Banks offer £1bn charity deal

Dormant Accounts: Compromise in Chancellor's in-box
Click to follow
The Independent Online

Gordon Brown has been offered a deal by the high street banks that could see more than £1bn in dormant accounts be given to charity.

The Chancellor has promised action on the so-called dormant accounts - mostly savings accounts where no transactions have taken place for years. The Treasury believes up to £10bn could be in these accounts and wants the banks to pay the money to charity.

The distance between the Chancellor and the banks hinges on the definition of "dormant". The Chancellor has said that any account where no transaction has taken place for three years might be considered dormant. The banks believe this is far too short a time and want the definition stretched to a minimum of 10 to 15 years of inactivity.

"There may be a very good reason why someone has not touched an account for three years," said a source at a high-street bank. "They may have-been abroad, or simply wanting to leave the cash for a rainy day. Three years is far too short."

With Mr Brown hoping to make an announcement in his pre-Budget statement on 5 December, the banks have offered him a deal. They have said they will review all accounts where no transactions have taken place for 10 years Most of those will be closed and the money given to charity. Any account dormant for 15 years will be automatically closed.

The banks have said they want to channel the money through their own charitable giving schemes, which see around £1bn paid to good causes each year. The industry argues that its members are among the largest charitable givers in British business and have efficient ways of passing money to charity.

"We don't want a big central fund run by government," said one banker.

The Chancellor has yet to respond to the offer from the banks, though there is still time for him to include it in the pre-Budget statement.

HBOS is believed to have the largest number of dormant accounts, followed by Royal Bank of Scotland, Lloyds TSB and the other main high street banks.