Plans for major expansion of dormant assets scheme to benefit good causes

Friday February 21st, 2020

The dormant assets scheme could be expanded to include a range of financial assets, in a move which could unlock hundreds of millions of pounds for good causes across the UK.Government Opportunities

The Government has today (Friday 20th Feb 2020) signaled its intention to expand the scheme from dormant bank and building society accounts to also cover insurance, investment and wealth management, and securities products.

Since its launch in 2011, 30 firms – including all major high street banks – have voluntarily transferred dormant funds into the scheme. So far over £600 million has been redistributed to good causes helping young people on the path to employment, encouraging investment in products that benefit social causes and tackling financial exclusion.

Consumer protection will remain at the heart of any expanded scheme, with the priority continuing to be reuniting customers with their money. Only where this is not possible, following rigorous, unsuccessful efforts to locate the asset owner, will funds be released to support good causes.

If at a later date a consumer discovers that they had a dormant account and their funds have been transferred into the scheme, they will also always be able reclaim the full amount transferred.

Over £400 million has been used to establish Big Society Capital, an independent financial institution, launched in 2012, with the aim of growing the social investment market in the UK.

To date, Big Society Capital investment has supported more than 2,000 vulnerable people to move into appropriate housing, 26,000 disadvantaged young people to benefit from job and training opportunities and 250,000 people to live in a home with access to community energy. For example, in 2018 £30 million was invested in the Bridges Evergreen Vehicle to create The Ethical Housing Company, which buys and rents out affordable properties for people with housing needs in Teesside.

In March 2019Fair4All Finance was established with an allocation of £55 million from the dormant assets scheme to support the financial wellbeing of vulnerable people. It works to increase access to fair, affordable and appropriate financial products and services, working with partners across the private and social sectors. Their programme aims to improve the access and availability of affordable credit helping smaller lenders to scale up.

At the same time, the Youth Futures Foundation was allocated £90 million to help unemployed, disadvantaged young people across the country into jobs. They will do this by providing funding and advice to youth employment organisations and will work with employers and businesses to create jobs with tailored support.

The public consultation follows an industry-led report by four business leaders which made a series of recommendations on how to broaden the current scheme beyond bank and building society accounts.

Given the significant changes to the pensions landscape in recent years and the Government’s commitment to pensions dashboards, it is minded to exclude pensions from an expanded dormant assets scheme at this stage. However, it encourages views on this as part of the consultation process.

Minister for Civil Society, Baroness Barran said:

“The dormant assets scheme is making a real difference to people across the nation. This includes helping to tackle youth unemployment, addressing financial exclusion and growing the social investment market.

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.”

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