Key Facts

• Clause 1 provides an overview of the operation of the dormant asset scheme.
• The reclaim fund distributes surplus money to the national lottery community fund according to part 1 of the Dormant Bank and Building Society Accounts Act 2008.
• Beneficial owners can always reclaim the full amount owed to them.
• The Dormant Bank and Building Society Accounts Act 2008 was introduced by a Labour Government in 2008.
• Around £745 million has been distributed to good causes across the UK through the scheme.
• Clause 29 aims to enable dormant assets to create community wealth funds for social infrastructure in deprived areas.
• Clauses 2 to 4 define insurance assets and participants in scope of the scheme.
• Clause 5 provides that a pension institution can transfer dormant pension benefits to an authorised reclaim fund.
• Personal pension schemes whose owners were automatically enrolled or with sums invested in with-profit funds are excluded.
• Clauses 8 to 16 define various types of investments, client money, and securities that can be transferred to reclaim funds.
• Clause 8 allows investment institutions to transfer dormant eligible amounts owing by virtue of collective scheme investments to an authorised reclaim fund.
• The Bill excludes lifetime ISAs if their transfer would incur tax liability to HM Revenue and Customs.
• Clause 19 enables the inclusion of new asset classes in the dormant assets scheme.
• It allows for amendments through regulations, subject to parliamentary approval.
• The aim is to expand the scope and potential of the fund without requiring further primary legislation.
• The Bill includes provisions allowing expansion into new asset classes via secondary legislation.
• The use of Henry VIII powers is justified due to the need for flexibility in addressing unforeseen financial assets types.
• Regulations are subject to draft affirmative procedure, ensuring parliamentary scrutiny.
• Clause 20 enables transfer of surplus funds from alternative scheme back to charities chosen by participants.
• Clause 22 ensures third-party rights are preserved.
• Clause 23 requires participants to take steps to reunite asset owners with their lost assets.
• Clause 26 names Reclaim Fund Ltd as the authorised reclaim fund and allows the Treasury to amend this designation.
• Reclaim Fund Ltd (RFL) is named as the only current authorised reclaim fund under clause 26.
• Clause 27 enables the Treasury to provide loans to RFL if it becomes unable to meet its liabilities.
• Clauses 27 and 28 replace financial services compensation scheme protection with a government guarantee through a Treasury loan.
• Amendment 5 seeks to require the Secretary of State to publish criteria for distributing dormant assets money.
• The amendment also mandates a three-month limit for consultations on these criteria.
• Labour supports prompt and thorough consultation but is concerned about delays.
• Amendment 1 removes provisions for community wealth funds added in the Lords.
• Amendment 3 seeks to include consideration of community wealth funds in future consultations.
• The current system reserves 40% of funds for potential claims, with 60% released for social and environmental purposes.
• Amendment 1 aims to protect the integrity of the consultation process.
• Over £465 million from the scheme has been invested in charities and social enterprises since its inception.
• A 12-week consultation period is proposed to afford everyone, including local communities and advocates for community wealth funds, an opportunity to contribute.
• The amendment moved in the Lords had cross-party support and was seen as a compromise.
• Government amendment 1 removes provisions to create a community wealth fund.
• Amendment 3 would require the Government to specifically consult on establishing a community wealth fund.
• The expanded scheme is expected to generate close to £1 billion for good causes.
• Over 40 local or combined authorities and mayors support the proposal.
• Polling research shows that 78% of senior leaders in financial services industry support new causes benefiting from the expanded scheme.
• The Dormant Assets Bill aims to enable systemic change in tackling youth unemployment and financial exclusion.
• Annual reports from the National Lottery Community Fund, spend organisations, and the Oversight Trust provide transparency on dormant assets funding distribution.
• Reclaim Fund Ltd publishes annual reports as well.
• Clause 30 requires a review report within three years of Royal Assent and every five years thereafter.
• New clause 1 mandates an annual assessment of the health and governance of reclaim funds to be reported to Parliament.
• The Secretary of State must assess authorised reclaim funds for insolvency risk annually.
• New Clause 2 would allow authorised reclaim funds to conduct a review and make recommendations on increasing the proportion of dormant asset money for good causes.
• It gives the Secretary of State power to implement such recommendations through regulations.
• The clause's wording is questioned regarding its applicability to devolved Administrations.
• The Government agrees that as many dormant funds as possible should be channelled to good causes.
• Reclaim Fund Ltd (RFL) currently holds 40% of dormant account assets and distributes 60% to the National Lottery Community Fund.
• RFL continuously assesses its reserving policy based on actuarial modelling and professional expertise guidance.