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Last Updated: Saturday, 20 March, 2004, 13:22 GMT
Lost money to benefit charities
Case of notes
Customers will still be able to claim their lost money

The 2004 Budget unveiled details of a change that could result in banks and building societies handing over billions of pounds to benefit charity. But it is already meeting resistance, as Chris A'Court found out.

It is suspected that banks and financial firms hold huge amounts of unclaimed money in accounts owned by people they claim to have lost touch with.

Often these people have moved, or in many cases have died without ever telling relatives about their money.

Estimates for the amount held in such accounts range from five to 20 billion pounds, and it is all earning interest for the financial firms.

The Budget papers revealed that a new independent charitable foundation has been set up in the UK into which banks and building societies could transfer unclaimed asset funds if they wish to.

It is called the Balance Foundation. It was a secret until now but it is now known that managers were in discussions with the Treasury for several months before being given the nod of approval in the Budget.

It is going to focus on social exclusion - with a particular focus on education, and probably financial literacy
Richard Compton-Burnett, Balance Foundation

Balance Foundation's Chief Executive Richard Compton-Burnett explained to BBC Radio 4's Money Box programme how the scheme would work.

He said that in the early years the capital would probably be retained, and the income arising from the investment of that capital would be released to charity.

He told the programme: "The Balance Foundation is going to be open to applications from charities of any size, big or small.

"It is going to focus on social exclusion, with a particular focus on education, and probably financial literacy."

And he was confident that the benefit to the charities would be enormous: "The prize is very big. It is a very exciting project."

But the Foundation has nothing in its account at the moment.

Resistance

Some city investment banks have indicated they will contribute some of their unclaimed assets, but what is really needed is for the High street names to get on board if the project is to be a success.

That money... belongs to the members of the building societies and it is not available for distribution to others
Adrian Coles, Building Societies Association

That is unlikely to happen quickly. The banks believe they should not have to hand over unclaimed money because they are now stepping up efforts to trace the owners of forgotten accounts, and they point out that they often make donations to charity already.

Adrian Coles, Director General of the Building Societies Association was certain of his position, as he told the programme:

"There is nothing in the building society sector that is anti-charity, but our starting point is that that money is invested in building societies.

"It belongs to the members of the building societies and it is not available for distribution to others who think they have a good idea on how to spend that money."

But if the banks and building societies do not voluntarily hand over their unclaimed cash there is now a clear hint that they be made to do so.

Slow start

The Budget papers say it is only right that unclaimed assets be reinvested in society.

The chancellor is going to review how well this is working later this year. That will be after the Balance Foundation hopes to have made its first awards to charities in the late summer.

I will also be looking to the government to put pressure on and to legislate
Martyn Jones, MP

But the Balance Foundation's Chief Executive also revealed to the programme that the target for the amount he hopes to get in this year is going to be far short of even a single billion.

The target is to persuade financial firms to hand over 100m in the next nine months.

That would help raise only about five million pounds for charity and would be disappointing to Martyn Jones MP who has been campaigning for a scheme like this.

Mr Jones told the programme: "It is a very slow start. I will be watching how the Balance Foundation carries on from this start.

"And I will also be looking to the government to put pressure on, and to legislate, if they do not come across huge amounts of money in the retail banks, which could transform charities.

"I really want to see more action."

Even if the financial firms do eventually hand over all their unclaimed money it would not affect any person who may be lucky enough to find a long lost account.

Insurance will guarantee customers will always get back all the money that is in a lost account, even it has been passed on to help a charity by the time the owner of the account comes forward.

BBC Radio 4's Money Box was broadcast on Saturday, 20 March, 2004, at 1204 GMT.

The programme was repeated on Sunday, 21 March, at 2102 GMT.

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