Why are bank accounts marked as dormant?
A “dormant” or “inactive” bank or building society account is one that hasn’t been used for an extended period. Officially in the UK it is an account where no transactions have been carried out for 15 years and the owner can’t be traced.
However, banks will often act a lot sooner than that. For example, HSBC says that if a customer is not using an account, it may restrict payments in or out “to protect against fraud”. It will do this after 12 months for current accounts and after two years for savings accounts.
Barclays does the same after 18 months for current accounts and five years for savings. The NatWest group applies the change after five years, and Lloyds Banking Group after three years.
Should I be told if my account has been declared dormant?
In most cases, yes. However, there are no formal rules for how, or how often, banks should attempt to reunite customers with their cash. A short section in the FCA’s banking conduct handbook merely states that banks must “enable” customers to trace and access lost or dormant funds “so far as is possible”, even if they cannot provide sufficient information about their account.
The banking sector is instead guided by its own set of pledges. These state that a bank will write to the most recent address held for the customer before it freezes the account unless mail has already been returned from that address. “It may also make other attempts to trace you,” the pledges state.
Banks are under no obligation to actively search and get in touch with customers with “lost” accounts – which usually means it is up to individuals to initiate a search, if they are even aware they have lost track of an account.
FCA rules governing other parts of the financial services sector – such as life insurance and pensions – set far more robust rules about contacting customers on lost accounts. If insurers initially lose contact with customers, they are obliged to try to trace them again after 18 months and again every three years.
What do I need to do if my account is made dormant?
If you believe your account has been dormant for less than 15 years contact your bank directly. Accounts can typically only be reactivated after customer identification and verification checks..
What if my account has been dormant for more than 15 years and I’ve lost the details?
After 15 years, most banks transfer dormant account deposits into the government-backed Dormant Assets Scheme. This is run by Reclaim Fund Ltd, which aims to hold sufficient funds to cover money paid out to people reclaiming their cash, while distributing the surplus to the National Lottery Community Fund so that it can go towards good causes.
Customers of dormant bank accounts still have the right to get their money back in full after it has been transferred to the fund.
They may wish to start the process of tracking their old accounts by using a free tracing service called My Lost Account.