Dormant Bank Accounts
Are you entitled to some of the estimated £5bn held in dormant accounts?
Dormant accounts are created when a bank and a customer 'lose touch with each other', in the words of the British Bankers' Association (BBA). This basically means that the account has fallen into disuse, with no new transactions occuring except those initiated by the bank itself (charges, interest payments etc), and the bank has been unable to contact the account holder over a period of time.
After a set period of account inactivity, usually a year, the bank will write to the account holder asking if they want to keep the account open. If no reply is received within a time of a few weeks or months, depending on the individual bank, then the account's status will be changed to dormant.
Why does an account go dormant?
Banks will make an account dormant for a variety of reasons. The main one is to stop statements, chequebooks, and other materials being sent to an address that may no longer be correct. This would risk identity theft by possibly giving fraudsters access to sensitive information, as well as being an unneccesary administration expense for the bank in question.
What happens to the funds in a dormant account?
Even when an account is dormant, the funds it contains will still be kept track of by the bank, and any interest that would normally be earned will still apply.
The money used to be kept indefinitely, but in December 2005 the government announced plans to appropriate the contents of accounts which have been officially dormant for 15 years or more, and pass the funds on to 'good causes' such as youth organisations and the like.
Banks, however, stress that every effort will be made to trace the rightful account owner before this happens.
How to reclaim dormant funds
It's estimated that at least £5bn is lying in dormant accounts, and while many accounts will contain only pennies, some will inevitably contain substantial amounts. If you think you may be entitled to money held in such an account, for example after the death of a relative, then you can make a claim by filling out a form available from the BBA.
Along with details of the account in question, if known, you'll have to give details of how you intend to prove your identity and grounds for claiming.
For more information and to download a claim form, see the BBA leaflet Dormant Bank Accounts - how banks handle losing touch with personal customers (pdf file).
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