BBA supports Government paper on unclaimed assets

The British Bankers’ Association (BBA) has confirmed the banking industry’s support for the proposed approach on unclaimed assets set out in the Government consultation paper issued today.

Angela Knight, chief executive designate of the BBA said: “The banking industry has been in a detailed discussion with the Government since the 2005 Pre-Budget Report on the introduction of an unclaimed assets scheme for bank and building society accounts with the aim of getting the technical detail right on their initiative.

All along our priority has been the protection of the right of customers to reclaim their monies at any time. A key element of the approach proposed within the consultation paper therefore is that even after the transfer of their “unclaimed assets” individuals will retain the right to reclaim their monies via their bank or building society as at present.”

The Government has published the consultation paper as part of the process of preparing for legislation to enable a scheme to be established. The legislation essentially provides a statutory framework in which unclaimed account monies can be reallocated to community causes while maintaining the right of account holders or their legal heirs to reclaim their monies subsequent to transfer.

Key to ensuring that consumer rights are fully protected is the establishment of a statutory definition that results in monies only being transferred at the point at which the likelihood of reclaim has become remote. The banks and building societies also plan to undertake enhanced reclaim activity in the run-up to the introduction of the unclaimed asset scheme.

While the financial liability will be transferred to an independent central reclaim fund once the 15 year definition has been met, it is proposed that banks and building societies will continue to provide the customer interface. This removes the need for individual account records to be transferred to the central body. It will ensure that the customer is not unduly inconvenienced and avoids the need for bulk transfer of their personal data.

It will also enable the central reclaim fund to concentrate on the financial management needed to ensure that monies remain available for ongoing reclaims. This will result in a substantial cost saving for the central reclaim fund and will therefore ensure that costs do not become a significant drain on the monies available for distribution to community causes.

The banks and building societies commitment to provide the customer interface will be reflected in the next revision of the Banking Code, an exercise that is currently underway.

The banking industry estimates that that a stock of several hundred million pounds may currently lie unclaimed. It is also estimated that a further flow of perhaps tens of millions of pounds may become available each year. These estimates are before further reunification initiatives that the banking industry envisages taking place.

The Government has announced that it will produce a separate consultation paper on distribution – or how the money will be spent – later in the Spring.