Under the Dormant Bank and Building Society Accounts Act 2008 (the Act), which received Royal Assent on 26 November 2008, reclaim funds will be authorised and regulated by the FSA. They will be under an obligation to transfer surplus money, after meeting FSA requirements and their own expenses, to the Government’s ‘Big Lottery Fund’ (BIG), which will reinvest the money according to Government priorities.
Graeme Ashley-Fenn, FSA director of permissions, decisions and reporting, said: “Reclaim funds will be a unique type of financial institution with the characteristics of both a bank and an insurer. This is because they will have dormant accounts transferred to them and will also have to estimate the percentage of deposits that are likely to be reclaimed. Our regime will reflect this uniqueness and will be proportionate and cost-effective with clear prudential requirements for reclaim funds to retain sufficient money to repay dormant depositors that may claim their money at a later stage.”
The FSA has pre-consulted and worked with the British Bankers’ Association (BBA) and the Building Societies Association (BSA), as well as the Treasury and will work with interested applicants on a pre-application basis and also through the authorisation process. The consultation period has also been shortened to two and a half months, given this pre-consultation process.
The Financial Ombudsman Service (FOS) and Financial Services Compensation Scheme (FSCS) will cover customers of banks and building societies who have dormant accounts transferred to a reclaim fund.
