Changes Proposed for Dormant Assets Scheme
Proposed changes to the Dormant Assets Scheme could release up to £880 million to social and environmental initiatives across the UK. Improvements to the operation of the scheme would also include making efforts to reunite assets with their owner a requirement.
The Dormant Assets Scheme was established by the Dormant Bank and Building Society Accounts Act 2008 (the 2008 Act). “A dormant asset is a financial product, such as a bank account, that has been open but unused for 15 years, and with which the provider has been unable to reunite the owner,” explains Danielle Higgins, Managing Director of The Tracing Group.
The government-backed Scheme is led by industry - 33 banks and building societies currently take part - and administered by Reclaim Fund Ltd. Following a review by the Office for National Statistics, RFL was classified as a public body in 2021. RFL is legally incorporated with its own legal identity, acting at arm’s length from the government and governed by a separate Board of Directors. Its principal aim is to reunite owners with their financial assets - where this isn't possible, though, the dormant money is used to support important social and environmental initiatives across the UK.
“The proposed expansion of the Dormant Assets Scheme is a positive step forwards for the financial services sector, good causes and the consumer by allowing additional types of dormant assets to be included from the insurance, pensions, investments, wealth management and securities sector,” explained Danielle, who works to reunify individuals with their missing money. Including a wider range of assets, while remaining true to the fundamental principles of reunification, voluntary industry participation and the guarantee that customers can reclaim their funds in full at any point, should ensure that businesses can offer consumer protection whilst further benefiting disadvantaged communities across the UK.
The Scheme was originally predicted to bring in around £400m but contributions to date have been around 250% higher than that. While £105m (or about 7.5%) of the scheme's money has been reclaimed by customers, more than £745m has been released over the past decade to social and environmental initiatives.
In 2020, for example, £150m was released for coronavirus response and recovery across the UK. The fund also supports not for profit groups like the UK’s leading eating disorders charity Beat, and the Youth Futures Foundation.
Since 2016, the financial services industry has been working with the UK Government to consider how best to expand the Scheme. Following a period of consultation, the new Dormant Assets Bill was presented to the House of Lords earlier this year.