On Friday 21 February, the UK Government released a new consultation on dormant assets – but what is a dormant asset? Where have they come from and what do you need to do about them?
What is a dormant asset?
The government state that:
A dormant asset is one that a firm is unable to reunite with its beneficial, or rightful, owner.
The current definition of a Dormant Account is in the Dormant Accounts Act which applies to banks and building societies. An account becomes 'dormant' when:
- the account has been open throughout the period of 15 years
- during that period no transactions have been carried out in relation to the account by or on the instructions of the holder of the account
While this definition applies to bank accounts currently, the work being done by the Government on the expansion of the scheme will have varying definitions by asset type.
Who needs to know about dormant assets?
While the current scheme is all about dormant assets in banks and building societies, the published consultation reflects on the recommendations of the Industry Champions which considered expanding into other sectors including the securities sector – but a lot of financial industries could find themselves included in a potentially expanded scheme.
What happens to dormant assets?
If the owner of a dormant asset can be found, it is returned to them. If they can't be found, the money is given to charitable causes. The current scheme has already distributed £360 million from accounts to go towards supporting good causes. Extending it could deliver lasting change to the way voluntary and charity sectors are funded.
Let's look at a timeline of the Government's work on dormant assets:
Since the scheme started, £750 million worth of dormant accounts have been volunteered by major banks and building societies. Of this, tens of millions have reached small charities across the UK. The new commission is tasked with accelerating the existing scheme and unlocking hundreds of millions of pounds for charitable causes.
The consultation will be open for eight weeks, shutting on you can have your say on the Government website.