The government has announced an expansion of the 'Dormant Assets Scheme' to help unlock over £800 million value to the benefit of communities across the UK. The Scheme is to now include assets from the insurance and pensions, investment and wealth management, and securities sectors, and will build upon over £745 million already distributed from dormant bank and building society accounts that have benefited social and environmental initiatives to date.
Funding raised through the expansion of the scheme will enable continued support of good causes, social investments and environmental initiatives.
Baroness Barran (pictured), Minister for Civil Society, said:
Expanding the Dormant Assets Scheme provides us with two positive opportunities to highlight the importance of people tracing their lost financial assets. Firstly it will highlight the potential importance for people to trace their lost financial assets.
Secondly, where that is not possible, it will release over £800 million for social investment that will make a real difference to people - both young and old - experiencing challenging circumstances across the UK as we work hard to recover from this pandemic.
This major expansion of the Dormant Assets Scheme marks the completion of a four-year review and public consultation process. The responses showed widespread support for expanding the scheme from bank and building society accounts to include assets in these new sectors.
Led by the financial industry and backed by the Government, the expanded scheme will have consumer protection at its heart, with the priority continuing to be locating and reuniting people with their financial assets.
Where that is not possible, more businesses will now be allowed to participate voluntarily in transferring dormant assets into the scheme. People will still be able to reclaim their assets in full at any time.
Since 2011, 30 banks and building societies participating in the current scheme have enabled the release of over £745 million from dormant accounts that have been inactive for at least 15 years. These funds have been used to support a range of social and environmental initiatives across the UK, including helping young people on the path to employment, tackling financial exclusion, growing the social investment market, and supporting renewable energy solutions.
£150 million was unlocked in May 2020 to support the UK’s charity and voluntary sectors, as they continue to play a vital role during the coronavirus pandemic. The funding is supporting work to tackle youth unemployment, expand access to emergency loans for civil society organisations and help improve the availability of fair, affordable credit to people in vulnerable circumstances.
To date, funding released through the Dormant Assets Scheme has been used in a number of ways, including:
Over £425 million has been used to establish Big Society Capital, an independent financial institution, launched in 2012, with the aim of growing the social investment market in the UK. To date, over 1,200 social enterprises and charities have received investment from Big Society Capital and the social impact investment market has grown from £830 million in 2011 to £5.1 billion.
£96 million has been provided to Fair4All Finance to increase the financial resilience and wellbeing of people in vulnerable circumstances through improving availability of fair and accessible financial products and services. Fair4All Finance has provided over £15 million in financial support to the community finance sector so far, including £12 million of equity investments in community finance providers and £3.6 million in Covid-19 grants.
£90 million has been provided to Youth Futures Foundation to break down the barriers to work for young people across England, with a focus on responding to the findings of the Racial Disparity Audit. It includes investing £6 million into targeted support for young people who are not in education, employment or training, and deploying £8.7 million in coronavirus grants to frontline charities, social enterprises and infrastructure bodies tackling youth unemployment.
£40 million has been provided to Access – The Foundation for Social Investment. In response to Covid-19 Access has made up to £10 million available for emergency support through social lenders, while also developing a wider £18 million programme of flexible long-term recovery finance for the social sector.
The Government intends to legislate for the scheme expansion and will continue to work with industry, regulators, and Reclaim Fund Ltd to ensure its success.
The definition of a dormant asset varies according to the type of asset in question. In general it means a financial product, such as a bank account, that the customer has not used for many years and which the provider has been unable to reunite them with, despite efforts based on industry best practice.
There are over 30 firms participating in the current Scheme, including HSBC Bank plc, Lloyds Banking Group, Nationwide Building Society, Royal Bank of Scotland, and The Co-operative Bank plc.
Under the current and expanded scheme, funds are held by Reclaim Fund Ltd (RFL). RFL holds sufficient money to cover any reclaims while distributing the surplus to The National Lottery Community Fund for social or environmental initiatives across the UK.