Dormant Accounts

Many people forget about, or lose track of, small deposits of money in bank and building society accounts. In May 2010, the Government announced its intention to channel money from these ‘dormant accounts’ into a Big Society Bank. This will provide new finance for neighbourhood groups, charities, social enterprises and other non-governmental bodies. Several countries have successfully set up schemes of their own in recent years to enable assets in dormant accounts to be reinvested in society.

In February 2011, as part of the Project Merlin agreements, the Chancellor announced that the banks will provide £200 million of funding over two years to the Big Society Bank. This capital will be over and above that used to meet their lending targets and the additional £1 billion that will be used for the Business Growth Fund as part of the deal. The capital is also in addition to capitalisation of the bank from dormant account funds.

The Government anticipates that dormant accounts funding, combined with additional investment from the private sector, will enable the Big Society Bank to become a dynamic source of funding for charities, social enterprises, communities and voluntary groups across the UK.

The Government’s vision will be made possible by the Dormant Bank and Building Society Act, which was passed in November 2008. The Act enables banks and building societies to transfer money held in dormant accounts to a central reclaim fund, for reinvestment in the community. Accounts are only classified as dormant when the money has been untouched by consumers for a period of 15 years or more.

The Government’s initiative to create a Big Society Bank provides a clear direction for dealing with the issue of dormant accounts in a fair and socially responsible way. Account holders also retain their right to repayment from the reclaim fund, and so can claim back their money at any time in the future. Account holders will be able to continue their usual relationship with their bank or building society, which will simply act as an agent of the reclaim fund.

A copy of the Dormant Bank and Building Society Act is available as follows:

Dormant Bank and Building Society Act (2008) (PDF (UK legislation website, opens in new browser window)

Dormant Accounts

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