The government has today published the independent report it commissioned from finance industry champions setting out how to expand the dormant assets scheme and release more funds for “good causes”.
Under the current scheme, funds held in dormant bank or building society accounts are transferred to the Reclaim Fund Ltd, which holds enough funds to pay customers who wish to reclaim their money, and also distributes funds to charities.
The government has been looking at ways to expand the scheme to other sectors such as investment and wealth management since December 2015 when Nick O’Donohoe was appointed to chair a commission.
So far, the existing scheme has unlocked £1.2bn from dormant accounts and generated £600m for good causes. But neither today's report, nor the Department for Digital, Culture, Media and Sport which commissioned it, indicated how much funding was expected to eventually be made available for the sector.
Following the findings of O'Donohoe's commission in 2017 the then-minister for civil society, Rob Wilson, said he expected the expansion of the scheme to generate between £1bn and £2bn for charities. But today a government spokesperson was unable to confirm that this is still the amount charities could expect.
Today’s announcement also emphasises the importance of customers being able to reclaim their assets.
The report, The Dormant Assets Scheme: A Blueprint for Expansion, is 100 pages long and sets out in detail the steps needed to expand the scheme for each type of asset.
It also calls for more transparency about how dormant account money is used and said that the Reclaim Fund’s annual report should be “made more prominent and readily accessible”.
The report also said that primary legislation was needed to expand the scheme to other areas.
“The current act is narrowly confined to the cash balance of dormant bank and building society accounts, and the government has no power to expand the scheme via secondary legislation. A contractual work-around to expand the scheme without legislation was explored, but it was not considered to be viable,” it said.
In joint statement the industry champions, drawn from banking, pensions, securities and asset management, said: “Today’s report shows how industry can significantly expand the money available to good causes, whilst ensuring customers can get their money back.”
Next steps ‘in due course’
DCMS said it would consider the recommendations, consult with stakeholders and set out next steps “in due course”.
Mims Davies, minister for civil society, said: "The dormant assets scheme has already benefited millions of people across the country through releasing money to good causes. I thank the industry champions for their ongoing dedicated commitment, hard work and for producing this comprehensive report. Ministers will rightly consider the recommendations in more detail looking ahead to the best possible future expansion of the scheme."
Community Wealth Fund
Last summer, an alliance of charity bodies called on the government to use funding released from dormant assets for the creation of a Community Wealth Fund.
Local Trust, a place-based funder, published a report making the case for the creation of a source of long-term funding for place-based initiatives to help strengthen communities.
It said that by pooling the £2bn of unclaimed assets that have already been identified and earmarked for the charity sector with private sector investment, and other unclaimed assets that have not yet been identified, a new £5bn fund could “deliver transformative social, economic and financial impact”.
The proposal has the support of the Church Urban Fund, Barrow Cadbury Trust, Paul Hamlyn Foundation, Lloyds Bank Foundation for England and Wales, the City of London Corporation’s charitable funder, City Bridge Trust, Local Trust and NCVO. It was developed in consultation with a number of other sector bodies.
Today the Community Wealth Fund Alliance said that dormant assets are urgently needed called on the government to engage.
Matt Leach, chief executive of Local Trust, said: “The most pressing need is in the places that did not benefit from the economic prosperity that helped these assets grow. There’s now a growing consensus that giving local people the power to meet their own needs, in their own way, will create real, long-term change.”
Karl Wilding, director of public policy at NCVO, added: “There’s a real opportunity to use this money to create a legacy for generations to come, creating independent, vibrant community services which can sustain themselves without the need to rely on government for financial support. The benefits of this speak for themselves, empowering communities and reducing the demand on public budgets.”