Robert Welch, Group Company Secretary of Tesco, and Securities Working Group Champion for the Dormant Assets Scheme, took to the stage at this year’s Equiniti Share Registration Conference to explain the success of the scheme, its benefits and why the scope is being considered for expansion.
The initiative originally emerged from the Dormant Bank and Building Society Accounts Act 2008 and was launched three years later. The over-riding aim has always been to track down the owners of dormant assets to reunite them with their money. Of course, this is not always possible and where the search for the owner of a dormant asset runs cold, the funds are put into a fund for good causes across the UK.
The figures are eye-opening and much higher than envisaged when the scheme began. Since opening, more than £1.1bn has been unlocked from dormant bank and building societies, with more than £500m made available for good causes. These include providing long-term accommodation for more than 2,000 vulnerable people. It has also funded jobs and training opportunities for 26,000 disadvantaged young people and affordable loans for more than 24,000 low-income consumers.
Participation is voluntary but most of the retail banking sector takes part. Buoyed by the success to date, the scheme has now established working groups to look at expanding into insurance and pensions, investment and wealth management, and securities. Ministerial clout has also been added with ambassadorial support from Tracey Couch (Minister for Sport and Civil Society), John Glen (Economic Secretary to the Treasury) and Guy Opperman (Minister for Pensions and Financial Inclusion).
A key element of the principles behind the revised scheme is that no customer should be disadvantaged by having an asset transferred – the asset will be returned to them if they are traced or make a legitimate claim.
Robert expects that this inclusion of full restitution in perpetuity will help to encourage participation by companies in the knowledge that asset owners will not be disadvantaged by taking part.
How long is dormant?
Robert went on to tackle some of the obstacles to the scheme’s expansion, including the cost to participants – and explained that an industry-wide process for tracing and reunification is being considered. He also promised a strong focus on keeping the scheme as simple as possible.
One other challenge is to establish a cross-sector acceptance of how long it takes an untouched asset to become ‘dormant’. Definitions vary between companies (many go for 12 years) but the current bank and building society scheme works on the basis of 15 years, as set out in the Dormant Bank and Building Society Accounts Act 2008.
A poll of the audience found that 62% of companies currently trace gone away shareholders, with more willing to embrace the spirit of the extended scheme.
Imagine the potential
The potential is massive, said Robert, describing it as a win-win situation for all involved – and a huge source of revenue for good causes during a time of difficult economic and public spending conditions. For instance, Tesco itself recently raised £5m from a share forfeiture initiative. Imagine, he said, similar sums of money raised across the whole UK corporate landscape.
Robert added, however, that the Scheme should never lose sight of the fact that the priority is to reunite customers with what belongs to them.
The next step in this process will be for the working group to report back to the Government and any necessary legislative and regulatory changes to be put in place.