The Dormant Asset Scheme was launched by the Government in 2011, with the aim of reuniting people with ‘lost’ money. A dormant asset is described as a financial product (such as a bank account) which has been left untouched for 15 years or more, and where the provider has not been able to locate the owner.
Once classified as ‘dormant’, the asset can be transferred to the Scheme’s administrator, Reclaim Fund Limited (RFL). RFL manages the funds, ensuring sufficient is retained to meet any claims, and the remainder is distributed to social and environmental initiatives, implemented via The National Lottery Community Fund. Each nation of the United Kingdom makes its own decisions on how the money is spent. As of February 2022, more than £800million has been released by the RFL to such initiatives.
Initially including just cash in banks and building societies, the Scheme has recently been expanded under the Dormant Assets Act 2022, which came into force on 24 February, to include certain assets from pensions, insurance, investments, wealth management and securities (which are crystallised into cash before being transferred into the Scheme).
It is understood that a significant proportion of dormant asset owners are likely to have died, and in this case the deceased owners’ personal representatives are entitled to make a claim for the assets in question.
Despite the Scheme providing opportunity for funds to be diverted to social or environmental initiatives, its primary focus is consumer protection and reuniting ‘lost’ funds with their rightful owners.
The issue for executors in most cases is that they will have no knowledge of assets which may have transferred to the RFL because one of the criteria for transfer to the RFL is that the organisation holding the asset has failed to contact the owner, so there may be no available paperwork to assist the executor in tracking down such assets.
Assets can become dormant for a number of reasons including house moves, job changes in the cases of pensions, and just simply where individuals have lost track of investments.
Best practice for any executor, whose duty it is to locate all the assets in the estate, would include undertaking a professional asset search to ensure that all the assets in the estate are identified.
In the event that a ‘lost’ asset is located through the asset search process, executors can then apply direct to the organisation where the original asset was held in order to claim it from the RFL.