Dormant Bank and Building Society Accounts Act 2008

The Bill aims to reinvest money from unclaimed assets in dormant bank accounts in the wider community. Money would be distributed via the BIG lottery fund to youth services and financial capability and inclusion programmes. The Bill’s measures will define unclaimed assets, allow banks to extinguish their existing liabilities to dormant account customers, allow for a reclaim fund to be set out, give customers rights to reclaim their assets, and, allow for assets to be distributed to the community.

The Bill takes forward HM Treasury consultations on a UK Unclaimed Asset Scheme and Unclaimed Assets distribution mechanism.

During second reading in the Lords, government spokesman Lord Davies of Oldham introduced the Bill and explained that current estimates from the British Bankers' Association suggest that there is between £250 million and £350 million in banks, and up to £150 million in building societies lying dormant.

The Bill would, Davies explained, allow such sums to be reinvested in society.

Listing the key elements of the Bill, Davies stated that it:- 

- defines a dormant bank account (as one where there has been no customer-initiated transaction for 15 years);

- defines the financial institutions able to participate in the scheme (retail banks and building societies);

- permits eligible institutions to have their liability extinguished on eligible accounts on certain conditions (including a transfer to a reclaim fund).

Davies went on that the Bill also sets out what a reclaim fund is and amends the Financial Services and Markets Act 2000 to enable the activities of a reclaim fund to be specified in secondary legislation as regulated activities and to be regulated by the Financial Services Authority.

The Bill also provides consumers with protections, including the right to repayment from the reclaim fund and it gives powers to the Big Lottery Fund to distribute assets that the reclaim fund deems surplus.

Davies listed elements - outside of the legislation - that would be "integral" to the delivery of the scheme:- 

- the setting up of a reclaim fund and its subsequent authorisation by the Financial Services Authority;

- agreements between individual participating institutions and the reclaim fund under which institutions agree to act as agents of the reclaim fund for the purposes of repaying customers;

- revisions to the self-regulation of the Banking Code;

- the industry’s commitments to maximise efforts to reunite account holders with their lost accounts.

Davies concluded his remarks by stating: "This Bill offers an historic opportunity to allow money lying dormant in bank accounts to be used to the wider benefit of society. It does so while protecting consumers and maintaining a low burden on industry."

The Conservative finance spokesman, Viscount Astor, concentrated his remarks on how the government chose youth and community facilities to be recipients of dormant account funds. Astor asked: "Why do the Government feel that they are in particular need of extra funding that is not already distributed by any of the lottery bodies, the Big Lottery Fund or any of the others? The Government have given no explanation of why they have taken these two areas, and it would be useful to know how the decision came to be made." 

The Liberal Democrat spokesman, Lord Shutt of Greetland, declared himself "an enthusiast" for the Bill and spoke about the potential for a second, smaller scheme to allow for more localised help for communities.

 

House of Lords

First reading: November 7 2007 [HL Bill 2]

Second reading: November 21 2007

Grand Committee:

• 1st day: December 10 2007
• 2nd day: December 11 2007
• 3rd day: January 10 2008
• 4th day: January 15 2008
• Bill as amended: HL Bill 17

Report stage: January 29 2008

Third reading: February 26 2008

House of Commons

First reading: February 27 2008 [HC Bill 80]

Second reading: October 6 2008

Dormant Bank and Building Societies committee:

• 1st sitting: October 15 2008
• 2nd sitting: October 16 2008 (am)
• 3rd sitting: October 16 2008 (pm)
• Bill as amended in committee: [HC Bill 150]

Report stage: November 3 2008

Third reading: November 3 2008

House of Lords

Consideration of Commons amendments: November 19 2008 [HL Bill 91]

House of Commons

Consideration of Lords amendments: November 25 2008 [HC Bill 173]

Royal Assent

November 26 2008