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The Dormant Asset Scheme Expands To Support More Charities And Social Projects

Thursday, 24 February 2022

As the Dormant Assets Act receives Royal Assent (24/02/22), the final step required for a parliamentary bill to become law, Steve Banfield, Head of Industry at EQ, and a member of the dormant assets expansion board, talks us through the background of the Scheme and its potential impact on organisations.

Initially introduced in 2008, the Dormant Assets Schemes' primary objective is to reunite owners with their financial assets. However, where this isn't possible, the dormant money is transferred to the Reclaim Fund then attributes the money to firms supporting important social and environmental initiatives across the UK.

"Thanks to all involved in the project for all of their hard work leading to this significant achievement." Steve Banfield, EQ

What are the new changes for the Dormant Asset Expansion act?

The changes contained within this Act expands the scope of the Dormant Bank and Building Society Accounts Act of 2008. It will now include dormant assets within the insurance and pensions, investment and wealth management and securities sectors to be transferred into the reclaim fund.

The money can then be utilised to help finance social and environmental causes. Over £800m has already been distributed to charitable and social enterprises across the UK. The Schemes expansion can potentially double this amount in the coming years.

Can you tell us about the background to the Act?

Since the original 2008 Act, over £1.2bn of dormant assets from the banking sector has been transferred to the reclaim fund. In 2016 an independent commission explored the feasibility of expanding the Scheme across the wider financial sector, culminating in a blueprint for expansion being published in 2019. The blueprint identified the potential to unlock billions of pounds of dormant assets. It recommended expanding the Scheme built upon the existing principles of prioritising reunification efforts, participation remaining voluntary and full restitution to the asset owner in perpetuity.

How did we get to where we are today with the Bill?

The expanded Scheme received cross-party support, and the Bill passed quickly through parliament, avoiding parliamentary ‘ping pong’ when seeking approval by both the House of Commons and Lords. The speed at which Royal Ascent was achieved was quicker than many expected.  

What is the impact on Issuers of this announcement?

Next up will be a consultation on where the money will be spent, with the expectation that the money will continue to be used for good social causes.  The Scheme may be live as soon as July 2022, with the first participants expected to follow shortly after.  

In line with the principles, companies will need to make efforts to trace dormant shareholders before they can transfer funds to the reclaim fund, and consideration should be given as to whether participation in the Scheme would be suitable for them.

As always, if you have any questions relating to this article, please contact your Client Relationship Lead, or get in touch below.