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Dormant Bank and Building Society Accounts Bill published
Economic Secretary Kitty Ussher today welcomed the publication of the Dormant Bank and Building Society Accounts Bill, which will allow money lying dormant in banks and building societies to be reinvested in the community.
The Bill, which forms part of a wider unclaimed assets scheme, received its first reading in the House of Lords yesterday.
Kitty Ussher said:
"Where there is money lying dormant in the banking system, our first priority is to reunite it with its owners. Where that's not possible, this Bill enables the assets that remain unclaimed to be reinvested for the benefit of communities, and used to help fund facilities for young people in every constituency in England.
"The Bill protects consumers, by ensuring that they will be able to reclaim their money at any time and can continue to deal with their bank directly to reclaim their money."
Following consultation a dormant bank account was defined as one where there has been no customer-initiated activity for 15 years.
As part of the wider unclaimed assets scheme, the industry and their representative bodies will launch a drive to reunite account holders with their lost accounts. If the account holder cannot be found, the money will be transferred to an FSA-regulated central reclaim fund, which will hold back money should people later come forward to reclaim their accounts. Money held in the fund can then be used to pay account holders their money with the interest owed.
The rest of the money will be reinvested in the community, with the focus in England on funding youth services, particularly places for young people to go, financial capability, financial inclusion and, resources permitting, social investment. The Bill allows Ministers in the Devolved Administrations to determine the distribution priorities in their areas.
Minister for the Third Sector Phil Hope said:
"I am delighted that this legislation will enable unclaimed assets to be reinvested in society and will help the third sector contribute even more to our society, economy and environment.
"Where unclaimed assets will be directed towards activities for young people, and where they will be invested to help people manage their finances, and, resources permitting, used to boost the social investment market, I know that third sector organisations will be at the heart of this reinvestment."
Legislation will allow resources to be distributed on a UK-wide basis by the BIG Lottery Fund. This will help to ensure a coordinated, transparent and effective allocation of funds, by building upon the BIG Lottery Fund's existing UK-wide infrastructure and expertise. Dormant account assets will be separate and distinguishable from lottery resources and managed as a distinct funding stream. Using BIG is an efficient way to distribute the assets and will limit spending on administration, meaning that as much money as possible reaches the front line.
Alongside the Bill, the Government also published its response to two consultations on the unclaimed assets scheme.
NOTES FOR EDITORS
1. Copies of the Dormant Bank and Building Society Bill and explanatory notes for the Bill are available at: http://www.publications.parliament.uk/pa/pabills.htm
2. The 2005 Pre-Budget Report set out that the Government had taken the view that the time had come to put in place an unclaimed assets scheme in the UK.
3. The banking industry and their representative bodies have indicated that they will announce their plans for a reuniting drive shortly.
4. The Treasury has held two consultations on the development of an unclaimed asset scheme. The first, A UK Unclaimed Asset Scheme: a consultation, was published in March 2007, and details the proposed mechanics of an unclaimed assets scheme. The consultation document is available at: http://www.hm-treasury.gov.uk/consultations_and_legislation/unclaimed_assets/consult_unclaimedasset_index.cfm
5. A second consultation Unclaimed assets distribution mechanism: a consultation was published in May 2007 and identified where money from dormant accounts would be spent in England. The consultation document is available at: http://www.hm-treasury.gov.uk/consultations_and_legislation/unclaimed_assets/consult_unclaimedassets_distribution.cfm
6. The Government response to both of these consultations is published today. This document is available at: http://www.hm-treasury.gov.uk/consultations_and_legislation/unclaimed_assets/consult_unclaimedasset_responsesummary.cfm