Ed Balls publishes consultation document on unclaimed asset scheme

The Economic Secretary, Ed Balls, today launched a consultation document on proposals to introduce an unclaimed assets scheme in the UK, in order to allow money in dormant bank and building society accounts to be reinvested in society, without taking away consumers' rights to reclaim their money.

As announced in the 2005 Pre-Budget Report, the Government has been working with the industry to design a scheme on this basis. The proposals are made with the support of the British Bankers' Association and Building Societies Association.

The consultation document outlines details of the scheme, including the banks and building societies' proposed changes to the Banking Code and proposals for legislation.

It is proposed that the scheme will apply to bank accounts where there has been no customer-initiated activity for at least 15 years. On this basis, the banks and building societies estimate that a stock of several hundred million pounds may currently lie unclaimed. They also estimate that a further flow of perhaps tens of millions of pounds may become available each year. These estimates are before the impact of a comprehensive reuniting exercise that banks and building societies will launch in advance of the scheme, building on their existing arrangements to help customers track down their accounts.

For consumers, the process for reclaiming money will not change, they simply need to visit their bank or building society to reclaim which will repay them as now.

A further Government consultation document will be published later in the Spring to consider the most effective means of distributing the available assets.

Ed Balls said:

"I am delighted to announce the publication of this consultation document on a UK unclaimed assets scheme. This is a unique opportunity to provide for worthwhile reinvestment in youth services, financial inclusion and capability, while balancing the financial interests of consumers.
The document builds on the excellent cooperation with the banks and building societies. We welcome the ongoing commitment from the sector to working together to make the scheme a success."

Notes to editors

1. As announced at Pre-Budget Report 2005 the Government has been working with the banking industry to design a scheme to allow money in dormant accounts to be reinvested in society. This consultation document outlines proposals to introduce an unclaimed assets scheme.

The key principles the underlying 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 in being in part a self-regulatory scheme.

2. In advance of the scheme being established, banks and the building societies will undertake a comprehensive reunification exercise.

3. Where this is unsuccessful and accounts have been dormant for at least fifteen years, banks and building societies will be able to transfer equivalent assets to a central reclaim fund.

4. For account holders, the process for reclaiming their money will not change. It is proposed that consumers will be protected through updated provisions in the Banking Code. They will also have the right of access to the Financial Ombudsman Service to resolve any disputes.

5. A further Government consultation will be released later in the Spring to consider the most effective means of distributing the available assets.

6. Legislation will be required to enable an unclaimed assets scheme to be established. The proposed legislation is primarily concerned with protecting the rights of account holders and safeguarding the position of the participating financial institutions.

7. Further information on unclaimed asset legislation

8. Media enquiries should be addressed to the Treasury Press Office on 020 7270 5238.

9. Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558, or by e-mail to public.enquiries@hm-treasury.gov.uk

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