Written by Carly Phillips-Jones
On 1 March 2022, the Dormant Assets Act (the “Act”) was published on legislation.gov.uk (having received Royal Assent on 24 February 2022). Among other things, this Act amends the Dormant Bank and Building Society Accounts Act 2008 to expand the existing Dormant Assets Scheme (the “Scheme”) to include a wider range of dormant assets. The changes to the Scheme are expected to unlock a further £880 million of dormant assets.
The primary purpose of the Scheme was to reunite people with assets in accounts that are open but have been inactive for at least 15 years. Since the Scheme was launched in 2011, 35 participating banks and building societies have released more than £800 million from such accounts. Where an asset cannot be reunited with its owner, it can then be released to the government-backed Reclaim Fund Ltd which manages the funds and makes distributions to key social and environmental initiatives.
The key changes made by the Act include:
- The expansion of the existing Scheme to include dormant assets within the insurance, pensions, investment and wealth management, and securities sectors. Only cash will be transferred into the Scheme, any non-cash assets must first crystallise or be converted to cash before being eligible for transfer.
- Reclaim Fund Ltd is permitted to accept transfers of certain unwanted assets and improves the operation of the Scheme.
- Power is conferred on the Secretary of State or HM Treasury to make regulations further expanding the scope of the Scheme in the future to broaden the pool of eligible dormant assets. It also introduces a new power for HM Treasury to establish other reclaim funds in the future as appropriate.
- Amendments to the approach for distributing dormant assets funding in England, aligning it with the model used for Scotland, Wales and Northern Ireland, enabling the social and environmental focus of the English portion of funds to be set through secondary legislation.
The FCA is expected to make a statement in the coming months to confirm relevant changes to its Rules.
Public consultation will launch in the summer to consider good causes to benefit from the additional £880 million.