Banks 'to get final say on dormant accounts'

Banks 'to get final say on dormant accounts'

Fears are growing that banks are trying to water down forthcoming rules that will see unclaimed money lying dormant in bank and savings accounts used for social purposes.

Critics say the banks have 'got at' Gordon Brown after it emerged that the Treasury will let banks administer the scheme; this is not the way similar initiatives are handled in other countries.

In addition, a Treasury consultation paper outlining how the scheme will work appears to give banks the final say on whether assets should be injected into the fund. It was previously thought that a 15-year lapse in account activity would be the determining factor.

Insiders believe that, taken together, these policy details will reduce money going to a new Social Investment bank to fund social enterprises and community businesses. It is thought that £400m now lies unclaimed in UK banks, but the figure could be much higher.

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According to Peter Graham, client services director in business advisory Grant Thornton's Forensic and Investigation Services Department - who worked on a similar scheme in Ireland - 'The more discretion you give to banks, the less level the playing field will be.'

Keith Hollender, managing director of the Experian-owned Unclaimed Assets Register, said: 'For this to work and the public to have faith this really needs to be regulated. The public, rightly or wrongly, are suspicious of banks. Strong regulation is in the banks' interests and demonstrates transparency. It's not necessarily a negative for the banks. It creates a central discipline and a level playing field.'

The Treasury said until the consultation period ends, nothing is set in stone. Paul Chisnall, executive director of the British Bankers' Association, dismissed claims that his industry had 'got at' the Treasury: 'The Treasury is seeking to achieve a balance between participating banks and customer interests. Although self-regulatory, it will be set out on statute that the customer will always be able to reclaim money.' He added that regulation would be needlessly bureaucratic.

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