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Dormant Bank and Building Society Accounts Act 2008: Difference between revisions
Dormant Bank and Building Society Accounts Act 2008 (view source)
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{{g}}You would like to think in this enlighted age this would not need saying but it does so we will: a deposit in a [[bank account]] constitutes a [[debt]] owed by the [[bank]] to its [[customer]]. The bank is free to use the deposited [[money]] received from customers however it likes<ref>Yes yes yes — keeping some aside under prudential rules to keep an adequate capital base.</ref> the bank remains liable to repay the debt to its customer '''indefinitely'''. Unclaimed bank deposits aren’t covered by the [[Limitation Act 1980]] — if you never ask for your money, the limitation period never begins to run — so banks are faced with a perennial problem with “[[gone-away client]]s”. | {{g}}You would like to think in this enlighted age this would not need saying but it does so we will: a deposit in a [[bank account]] constitutes a [[debt]] owed by the [[bank]] to its [[customer]]. The bank is free to use the deposited [[money]] received from customers however it likes<ref>Yes yes yes — keeping some aside under prudential rules to keep an adequate capital base.</ref> the bank remains liable to repay the debt to its customer '''indefinitely'''. Unclaimed bank deposits aren’t covered by the [[Limitation Act 1980]] — if you never ask for your money, the limitation period never begins to run — so banks are faced with a perennial problem with “[[gone-away client]]s”. | ||
Enter the [[Dormant Bank and Building Society Accounts Act 2008]], which allows | Enter the [[Dormant Bank and Building Society Accounts Act 2008]], which creates a framework under which dormant bank and building society account balances, on which there have been no customer initiated transactions for 15 years, can be distributed for the benefit of the community, whilst the beneficiaries, should they reappear through the mist retain the right to reclaim their money. The Act allows banks and building societies to cancel their liability to repay a customer on a dormant account by transferring the cash into a reclaim fund. The customer’s doesn’t lose its rights altogether: they are can be exercised instead against the reclaim fund. | ||
Unlike the gone away rules for client assets and client money, there does not appear to be any requirement to try to contact or notify clients, though the Act does require (under Section 14(1)(b)) HM Treasury to consider “how effective banks have been in providing a mechanism for making those entitled to dormant account money aware of the fact”. In 2014, HMT concluded they ''had'' been quite effective. Which is nice. | |||
This cancellation of liability means banks can participate in the scheme without suffering an adverse impact on their balance sheets. | This cancellation of liability means banks can participate in the scheme without suffering an adverse impact on their balance sheets. | ||