Current Status
Countdown to investment firm participation in the scheme:
Legislation expanding the scheme - COMPLETE
Updated industry good practice guide on tracing customers - COMPLETE
Decision on allocation of funding - COMPLETE
Regulatory changes to enable participation - COMPLETE
T&Cs / legal agreement with RFL - IN PROGRESS conclusion expected late 2024-25
Scheme open for first transfers of money - PENDING expected 2025
The Dormant Assets Scheme is an industry-led voluntary initiative established in 2011 which is backed by the UK Government and regulators. To date, £1.4bn of dormant assets – money in financial accounts where the firm is no longer in contact with the customer – has been transferred into the scheme from banks and building societies.
The money is then put to use by charities and organisations for the benefit of social and environmental causes.
The Investment sector will be able to provide the first transfers of money into an expanded Scheme in 2025.
Watch our webinar, the first section of which discusses the Scheme, with:
- Adrian Smith OBE - Reclaim Fund Limited
- Sacha Romanovitch OBE - Fair4AllFinance
- Jasveer Singh - Jupiter Asset Mgmt, & DA Industry Champion for our sector
April 2022
Background to the Scheme
Operated by Reclaim Fund Limited (RFL), the Scheme has released £900m to good causes across the United Kingdom, and in future will be able to do more now that it is being expanded into other financial services sectors such as ours.
Importantly, assets are only able to be transferred into the Scheme once firms have completed their first priority of tracing and reuniting owners with their assets. Even then, asset owners are able - at any time - to reclaim the amount that would have been due to them had the transfer to the Scheme not taken place. This includes any valuation growth for assets in investment funds after the transfer date.
Why firms should consider participating
The Scheme deploys money that would otherwise remain dormant and puts it to good use across the UK. Firms are able to demonstrate their social conscience and practically support a wide range of charitable and other organisations in their work. Recipient organisations report annually on how the money has been deployed; this information can be utilised by firms in their own shareholder reports. As the assets can be reclaimed in full at any time participation comes at no risk to either the asset owner or the firm. Existing options for paying dormant assets away to charity or to the originating fund are fairly limited, and in the case of direct transfer to charity contain no ability to reclaim the money at a later date, or to release the obligation to the asset owner.
Current activities & next steps
The Dormant Assets Act 2022 expanded the Scheme to the Investment & Wealth Management and the Securities and Insurance sectors, and the FCA'S PS24-10 amended handbook rules to allow investment firms to access the Scheme:
There is one remaining stage outstanding before firms will be able to participate:
- The legal agreement governing the entry and ongoing requirements for participation in the Scheme is currently being negotiated at sector level, co-ordinated by the IA. Firms interested in potentially joining the Scheme in future should contact the IA as early sight of the draft agreement will be advantageous.
Actions for Firms
- Engage in the negotiation of the terms of the Scheme, which detail the operational and legal arrangements, and are currently being agreed at a sector level with RFL;
- Liaise with your operational teams / transfer agent if relevant, to ensure they can support the operational requirements of the Scheme;
- Ensure your dormant assets records are up to date and that your tracing and reunification efforts are being carried out to the maximum extent;
- Firms interested in participating in the Scheme should contact the IA in the first instance.
Dormant Assets Information Guide v3 Mar22
Fair4AllFinance - an introduction
Dormant Assets - Spend Allocation
DCMS summary of DA Spend consultation Jul22
Dormant Assets Scheme - summary Apr22
IA Principles for Maintaining Active Client Relationships
Summary of Dormant Assets Scheme TAA
Useful links:
Background:
IA Best Practice Guide:
Terms and Conditions:
- Slaughter & May summary of the Transfer & Agency Agreement (Core only, as at Jan 24)
- Transfer & Agency Agreement (Core only, as at May 23)
- Transfer & Agency Agreement (Investments Schedule - to follow later in 2024)
Legislation:
Regulation:
- PS24-10: Expansion of the Dormant Assets Scheme – second phase
- CP23/12: Expansion of the Dormant Assets scheme - second phase
- IA response to CP23/12
Tax:
- HMT policy paper on CGT implications
- Finance Act 2022: Schedule 6 - the tax implications
- ISA regulations allowing reclaimed money to go back into an ISA (from 23-24 tax year)
Allocation of funding to beneficiaries:
Contact
John Allan | Head of Innovation and Operations Unit
John can also point members to:
Jasveer Singh | Industry Champion for the I&WM Sector and member of the Dormant Assets Expansion Board
Steve Doyle | Chair of the IA Dormant Assets Technical Group
