Unclaimed assets scheme
03 March 2008
A UK unclaimed assets scheme
As announced in the 2005 Pre-Budget Report, the Government has been working together with the bank and building society sector to design a scheme to allow money in dormant bank and building society accounts to be reinvested in society, while protecting consumers' rights to reclaim their money.
The Dormant Bank and Building Society Accounts Bill
In November 2007 the Dormant Bank and Building Society Accounts Bill was introduced in Parliament to facilitate the proposed scheme. It has passed through the House of Lords and was introduced in the House of Commons on 27 February 2008.
The Bill will enable banks and building societies to transfer money held in dormant accounts for reinvestment in the community, and will provide account holders with a right to repayment.
The proposed legislation will allow participating banks and building societies to extinguish their liability to a dormant account holder upon transfer of the balance of the account to a reclaim fund. After transfer account holders will have the right of repayment from a reclaim fund which will need to be authorised by the Financial Services Authority. Account holders will be able to continue their usual relationship with their bank or building society, which will act as agent of a reclaim fund.
Money not needed to fund reclaim applications will be passed to the Big Lottery Fund for onward distribution according to the spending priorities in England, Scotland, Wales and Northern Ireland. The spending priorities for England are young people, financial inclusion and financial capability, and, if resources permit, social investment. The Devolved Administrations will determine their own spending priorities, reflecting the needs of their communities.
Aspects of the scheme outside the Bill
Aspects of the scheme fall outside the provisions of the Bill. These include:
- the self-regulatory Banking Code which sets standards of good banking practice for banks and building societies to follow when they are dealing with their consumers. The Government expects the updated Banking Code, due to come into effect in March 2008 to reflect the unclaimed assets scheme;
- agency agreements it is envisaged will existing between participating institutions and a reclaim fund; and
- the bank and building society sector’s commitment to launch a comprehensive new exercise to reunite account owners and assets prior to the scheme’s introduction. This includes the establishment of the http://www.mylostaccount.org.uk/ website which allows customers to conduct a free search for their money through a single cross-industry web portal.
Principles of the unclaimed assets scheme
The key principles of the proposed scheme are:
- wherever possible to re-unite account holders with the assets that are rightfully theirs;
- to provide a legal right for account holders to reclaim their money at any time;
- to take a light touch approach which minimises running costs for the scheme and participating institutions by wherever possible building on existing infrastructure in order to maximise the money available for reinvestment in the community; and
- to take account of better regulation principles. The proposed UK scheme will therefore differ significantly from other international arrangements being, in part, a self-regulatory scheme.
Principles underpinning the distribution of available assets through the Big Lottery Fund are:
- distribution to be managed on a devolved basis, with distribution in England to focus on youth services that are responsive to the needs of young people, followed by financial capability and inclusion. Resources permitting, the Government would also like to see a proportion of assets used to boost social investment and develop the long-term sustainability of the third sector. The devolved administrations of Scotland, Wales and Northern Ireland will determine their own priorities for distribution, which may differ from those of England;
- a fair distribution of assets across all four countries of the United Kingdom;
- spending to be additional to Government provision, in a manner that takes account of the role of the third sector in the delivery of spending priorities;
- a distribution process that is fully accountable and transparent;
- the available resources, in England, used to deliver practical projects in local communities;
- distribution to be managed efficiently, with as little resource as possible being spent on administration and running costs; and
- distribution in England to focus on a diverse range of communities across the country.
Contact
If you would like to contact HM Treasury about the proposed scheme please email: unclaimedassets@hm-treasury.gov.uk
Media links:
External links
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