Up to five million children with Child Trust Funds could benefit from the new flexibility to transfer them into Junior ISAs from next month.

But most parents and guardians of children born between 1 September 2002 and 3 January 2011 are likely to be oblivious to this due a to a "policy fudge", says adviser and broker Tilney Bestinvest.

Rather than give the green light to a wholesale merger of the old (Labour) with the new (Coalition) products, the government has said parents must request the necessary paperwork to exit a CTF.

"Lack of awareness and inertia could see millions of children endure lower returns as a result," says Jason Hollands at Tilney Bestinvest.

Scottish Friendly research has found 58% of parents currently holding CTFS are unaware of the new transfer rules - and there are 6.3m accounts.

Launched with great fanfare by Gordon Brown in 2005 and accompanied by the distribution of £250 vouchers from the state to all new- born children, CTFs were phased out six years later in favour of Jisas which are voluntary with no state contribution.

"CTFs have become a 'zombie' product, with lack of competition and innovation between providers," Hollands says. According to data from HM Revenue & Customs, some 4.84m CTF accounts representing almost 80% of all CTFs are invested in Stakeholder Accounts.

Of these, 1.75m were opened by HMRC after parents had taken no action within 12 months of receiving the "free money" to supposedly kick-start their savings.

Stakeholder CTF accounts were the default option, with a guarantee that their charges would be capped at 1.5 per cent.

Hollands says: "The charging cap will undoubtedly have left some parents with the impression that this must represent value for money. Indeed many providers describe the benefits of their Stakeholder CTFs as being 'low cost'. Yet most Stakeholder CTFs are invested in UK index-tracker funds and 1.5% is actually a very high level of fee for such investment strategies."

The Fidelity Index UK W fund, for instance, tracks the FTSE All Share Index, for ongoing charges of 0.09% via Tilney, which adds an account fee of 0.4% for its online investment service, making a total cost of 0.49per cent, less than a third of the supposedly low cost tracker CTF.

"As these children's savings schemes are typically very long-term investments, which are only accessible from aged 18, that could make a surprisingly big difference in outcomes over time for what are, fundamentally, very similar investments," Hollands says.

For those who have left CTFs invested in a cash fund, the returns have been underwhelming. Sylvia Waycot, publishing director of Moneyfacts, says: "When CTFs were originally launched, only eight out of 117 providers that could have offered them did so. Today, the rates offered on CTFs are poor compared with Jisas. A child can earn as little as 1.1% from a Nationwide CTF and yet their sibling could get 3.25% with a Jisa. The good news is that after years of being trapped in an account that never worked, the chains are about to be broken and any money saved can be transferred to a Jisa, which at least offers some chance of a real return."

Hollands says it is important to recognise that the UK market accounts for around 10% of global equity markets by size. "By focusing a child's investments exclusively on UK-listed investments, you could be forgoing a lot of opportunities. Junior Isas enable parents to access some of these either by selecting combinations of funds that give exposure to other regions of the world or choosing investments that take a global investment approach such as the Scottish Mortgage investment trust, which invests in high growth companies from China to the USA and has very low costs, or the Artemis Strategic Assets fund which invests across a wide range of markets and asset classes."

Scottish Friendly is calling on all parents of children aged between four and 13 to check the status of their CTF. It found that the current average CTF holds approximately £1,409 - meaning that as much as £8.9bn currently held in these accounts could be moved to a Jisa that will offer more flexibility and the potential for greater returns.

The vast majority of those surveyed, once informed, said that they would be likely to take advantage of the new freedoms and move their child's money to a Jisa.

Calum Bennie, savings expert at Scottish Friendly, commented: "There was a nationwide campaign to bring about these changes and allow more freedom in how parents save for their child's future. However, no sooner was the campaign successful it seemed to drop off the radar. So much so, that now there is a very real danger that if more isn't done to let people know about the change in rules, parents may just end up leaving their money in a CTF where interest rates can be as little as 1.05%."

Even now the timing of the new rule is not certain. The Tax-Incentivised Savings Association warned on Thursday that the April 6 start "can still not be confirmed because it is dependent upon enactment of the Deregulation Bill which is still in the final stages of its passage through the Houses of Parliament".