Dormant bank and building society accounts are accounts on which a customer has not initiated any activity for a period of 15 years or more. The British Bankers' Association and the Building Societies Association estimate that there is approximately £400-£500 million in dormant accounts in the UK.
Legislation to set up a fund accessing dormant accounts was passed by the UK Parliament in November 2008. The UK Bill states that the scheme will be voluntary in terms of the participation of banks and building societies. Money would flow from dormant accounts to a UK-wide Reclaim Fund which will be set up by the banks and building societies and independent of Government. The Reclaim Fund will need some time to become operational, including applying for authorisation to the Financial Services Authority: it is not likely to be established until mid 2009 at the earliest. The Reclaim Fund will then determine what proportion of funds can be passed on to the national distributor, the Big Lottery Fund (BIG), and what proportion needs to be held back to meet future claims from customers. Customers will still be able to make claims after 15 years.
Scotland's share of the fund, based on a Barnett-style formula, would be approximately one tenth of the money released by the Reclaim Fund to BIG. If the Reclaim Fund is set up by mid-2009, that could allow BIG to open the fund for applications in 2010.
The funds will be invested UK-wide exclusively in the third sector for social and environmental purposes. In England, the fund will be used for defined priority areas of providing opportunities for young people, and for improving financial inclusion and supporting institutions involved in social lending. However, the UK Bill states that it is the responsibility of devolved administrations to set the priorities in those countries.
In the debate at the Scottish Parliament on the UK Bill, the Scottish Government gave a commitment to a full and open consultation with the third sector on the priorities for the fund in Scotland. The results to the responses are analysed in a report and two annexes ( annexe 1 | annexe 2). Scottish Government officials are currently discussing with Scottish ministers the results of the consultation and the proposed spending priorities.
There were 76 individual responses to the consultation.
For more information, contact Glen Buchanan, Third Sector Division, Scottish Government, Highlander House, 58 Waterloo Street, Glasgow G2 7DA. Tel: 0141 271 3740. Email: glen.buchanan@scotland.gsi.gov.uk