The FCA is consulting on a major expansion of the dormant assets scheme to include insurance provider, pension and investment assets.

Following a change in the law, the FCA is planning new rules to ‘unlock’ millions held in dormant assets for good causes.

The ABI estimates that there is up to £2.1bn in unclaimed assets held by the life, pensions and investment sectors.

Dormant assets are money left unclaimed and unused with providers for long periods.

The money will always be returned to the original owners if it can be but the aim is to use the unclaimed assets to help charities and organisations helping those in need.

The FCA is consulting on its proposals in CP22/9 until 17 June with the aim of publishing proposed new rules in July.

In 2016, the Government established the Independent Commission on Dormant Assets to examine what new assets could be brought into an expanded Dormant Asset Scheme which already covered unclaimed bank and deposit accounts held with banks and building societies.

In February 2022, the Dormant Assets Act 2022 received Royal Assent. This expanded the range of dormant assets that can be contributed to the scheme. The FCA is now consulting on implementation in the retail finance sector.

Since 2022 the FCA has been working the the Government and Reclaim Fund Limited (RFL) – the existing scheme - to discuss expansion to enable insurance, pension and securities firms to contribute dormant assets to an expanded scheme.

Pension and insurance assets are likely to be included first but in a change to earlier plans, the FCA said it would engage in more discussion with securities and investment firms about extending the scheme to the investment sector. Any changes are likely to be on a “staggered” basis.

Assets likely to be included in the expanded scheme are:

• Proceeds of dormant life insurance and retirement income policies
• Proceeds of dormant shares or units in collective investments
• Dormant investment asset distributions and proceeds
• Proceeds of, or distributions from, dormant shares
• Unclaimed proceeds from corporate actions

Since 2011, 30 banks and building societies have released over £745m from dormant accounts that have been inactive for at least 15 years. Some £150m was unlocked in May 2020 to support the UK’s charity and voluntary sectors.

The funding is supporting work to tackle youth unemployment, expand access to emergency loans for civil society organisations and help improve the availability of affordable credit to people in vulnerable circumstances.

Under the current scheme, bank accounts are deemed dormant when they have been untouched for a minimum of 15 years and the bank or building society has been unable to trace the owner. The first priority will always be to try to trace the original owner, the FCA says.

The FCA is also looking at the implications of the expansion of the dormant assets process on the Financial Services Compensation Scheme and the Financial Ombudsman Service.