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01 October 2015
How will this help banks?
How will the scheme work?
Can money be reclaimed?
Who will administer the fund?
What happens to the money?
Are there precedents for the scheme?
When will the scheme start?
How to input in the scheme
Banks may soon be able to close dormant bank accounts by depositing the account balance into a central fund. Any money that is not reclaimed from the fund will be used for charitable and social purposes.
Where a Jersey bank has lost contact with a customer, it must maintain the customer's deposit account. The draft Dormant Bank Accounts (Jersey) Law will allow banks to remove the liabilities associated with dormant accounts from their balance sheets.
An account will be classified as dormant if no transactions have been carried out by the customer for 15 years. Banks must notify customers with dormant accounts three months before transferring account balances to the central fund. Transfers to the fund will be made each December. The regime will cover precious stones and metals (excluding jewellery), as well as deposit accounts. Non-sterling balances will be converted into sterling before the transfer at a market mid-rate.
Customers will be able to reclaim money after it has been transferred to the fund by contacting their bank. Banks must retain customer records so that they can administer claims and will (acting as an agent for the Jersey Reclaim Fund) be required to return the money to customers. Banks will then be reimbursed, usually annually, from the fund.
The Jersey Reclaim Fund will be run by the chief minister and administered by the Treasury and Resources Department.
Money that is not reclaimed will be used to cover the costs of the commissioner of charities. It may also be used to fund arts, sport and the heritage of Jersey, and for charitable purposes. While total deposits in Jersey are much less than in the United Kingdom, the Jersey scheme may generate significant revenue. The UK dormant accounts scheme has transferred £238 million to the Big Lottery Fund since 2009.
The United Kingdom, the United States, Australia and the Cayman Islands all have dormant account schemes. The UK scheme is optional, but it is proposed that the Jersey scheme be compulsory, as it is in the Cayman Islands.
The consultation paper indicates that the scheme may be operative from early 2016. There will be transitional provisions to give banks time to build systems to identify accounts that have been dormant for 15 years.
Interested parties can participate in the consultation on the draft Dormant Bank Accounts (Jersey) Law.(1) The consultation is open until September 30 2015.
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