News

Dormant accounts bill becomes law, but with pledge to review

Finance | Ian Allsop | 3 Dec 2008

New legislation that enables unclaimed money in dormant bank accounts to be used for good causes has received Royal Assent, but the government has promised to review it after three years to ensure the banks are playing ball.

The Dormant Bank and Building Society Accounts Act allows for monies that have not been touched for 15 years to be used to support youth facilities, financial inclusion and social investment projects.

It is estimated that around £400m currently lying in dormant bank accounts could go to good causes, to be reinvested in the community through the Big Lottery Fund (BIG).

The Act received Royal Assent last week and contained the promise that in three years, the Treasury "shall carry out a review of the effectiveness of the efforts made by financial institutions to ensure that those entitled to money in inactive accounts are made aware of the fact".

It also said the review would examine how many banks and building societies have transferred balances, how much money has been transferred and how promptly.

Sector ‘delighted' with review

As the scheme will allow banks and building societies to commit to it on a voluntary basis, there have been concerns about how many would actually take part. The government's commitment to review the new law has been welcomed by sector bodies.

Ann Blackmore, head of policy at NCVO, said: "We are delighted that the government has listened to our concerns about the effectiveness of a voluntary scheme and committed to undertaking a review within three years.

"This is vital to monitor financial institutions' participation in the scheme and to ensure that the maximum possible is available for reinvestment in society. In the current climate, new forms of funding like that from dormant accounts will be ever more important."

Speaking on behalf of the Unclaimed Assets Charity Coalition, Richard Davidson, director of policy and public affairs at Cancer Research UK, said it was pleased the Act had been passed.

"It is crucial that this review is comprehensive and seeks to assess if attempts to reunite people with unclaimed financial assets have been sufficient. We hope that, if necessary, the review will lead to further government action on this important issue."

Who's Who: Ian Allsop