THE DORMANT BANK AND BUILDING SOCIETY ACCOUNTS ACT 2008
Many people forget about, or lose track of, small deposits of money in bank and building society accounts. Despite the efforts of banks and building societies to reunite these funds with their owners, they build up as dormant accounts assets in the banking system. Several countries have successfully set up schemes in recent years to enable assets in dormant accounts to be reinvested in society. The UK Parliament passed legislation to enable banks to pass this money, on a voluntary basis, to the Big Lottery Fund for distribution for social and environmental purposes
The Dormant Bank and Building Society Accounts Act 2008 (Link to the Act at http://www.opsi.gov.uk/acts/acts2008/ukpga_20080031_en_1)
The Act allows participating banks and building societies to extinguish their liability to a dormant account holder upon transfer of the balance of the account to a reclaim fund. After transfer account holders will have the right of repayment from a reclaim fund which will need to be authorised by the Financial Services Authority. Account holders will be able to continue their usual relationship with their bank or building society, which will act as agent of a reclaim fund.
Money not needed to fund reclaim applications will be passed to the Big lottery Fund for onward distribution according to the spending priorities in England, Scotland, Wales and Northern Ireland. The apportionment of available funds between the four countries will be by the Barnett Formula as set out in The Distribution of Dormant Account Money (Apportionment) Order 2011
The Act provides that Scottish Ministers may make an order (under Section 20) in the Scottish Parliament to restrict the persons to and purposes for which dormant bank and building society account funds may be used in Scotland. The Dormant Bank and Building Society Accounts (Scotland) order 2010 provides for dormant bank accounts to be restricted to third sector organisations for the purpose of promoting strong and resilient communities.
Schedule 3 to the Act enables Scottish Ministers to require the Big Lottery Fund to prepare a strategic plan, setting out a detailed statement of the Fund's investment priorities, following policy directions from Scottish Ministers. BIG would consult on this plan and, on adoption, Scottish Ministers would lay it before the Scottish Parliament.
The earliest that funds are likely to be released by BIG in Scotland is expected to be in the first quarter of 2012.
For more information, contact Alastair Goudie, Third Sector Division, Scottish Government.