Ministers expect more than £800m to be released to UK charities and other good causes under an expansion of a scheme that seizes money from dormant accounts.
The move will broaden the so-called dormant assets scheme from unused bank and building accounts to a range of other financial products. It marks the latest step by the government to tap into or reunite people with the billions of pounds of assets sitting in long-forgotten accounts bank accounts.
Diana Barran, the minister for civil society, said the expansion of the scheme provided a “positive opportunity to highlight the importance of people tracing their lost financial assets” and where that was not possible the funds could be used to help people in need as the government worked to recover from the coronavirus pandemic.
Under the existing scheme, banks and building societies try to contact the holders of accounts that have remained untouched for 15 years or more. If the owners cannot be traced the funds are handed over to the government’s Reclaim Fund Ltd, which distributes half of the assets to good causes, while retaining half to reimburse anyone who does eventually come forward to claim the money.
Lady Barran said the scheme had released £745m from dormant accounts for good causes, against just £200m initially expected. “That’s a pretty good experience to build on,” she said.
The expanded scheme will target other dormant financial products, including life insurance and retirement income policies, shares and investment trusts.
The government will have to amend the existing legislation to expand the instruments covered. The speed of release of funds will then depend on how quickly financial institutions complete the process of trying to trace owners.
There would be different criteria for different assets to determine the meaning of dormant, Lady Barran said. “We think we’ll unlock more than £800m for good causes.”
The widened scheme would contribute to a similar range of good causes to the existing one, the minister said. The reclaim fund has given to charities undertaking work on the environment, youth unemployment and helping people struggling with financial problems such as high-cost debt.
One of the biggest beneficiaries has been Big Society Capital, a social investment fund that invests in charities and other community initiatives.
The government in May announced the release of £150m from the dormant asset fund to help charities that have lost income as a result of the coronavirus crisis.
Duncan Stevens, chief executive of Gretel, an online service that helps people trace dormant assets, welcomed the move. “It is a good to see the scheme will be expanded to allow for additional dormant assets, including investments, insurance, and especially pensions, meaning billions more could be utilised for great causes across the UK.”