Banks told to hand over £20bn

HIGH Street banks have been given a nine-month ultimatum to start handing over to charity some of the estimated £20bn in dormant accounts.

Gordon Brown made it plain in the Budget he wants them to do more to release unclaimed deposits and investments for the good of society.

Deaths, changes of address, lost passbooks and forgetfulness lead to millions of accounts lying untouched, with banks earning interest on the money.

While London branches of investment banks - led by Lehman Brothers and UBS - have set up a scheme to hand over unclaimed UK assets to a charitable foundation, retail banks have been more sluggish.

In Budget documents, Brown said the Government would report on progress in the 2004 Pre-Budget Report towards the end of the year.

'Where assets and owners cannot be reunited, it is right that the assets be reinvested in society as long as the original owners' entitlements to reclaim are preserved,' he wrote.

'Charitable and voluntary organisations would provide an effective route for this.'

Michael Webber, a former Charity Commissioner, said the Chancellor's words were a veiled threat. There was 'a Damocles sword of legislation' hanging over banks if they failed to act.

'The prize for the voluntary sector could be up to £20bn,' says Webber, a trustee of the Balance Charitable Foundation for Unclaimed Assets, set up to help banks release dormant funds and channel them to worthy causes.

It has negotiated an insurance scheme with Lloyd's of London, which pays out if long-lost depositors are later traced. Other trustees include Bank of England director Sir David Cooksey and solicitor Judith Portrait, who looks after the Sainsbury family's charitable donations. The foundation is also backed by entrepreneur Tom Hunter.

Some estimates of unclaimed assets in UK bank accounts go as high as £70bn, Webber said.

National Savings & Investments admits it is sitting on £1.5bn of such accounts. It launched a campaign to find the owners and, since November 2001, has reunited 10,000 people with £8m. Some 10m depositors, with £1.2bn of deposits in its 'blue book' savings accounts, are classified dormant.