Posted on July 19th, 2010 | Categories - Financial News
Money in dormant bank accounts will be used by the government to fund charity projects, it was announced today by David Cameron.
The move comes as part of the Big Society Bank scheme, which will finance social enterprises and voluntary groups in need of extra capital.
Cameron said, the “unclaimed assets alongside the private sector investment that we will leverage, will … make available hundreds of millions of pounds of new finance to some of our most dynamic social organisations”.
The plan will affect inactive accounts that have remained untouched by customers for the last 15 years under legislation that was passed by the Labour government two years ago. The British Banking Association has estimated that there is about £400 million of unclaimed capital left in dormant accounts that could be utilised.
Banks have a duty to inform customers of the existence of their long-forgotten-about accounts. However, it can be difficult to track down clients after years of inactivity, during which time they may have moved addresses or changed their name.
People in receipt of such accounts can easily prevent the government from using the deposited cash by getting in touch with their bank – any form of contact counts as customer activity and will prevent the funds from being labelled as dormant.
Once money in dormant accounts has been tracked down, cash management services and guidance from Independent Financial Advisers can assist those who want to use the money in their awakened accounts to invest in new areas or simply get a better return from an alternative deposit account.