Dormant Assets Act 2022 receives Royal Assent

The Dormant Assets Act 2022 became law on 24 February 2022, receiving Royal Assent as chapter 5 of the 2022 session¹. It establishes an expanded dormant assets scheme and amends the Dormant Bank and Building Society Accounts Act 2008, which it may be cited alongside as the Dormant Assets Acts 2008 to 2022¹.

Under the scheme, an institution transfers to an authorised reclaim fund, with its consent, an amount owing to a person which is dormant; the transfer extinguishes the person's right to the amount and replaces it with a right against the reclaim fund¹. The Act sets out six categories of assets within scope¹:

The Act extends to England and Wales, Scotland and Northern Ireland¹. It repeals section 11 of the 2008 Act, on a customer's rights on the insolvency of a bank or building society, and section 18 of that Act¹. Reclaim Fund Ltd (registered company 07344884) is named in relation to transfers¹. Claims against an authorised reclaim fund are excluded from the financial services compensation scheme, including repayment claims arising under the 2008 Act before the relevant section comes into force¹. The Treasury may make a loan to a reclaim fund where it considers that, unless the loan is made, the fund is or is likely to become unable to meet its liabilities¹.

Dormancy is defined differently by asset type. Eligible insurance proceeds are dormant where, among other conditions, at least seven years have passed since the institution was notified of the holder's death with no subsequent communication, or where the holder would be at least 120 years old¹. Share or unit conversion proceeds are dormant where the institution regards the person as having been gone-away throughout the preceding 12 years². Certain assets are excluded, including with-profits policies, industrial assurance policies, policies subject to a trust, and Lifetime ISA holdings where transfer would trigger an HMRC withdrawal charge¹.

Money released is distributed for expenditure with a social or environmental purpose¹. Purposes named in the Act include services, facilities or opportunities to meet the needs of young people, and a community wealth fund, defined as a fund giving long term financial support for local amenities or other social infrastructure¹. The Act sets an "additionality principle", meaning dormant assets money should fund projects, or aspects of projects, for which funds would be unlikely to be made available by a government department or the devolved administrations¹.

Why it matters for households

The Act widens the range of forgotten money that can be moved into the scheme and later claimed. People with dormant long-term insurance policies, personal pension benefits, collective investment holdings, client money or proceeds from shares in traded public companies now fall within a scheme that previously covered only bank and building society accounts¹. Where a transfer happens, the individual's right against the original institution ends and is replaced by a right against the reclaim fund¹. The Act states that claims against an authorised reclaim fund are excluded from the financial services compensation scheme¹. Certain holdings are carved out, including with-profits policies and Lifetime ISAs where a transfer would create an HMRC withdrawal charge¹. The scheme does not apply to the alternative scheme for smaller institutions or to transfers of unwanted assets¹.

What happens next

The first report under the relevant section must be laid no more than three years after the day the Act was passed, with subsequent reports no more than five years after the previous one¹. Before an order on how money for English expenditure should be distributed, the Treasury must carry out a public consultation and consult the Big Lottery Fund on a draft of the order¹.