Savings.

Various provisions remove requirements for applications and notices to be made or given in written form.

A full impact assessment has not been produced for this instrument as no impact on the costs of business or the voluntary sector is foreseen.