by Hetty Ahern
The Dormant Assets Scheme has been expanded, opening up the potential for our sector to use its unclaimed funds to contribute to good causes in the UK, with customers still able to reclaim their money indefinitely.
We’ve been working with industry, Government and Reclaim Fund Limited (RFL) – who administer the Scheme – to enable its expansion to the insurance and long-term savings sector and are delighted to see that Aviva has made its first payment. To help other insurers and pension providers follow suit, we’ve published a new Participation Guide, to navigate the process.
For any insurance company or pension provider that holds eligible assets, our Guide sets out the key principles and requirements of the Scheme, the tracing, verification and reconnection (TVR) process, and next steps to join.
With millions held in unclaimed assets, this expansion unleashes our industry’s potential to put the funds towards the initiatives the Scheme supports, and we’d encourage any firm that can to take part.
What does the Dormant Assets Scheme do?
Since its formation in 2011, the Scheme has only been open to the banking and building society sector. Over the course of its 12 years, £1.6 billion has been transferred from dormant assets, with £900 million of that shared with causes relating to youth services, social communities, and financial inclusion initiatives. The remaining funds are held in reserve in case owners re-emerge and claim them (a key principle of the scheme).
Why participate?
By opening the Scheme up to insurers, pension providers, and other financial services firms, the Government estimates that up to £880m could be unlocked to further support good causes.
There are significant benefits to signing up to this voluntary scheme. Dormant assets can change lives and transform communities, and over 2,500 initiatives have already benefited from this funding.
As financial inclusion is one of the key causes of the scheme, firms can use their unclaimed assets to directly make an impact to improve people’s financial lives.
Participating firms can also move their unclaimed assets liabilities off their balance sheets, as liability for reclaiming these funds sits with RFL.
Providers should be reassured that the Scheme takes its obligation to reunite customers with their assets at any time very seriously, and provisions are always made to ensure this can happen.
Who can participate?
Under the legislation, only assets which have certain conditions and characteristics can be included. Broadly, this involves any funds remaining from term assurance or whole of life assurance policies, savings endowments, investment bonds, defined contribution personal pensions, income drawdown and annuities.
Assets that aren’t eligible for inclusion include any products from mutual insurers, industrial assurance or industrial branch policies, any product that has a ‘with-profits’ element, any insurance policy which is subject to a trust, and any pension that has an automatic-enrolment element.
This Scheme is a fantastic opportunity to use unclaimed assets to benefit many people, and any firm interested in volunteering to participate should take a look at our guide and get involved.