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Bill paves way for banks to give to charity

January 2008

A Bill has been introduced in the UK parliament that will make it easier for banks and building societies to hand over money in dormant accounts to finance community projects.

The Dormant Bank and Building Society Accounts Bill will not compel financial institutions to give away the cash, but will provide safeguards that banks say are needed to ensure that the public trusts any such system.

The chief of these is a government guarantee that account holders will have a right to repayment of their funds even after the money in their dormant account has been given to community projects. Dormant accounts will be defined as those that have not been touched for 15 years.

The proposed legislation will allow banks and building societies to end their liability to a dormant account holder and transfer the cash to a reclaim fund, with the money distributed to community projects through the existing Big Lottery Fund, which allocates National Lottery cash to good causes.

The Bill says the money, which could be as much as £20billion ($40bn), should be spent on young people, financial inclusion and other 'social investment'. Smaller banks and building societies will be allowed to transfer dormant account money to charities that benefit their communities, rather than directly to the Big Lottery Fund.

Until now, UK banks and building societies have shown little enthusiasm for using money from dormant accounts for charitable purposes, despite prompting from the Treasury, partly because in some cases it contributes to their bottom line.




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