Making good with £400m of nobody's money

It is estimated that up to £400m may be sitting in Britain’s bank and building societies without a traceable owner. For reasons ranging from family break-ups, house moves or simply absent-mindedness, many thousands of people have lost track of cash which, while still remaining theirs, sits in banks and building societies awaiting reclaim.

The Dormant Bank and Building Society Accounts Bill announced in the Queen’s Speech aims to release some of this cash for use in community projects via the Big Lottery Fund. Initially proposed in Labour’s 2005 manifesto, the idea has been subject to intensive discussion with the financial services industry.

The proposed system is based on four principles:

• every attempt must first be made to reunite account holders with their money;

• it remains their money, even after the banks release it to the reclaim fund;

• the scheme will build on the existing infrastructure, operating through banks and building societies; and

• costs will be kept to a minimum so that as much money as possible is available for reinvestment in the community.

The scheme will cover accounts which have been inactive for 15 years or more: after that point, the possibility of a customer reclaiming the money falls off sharply. While the banks and building societies will still work to reunite customers with their cash, the money will be transferred to a reclaim fund.

This fund, which will be regulated by the Financial Services Authority, will be responsible for holding money to meet the cost of future reclaims and releasing the surplus to the Big Lottery Fund. According to the Queen’s Speech, this money will then be spent on ‘youth facilities, financial inclusion and social investment.’

Critical to the unclaimed assets scheme is the fact that account money will be transferred only when a bank or building society has genuinely lost touch with the customer. Banks and building societies are looking beyond simple transaction data to find any customer information which might lead to reuniting an account with its owner. Individual banks and building societies are planning further campaigns to reunite customers with their cash. As a result of their campaigning this summer, the British Bankers’ Association’s free tracing service dealt with more claims in two months than in the whole of 2006.

Angela Knight is Chief Executive of the British Bankers’ Association.