- Expanding the Dormant Assets Scheme
- May 1, 2017 | Authors: Alison Paines; Chris Priestley
- Law Firm: Withers LLP - London Office
- The Commission on Dormant Assets published a report last month which states that including shares and investment fund holdings within its scope could considerably increase the amount of money available for charities. The Commission's view is that the current scheme should be expanded to include a much wider range of financial assets, and it estimates that their inclusion could lead to an extra £1-2 billion of funding being transferred for the eventual benefit of good causes.
More than £1 billion has already been uncovered in dormant bank accounts and building society accounts since 2008. Through the Dormant Assets Scheme, an estimated £360 million has been directed to good causes. Because of the success of the current dormant assets scheme and the positive industry participation to date, the Government announced in late 2015 its intention to examine how to broaden the scope of the Dorman Assets Scheme and appointed a new Commission in 2016.
The Commission determined that a broad range of UK-domiciled financial products are suitable for inclusion, including additional bank accounts, unclaimed proceeds from life insurance and pensions products, and non-cash assets such as dormant holdings in investment funds, shares and bonds. Further, it noted that certain assets recommended for inclusion may be held through trust structures and that legislative change may be required to facilitate trustees transferring assets to the scheme. Given the time constraints, the Commission stated that it was unable to complete a detailed review of non-financial products.
During the summer of 2016, the Commission contacted around 200 organisations, including trade associations, regulators and market participants to ask their opinions on expanding the current scheme.
The Commission recommended that the way that the scheme is managed should be revised to enable it to cope with a wider range of assets envisaged. It further recommended that new or amended legislation should be enacted to give effect to the proposed expansion.
Finally, the Report recommends that the Reclaim Fund, which administers the Dorman Asset Scheme, should be reconstituted in lieu of being owned by an entity within the Co-operative Group. The directors of the reconstituted reclaim fund should be responsible for ensuring there is an appropriate balance between the two roles of reserving for future reclaims and making distributions for the benefit of good causes.