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banks show little interest in releasing dormant cash

October 2005

UK financial institutions have given a lukewarm response to calls to redirect cash in dormant bank accounts to projects that tackle social and financial deprivation.

For two years the UK chancellor of the exchequer Gordon Brown has urged banks voluntarily to redirect the billions of pounds in dormant accounts to good causes, with the veiled threat that they may be forced to do so if their response is poor.

However, EP has discovered that a Brown-backed foundation set up in the spring of 2004 to allow banks to channel money from dormant accounts to charities has received cash from just two institutions. The Balance Charitable Foundation for Unclaimed Assets refuses to name the companies or reveal how much they have released from dormant accounts, but one of them is understood to be an investment bank.

When the foundation was set up, it announced it was holding discussions with seven or eight investment banks, but now says only that ‘two or three’ may be in a position to contribute money by the end of the year.

A foundation spokesman told EP: ‘Some of the banks are a bit coy about this issue because to admit you have dormant accounts can be perceived in some quarters as bad practice.’

Although the foundation has concentrated on investment banks, which have far less money in dormant accounts, the Treasury has been working behind the scenes on retail banks, and Brown is expected to raise the issue again in his pre-budget report expected next month.

The amount in dormant accounts, largely in the names of people who have died or cannot be traced, is thought to be between £5billion ($9.1bn) and £20bn. The British Bankers’ Association, which has private reservations about the idea, is talking with the government and will not comment during those negotiations.

The foundation was set up by a group of individuals, including Sir David Cooksey, a non-executive director of the Bank of England, with help from charities – and is endorsed by Brown. Its first programme will fund projects for older people across the UK with grants of £50,000 to £100,000 phased over up to five years.




Further Information
http://www.balancefoundation.org.uk
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