Monday, October 06, 2008

Dormant Bank and Building Society Accounts Bill

The first serious piece of legislation to be discussed on the floor of the House of Commons on their return is the second reading of the Dormant Bank and Building Society Accounts Bill, which has already passed through the House of Lords.

This Bill provides the legal and administrative framework for distributing assets from dormant cash accounts.

Dormant is defined in the Bill as a period of 15 years during which the customer has not initiated any activity on an account.

This only includes bank and building society accounts and not dormant accounts in National Savings & Insurance as the Government argues that this is already in public usage, or other unclaimed assets, e.g. life policies, pensions, lotteries etc., due to possible legal difficulties in arranging this.

Assets will be distributed by the Big Lottery Fund on a national basis. According to Lord Davies of Oldham, who was leading the Bill through the Lords, this money will be divided using the Barnett Formula. The administrations will be required to use this money for social or environmental purposes.

This is a voluntary agreement between the Banks to supply this money. In the Lords, Baroness Finlay of Llandaff called for reserve powers in the Bill to enforce this agreement should the banks not take part in the way intended by the Bill.

Similar schemes are in existence in other countries, e.g. Ireland, but it seems strange that the government here has gone for 'light touch' regulation and not a compulsory scheme.

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