Dormant Bank and Building Society Accounts Bill falls short of commission recommendations
The new Dormant Bank and Building Society Accounts Bill, which was set in motion during the Queen’s speech last week, will not include two key elements proposed by two commissions.
Previously called the Unclaimed Assets Bill, the new Bill is the outcome of the consultation paper by the independent Commission on Unclaimed Assets (CUA), of the preliminary findings and vision of how unclaimed assets can be put to best use. The Commission was set up in November 2005.
CUA’s proposal for the establishment of a social investment bank to fund a system of grants and loans to help disadvantaged communities was not included in the Bill, and the proposed legislation also resisted the recommendations of a Treasury select committee report that an unclaimed assets scheme should be compulsory for banks and building societies.
The bill defines unclaimed assets as "covering all bank and building society accounts where there has been no customer-initiated activity for 15 years”. A Treasury briefing explained that the purpose of the Bill was to "enable unclaimed assets to be invested for community purposes, whilst ensuring the rights of owners to be reunited with their assets are protected."
The Queen's said in her speech that "legislation will be introduced to enable unclaimed money in dormant bank accounts to be used for youth facilities, financial inclusion, and social investment."
The Government confirmed that the new Bill would allow money not needed for potential customer reclamation of dormant funds to be reinvested in the community through the Big Lottery Fund (BIG). It is estimated that around £400m currently lying in dormant bank accounts could go to good causes.
The Community Foundation Network (CFN) was disappointed with the bill, especially the voluntary element for banks. Stephen Hammersley, CFN’s chief executive, remarked that it looked like there would be no compulsion on banks and building societies to join the scheme. He called on BIG to make sure the money filtered down to community groups.
Toby Eccles, secretary for the Commission on Unclaimed Assets said that the Commission was concerned that the government’s proposals so far fell short of offering security that a self-regulatory scheme for financial institutions would have some teeth.
However, in its briefing the government said the legislation “would be enabling, not compulsory, for financial institutions”.