The government has launched a public consultation that is expected to lead to millions of pounds worth of unclaimed financial assets being used for “good causes”.
The plans will expand the release of unclaimed dormant assets from bank and building society accounts to also cover products related to insurance, investment and wealth management, and securities.
The government first announced its intention to expand this scheme in December 2015 and appointed Nick O'Donohoe to lead a commission to identify potential unclaimed assets. When O’Donohoe reported back in March 2017, he said that there was potentially up to £2bn available.
In March 2018 the government appointed four industry champions tasked with looking at the insurance and pensions, banking, investment and wealth management, and securities industries, and the blueprint that they produced was published in April 2019.
However, today the government said it plans to exclude pensions from an expanded dormant assets scheme at this stage because there have been significant changes in the pensions landscape, meaning the total released for good causes is likely to be less than previously estimated. The government is understood to be waiting for a revised estimate.
Under the scheme, unclaimed funds are held by Reclaim Fund Ltd, which holds enough money to cover any claims from the public and then distributes the surplus to the National Lottery Community Fund.
So far more than £600m has been redistributed to good causes.
'It is making a real difference'
Baroness Barran, minister for civil society, said: “The dormant assets scheme is making a real difference to people across the nation. This includes helping to tackle youth unemployment, addressing financial exclusion and growing the social investment market.
“That’s why we are now seeking views on expanding the scheme to include even more unclaimed assets, in a way that continues to protect customers whilst potentially unlocking millions more pounds for good causes.”
Over £400m from the original scheme was been used to establish Big Society Capital, the independent financial institution that was launched in 2012 with the aim of growing the social investment market in the UK.
In March 2019, Fair4All Finance was established with an allocation of £55m to support the financial wellbeing of vulnerable people. The Youth Futures Foundation was also allocated £90m to help unemployed young people into jobs.
John Glen, economic secretary to the Treasury, said: “Through this scheme we have channelled hundreds of millions of pounds into causes to help those most in need.
“Today’s announcement builds on vital work by industry to broaden the scheme. By expanding it beyond bank accounts to include assets like insurance products, we will be able to unlock even more funds for worthy causes up and down the country.”
The consultation is open until 23:59 on Thursday 16 April. The consultation document and details of how to respond are available on the government's website.