Government to redistribute £330 million from dormant bank accounts

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The money will be distributed over the next four years to support vulnerable people, youth employment and debt management initiatives in England, Wales, Scotland and Northern Ireland.

It's all possible thanks to the 2008 Dormant Bank and Building Society Accounts Act, which allows cash from dormant accounts to be reclaimed in this way. Up to £1 billion in unused accounts has been identified over the last ten years, and £360 million has been recovered. It's estimated this could reach £500 million by 2020.

Tracey Crouch, Minister for Sport and Civil Society, said "This is part of the Government's commitment to building a fairer society and tackling the social injustices that hold people back from achieving their full potential."

Where it's going

£280 million will be allocated to initiatives in England, including £135 million for Big Society Capital (BSC), a social investment firm set up by David Cameron. BSC will look to leverage the funding to gain private investment in funding stable and long-term accommodation for vulnerable groups including homeless and mentally ill people, as well as supporting local charities and social enterprises.

£90 million will go to supporting projects helping disadvantaged young people into employment, while £55 million will go towards financial inclusion and capability initiatives tackling debt and improving access to financial services.

£50 million is to be distributed in Scotland, Wales and Northern Ireland by the Big Lottery Fund, the same public body that distributes National Lottery funds.

What is a dormant bank account?

An account is declared dormant by a bank or building society when it has been unused for an extended period of time, and where they are unable to contact the account holder.

If contact cannot be established the institution will mark the account 'dormant' and correspondence to any out of date contact details will be stopped, partly in order to mitigate the risk of identity fraud.

Different banks have different definitions of 'dormant', but the legislation means the government can only claim money that has been untouched for 15 years or more.

It also ensures that anyone who can trace money from dormant accounts that belongs to them can still reclaim it, even after 15 years. So don't fret if you think you may have inactive accounts you have forgotten the details of.

What to do if you think you have a dormant account

My Lost Account is a free service that helps people find lost savings. Users can complete a single form that can identify relevant accounts and savings from 36 banks, all building societies and National Savings and Investments (including old Post Office accounts).

Searches can take up to three months but in its first five years it found £645 million in otherwise-lost savings.

In 2015 RBS were in hot water for denying the existence of £250,000 of dormant accounts, although they explained customers had been told the accounts did not exist due to a problem with their computer systems.

Other assets

The scheme could be extended to include other types of financial assets including dormant insurance policies, pensions or other types of investment.

An independent Commission on Dormant Assets in March 2017 recommended that the scheme be extended to include a wider range of dormant financial assets. The government is still considering their response.