UK Finance responds to the Dormant Assets Expansion consultation

UK Finance welcomed the opportunity to respond last week to the consultation launched by HM Treasury and the Department for Digital, Culture, Media and Sport on expanding the dormant assets scheme to cover non-cash assets. The dormant assets scheme enables participating financial institutions to voluntarily channel funds from dormant accounts towards good causes through an authorised reclaim fund. Customers remain able to reclaim their money and firms are encouraged to ensure they have the right steps in place to trace customers and reunite them with their assets. The Dormant Asset Scheme has channelled over £600 million towards social causes since 2011.

The consultation proposes expanding the current dormant assets scheme beyond bank and building society accounts to include assets from the insurance and pensions, investment and wealth management, and securities sectors. In responding to the consultation, UK Finance recognises the laudable policy drivers underpinning the proposals. The duties of bankers to safeguard client assets are however age-old. Additional considerations arise for banks when determining whether or not to participate in respect of client non-cash assets. Our members are keen to ensure that they could navigate this expanded dormant asset scheme and their long-standing fiduciary duties and duties under trust law.

Careful input was provided by our members in the UK Finance response to support the government in ensuring that the expanded scheme does not have unintended consequences. It is important for the government to ensure that the fundamental difference (in terms of ease of liquidation, operational processes and fungibility) between cash and non-cash assets is reflected in the final scheme. In our response, UK Finance recommends that the focus for determining dormant investment assets should not be on the lack of customer-generated activity where customers do not typically actively engage in such investments. Secondly, that the expanded dormant assets scheme should align with Client Asset (CASS) rules. Many of our members hold or control client assets and have built sound processes to honour their obligations arising from the CASS Rules in the FCA Handbook. Finally, UK Finance contends that the voluntary participation element of the dormant assets scheme is a core principle that has been integral to the scheme's success. The principle has supported participants in determining whether or not to contribute to the scheme and the extent to which they should do so. We therefore strongly concur with the consultation's proposal that the principle of voluntary participation will be retained as the scheme expands. If you require more information, please let Yvonne Deane know. 


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