View more on these topics

BSA backs good cause proposals

In the pre-Budget Report the chancellor announced further details on plans to give dormant account monies to good causes.

These proposals were first mooted in the 2004 budget and since then the industry has held constructive discussions with the Treasury on a number of complex issues.

Adrian Coles, director-general of the Building Societies Association, says: The BSA is determined to ensure that as much money as possible is reunited with customers.

“If a scheme is considered necessary to deal with the remainder, it is important that a realistic definition of dormancy is used and that smaller institutions are able to support local charities.

“We are pleased the Government has taken these points on board. However, much of the detail still needs to be resolved and we will be looking to work constructively with the Treasury on issues such as identifying unclaimed assets.

Assets lie unclaimed for a number of reasons. People lead ever busier lives and sometimes do not keep track of all the accounts they hold and lose touch with their money. Others deposit money, which they do not touch until a rainy day comes along.

“Therefore it is important to recognise the distinction between accounts that are lost and those that are merely dormant. In the case of the former, accounts where mail is returned as addressee unknown, are flagged to stop confidential account information being sent out.

“Where the account is merely dormant, the person knows perfectly well where their money is, but has not touched it. This is especially the case for building societies, which specialise in savings accounts, where people deposit money for long term safe keeping.

The proposed 15-year definition for unclaimed assets is very sensible. The longer the timescale, the greater the likelihood that these accounts are genuinely lost, rather than merely untouched.

Coles adds: Many societies have a policy of making charitable donations to help the communities from where their members are drawn, rather than centrally based organisations. After all, charitable donations are drawn from members money.

“Regional societies will want to continue to ensure their local communities are helped by charitable donations.

“Therefore the chancellors commitment that locally-based financial institutions will be able to focus on the needs of the communities in which they operate is a step forward and we look forward to working with the Treasury on what this will mean for building societies.

There is a difference between accounts which are dormant and those which are lost. Many people use building societies to keep their long-term savings safe.

“Their account may be dormant in that they have not carried out any transactions for a while, but they active relationship on another account such as an instant access savings account, mortgage or AGM voting. It is essential that money in these accounts is not required to be paid over to charity since it is not lost.

Coles says: It is not clear whether membership rights would be retained if the account money is taken off a building societies balance sheet. The legality of taking members money out of an institution, and what happens to that membership needs to be properly worked through.

“As mutual organisations, building society lost account money is used collectively for the benefit of all members of the society, funding good value mortgages, which currently allow 2.5 million people to purchase their own home.

The starting point for all of these negotiations is rightly the need to ensure that people are reunited with the money, which belongs to them. To this end the BSA has recently launched its revamped lost savings leaflet, which is an easy one-stop process for people to trace any building society savings with which they have lost touch.

In order to maximise the amount of money being given to young people and financial education, we would urge the government to rethink the decision not to involve national savings and investments in the discussion on unclaimed assets.

“During a recent Treasury Select Committee hearing, representatives from NS&I told MPs that 1.8bn was currently in dormant accounts, with 25m in unclaimed Premium Bonds.

Recommended

NLA welcomes private-rented sector report

The National Landlords Association has welcomed the recent report on the private-rented sector published by Camden Council. The report, produced by the Private Rented Sector Accommodation Scrutiny Panel, reflects the fact that a quarter of all households in the borough now rent their homes from a private landlord, almost as many as remain tenants of […]

Skipton networks Pink and Enable merge

Pink Home Loans and Direct Life & Pension Services (Enable) are to combine their two mortgage and insurance networks.Both owned by the Skipton, the aim is to provide enhanced benefits to the membership of both and to create management efficiencies in the running of the groups network services.The combined network will trade under the banner […]

Tested to destruction

The financial sector last week took part in the largest ever test of its preparedness to respond to a crisis such as a terrorist attack or widespread infrastructural damage.

Ben Stafford to leave AMI

Ben Stafford is leaving the Association of Mortgage Intermediaries to become policy adviser for regulation and distribution at the Association of British Insurers. Stafford, who has been head of policy at AMI for the past two years, will join the ABI in mid January.He says: Its been a real privilege to work with Chris and […]

In Focus image

In Focus — May 2015: private medical insurance market in Germany

Welcome to the latest edition of In Focus. In this issue, Jelf examines the private medical insurance market for employers with expatriate workforces in Germany. This includes the common challenges faced in sourcing appropriate coverage, along with a selection of available solutions. This will be of particular interest to HR/reward decision makers with employees based in Germany. It will assess the cultural norms, risks and backdrop that are relevant to organisations with expatriate staff in this location.

Newsletter

News and expert analysis straight to your inbox

Sign up