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Spend & Save

Time to rescue old money from sleeping bank accounts

Wake up before your cash vanishes, say Alessia Horwich and Julian Knight

In a few months' time, money held in dormant savings accounts will be seized by the Government and distributed to good causes through the BIG Lottery Fund.

An account is deemed to be dormant if has seen no activity in the past 15 years. In other words, the provider has lost contact with the account holder and no money has been paid in or taken out. You might think there would be relatively few accounts that were deemed dormant but you'd be wrong. Of the 150 million bank and building society accounts in Britain, up to half a million may be dormant. The final date for transferring funds to the BIG Lottery Fund is yet to be confirmed but Treasury sources say it should be under way by the summer.

NS&I says it holds £452m in dormant accounts, and the Building Societies Association (BSA) puts the total in building societies at £115m. The British Bankers' Association (BBA) estimates there could be as much as £400m eligible for the transfer to good causes snoozing in banks.

But voices in the industry say the term "dormant" is woolly. It could mean no debits or credits or even no changes of personal details – which leads to imprecise figures. James Jones, a spokesman for the Unclaimed Assets Register, which reunites savers with their cash, says: "As far as dormant accounts are concerned, we're looking realistically at about £850m. If you include all other assets such as investment funds, which are also dormant, you could be talking several billion pounds."

Moving house is, in many cases, to blame, as paperwork disappears to the bottom of cardboard boxes. Accounts opened by relatives for children, unbeknownst to those children, are common. Sums also lie untouched when people die and the executor doesn't realise the account exists. In many cases, busy people simply forget about accounts. "Typically, a dormant account is just the remnants of savings where £50 or £60 has been left in a secondary account," says Patrik Karlsson, a spokesman for the BBA. "But it is not unusual for there to be several hundred thousand pounds in an account." The account may be in the name of a charity or club which may have closed or changed its treasurer.

Trade bodies and individual banks and building societies have launched schemes to reunite consumers with their cash. Halifax and Lloyds have reunited £32.8m with owners and say £79.5m remains unclaimed. Thus far, HSBC has returned £8.55m of more than £38.8m spread across 40,000 accounts. NS&I gave back £235m. If you want to track down a dormant account, then visit mylostaccount.org.uk, a joint effort from the BBA, BSA and NS&I that is free and easy to use. It can take several weeks to do the searches, and the site doesn't cover all banks.

Mylostaccount is complemented by the Unclaimed Assets Register (UAR), which searches for occupational pensions, investments, life insurance and other assets. Run by Experian, a credit agency, the UAR charges a one-off fee of £25. On average, one search in 20 is successful and the average find is £6,000. Some third-party firms also offer to track down missing cash. Some charge an upfront fee of between £20 and £200, depending on the amount of work involved, and others will search free of charge, but take a cut of any funds found. Some even have premium rate phone numbers. Generally, these services don't offer anything you couldn't get for free from mylostaccount.co.uk.

If your money has already been transferred out of a dormant account into the BIG Lottery Fund, the Government has set up a new fund to repay those who make a claim. "The reclaim fund sits between the financial services industry and the lottery fund," says Mr Chisnall, "so customers will always be able to reclaim their monies." The reclamation process is as yet undefined and banks remain unsure whether it will be laborious. The BBAsays it won't. "Now or later, it will make no difference," says Mr Chisnall. "The scheme will require no additional effort to get the money back." But many may prefer to get hold of their cash rather than deal with a new reclamation fund. What's more, money languishing in the bank is unlikely to be earning a good interest rate. The quicker you find it, the quicker you can put it to better use.