A government scheme that gives the proceeds from dormant bank accounts to good causes could raise a further £2bn under plans to expand it to unclaimed insurance payouts and share sales.
Since 2011, the UK’s 30 biggest banks and building societies have been voluntarily transferring money left in dormant bank accounts to a specially set-up scheme.
So far more than £600m has been redistributed to charities helping young people get into work and housing, and others tackling financial exclusion.
Now the government is consulting on its proposal to expand the scheme to include dormant insurance policy payouts and unclaimed proceeds of sales of assets such as shares or unit trusts, which could lie in stockbroker or investment accounts. The independent Commission on Dormant Assets has estimated that there is up to £2bn sitting unclaimed under those categories that could similarly used by the charitable sector.
The banks and building societies in the scheme hand over the sums that have lain completely untouched by the account’s owner for 15 years, and if no owner has been located after extensive inquires.
The minister for civil society, Baroness Diana Barran, said the dormant assets scheme had made a difference to people across the nation.
“That’s why we are now seeking views on expanding the scheme to include even more unclaimed assets, in a way that continues to protect customers whilst potentially unlocking millions more pounds for good causes.”
If at a later date a consumer discovers that they had a dormant account, they will always be able reclaim the full amount transferred into the scheme, she said.
So far more than £400m handed over has been used to establish an independent financial institution, Big Society Capital, which has helped more than 26,000 disadvantaged young people to benefit from job training opportunities. It has also aided 250,000 people to live in a home with access to community energy.
Michael Sansom, of Computershare Investor Services, welcomed the widening the scheme, but warned it would present challenges to the investment sector.
“Those that choose to take part will need to work with their registrar to ensure they overcome implementation challenges. These include deciding which dormant accounts show 12 years of no contact. At present, companies record contact in different ways, and there is no cross-industry approach,” he said.