A new option for firms who have lost touch with their retail clients
The Dormant Assets Scheme currently provides a mechanism for banks to be able to unlock the assets of customers they have lost contact with to be able to be put to good use across the UK. The Scheme is proposed to be extended to the Investment & Wealth Management sector and others, which will enable investment firms to transfer the cash from dormant accounts to charities via a reclaim fund. The Scheme has three central principles which will remain unchanged, and are shown in the box on the right.
The Dormant Assets Bill is currently proceeding through parliament, and passed its Committee stage in the House of Lords in June. Opposition parties have signalled their broad support for the Bill and it is not expected that its passage will be interrupted. The next stage in the legislative process, the report stage, will be after summer recess and it is hoped that it will pass both Houses later this year. We are currently in discussion with FCA on a small number of associated regulatory changes that may be needed, mainly in CASS, and a short consultation is expected on these in Q4.
The IA is currently updating its ‘Principles for tracing gone away customers’ which contain the steps that will become a pre-requisite for participation in the expanded Scheme. There is work to be done with the FCA on changes to regulation in Q4 and in partnership with the Reclaim Fund Ltd to operationalise the Scheme for our sector into 2022.
- Reunification first Assets are only classed as ‘dormant’ and made available to the Scheme after satisfying strict criteria, and only after participating firms have completed their first priority to trace and reunite owners with their assets. Customers can reclaim any 'lost' assets through their original product provider at any time, with the firm retaining the customer relationship. - Voluntary participation Potential participants can choose whether to contribute to the Scheme and to what extent. The Scheme is a voluntary commitment by industry to pool dormant assets to help address social challenges. - Full restitution in perpetuity Owners are able, at any point, to reclaim the amount that would have been due to them had a transfer into the Scheme not occurred. RFL, who operate the Scheme, ensures that sufficient funds are available so this guarantee can always be fulfilled.