16 June 2021

The Dormant Assets scheme was originally introduced by the Dormant Bank and Building Society Accounts Act 2008 (“2008 Act”). The aim of the Scheme was to allow social and environmental causes in the UK to benefit from ‘dormant assets’ of which Banks and Building societies had been unable to reunite with their owners. The Dormant Assets Bill proposes to significantly expand the current scheme by allowing assets from additional sectors to be transferred to the Reclaim Fund (“RF”), to be subsequently distributed to British charities. The Government reports that “estimates suggest that an expanded Scheme has the potential to make around £880million available for social and environmental causes in the UK”, of which 8.4% would be attributed to Scotland.

Under the current provisions, the RF can only accept eligible dormant assets from banks and building societies, however, the Bill proposes to accept eligible dormant assets from the following additional sectors:

• Insurance
• Pensions
• Investment
• Wealth management; and
• Securities.

Despite these changes, the Bill intends for the new Scheme to operate similarly to the current scheme, with the requirement of consent of the RF to transfer the assets and the original owners ceasing to have a right of repayment against the transferring institution but acquiring a right of repayment against the RF.

The Bill proposes that the requirements for eligible assets to be considered ‘dormant’ be specific to each additional sector being introduced to the new Scheme. The proposed sector specific dormancy definitions shall be different to the current provisions under the 2008 Act which consider bank and building society accounts to be dormant if they have been “open for a period of 15 years” and “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”.

Additional points of importance include that, if enacted, the Bill shall revise England’s approach to distributing their allocation of the funds, to be consistent with the approach taken in Scotland, Wales and Northern Ireland. Further, it is proposed that the ‘Alternative Scheme for smaller banks and building societies’ shall continue to function under the new legislation as it is currently under the 2008 Act. The Bill also proposes to make it easier for the Scheme to be expanded in future by allowing the Secretary of State or the Treasury to “extend the dormant assets scheme to cover new dormant assets” by way of regulation (Clause 19).

Despite the Bill’s proposals, the main principles governing the Scheme shall remain unchanged, the first being to reunite owners with their dormant assets, secondly, to allow customers to reclaim their assets from the RF and lastly, to allow businesses to voluntarily participate in the Scheme. The proposed inclusion of more asset classes in the Scheme, along with tailored definitions of dormancy, is likely to increase the availability of funds to charities across the UK, notwithstanding the requirement to reserve a proportion of the funds for potential repayment to the original owner of the forgotten assets.

Marion Davis, Senior Associate & Accredited Specialist in Charity Law:

mda@bto.co.uk / 0141 221 8012

Emily Couchlin, Trainee Solicitor: eco@bto.co.uk / 0141 221 8012