Dormant accounts money to go to community projects fund

Money from dormant accounts in UK banks and building societies could soon be used to fund community projects in a program first proposed in 2005 by Gordon Brown. However, before the money is transferred to a fund independent of the government, the banks, and the mechanism to distribute them to various projects, financial institutions will make an effort to find the owners of what analysts say could be as much as £400 million sitting in accounts that have not been used for 15 years or more.

Further, the money will not just disappear into the fund, never to be seen by those who deposited it again. The fund will be required to contain enough funds to pay back any account holder who wishes to reclaim his or her money. However, customers will be encouraged to claim any money that they wish to keep before it is transferred into the projects fund.

For example Halifax, part of the HBOS Group (LSE: HBOS), said last month that it will conduct an advertising campaign to let the owners of 110,000 dormant accounts that their money could be taken for the projects fund. Those dormant accounts alone contain deposits of £44 million.

The community projects fund is expected to provide funding for various projects, but concentrating on youth services and financial inclusion projects.

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