Banks will soon be able to close dormant bank accounts by depositing the account balance into a central fund, the Jersey Reclaim Fund. Any money that is not reclaimed from the fund will be used for charitable and social purposes.
How will this help banks?
Currently, where a Jersey bank has lost contact with a customer it must maintain the customer's deposit account. The Dormant Bank Accounts (Jersey) Law 201- will allow banks to remove the liabilities associated with dormant accounts from their balance sheets.
How will the scheme work?
An account will be classified as dormant if no transactions have been carried out by the customer on it for 15 years. Banks will have to notify customers with dormant accounts 3 months before transferring account balances to the central fund. There will be transitional provisions to give banks time to build systems to identify accounts that have been dormant for 15 years. Failure to comply with the law is a criminal offence and punishable by a fine.
The regime will cover precious stones and metal (excluding jewellery) as well as deposit accounts. Non-sterling balances will be converted into sterling before the transfer, at a market mid-rate. Transfers to the fund will be made annually, in December of each year.
Can money be reclaimed?
Customers will be able to reclaim money after a transfer is made to the fund by getting in touch with their bank. Banks must retain customer records so that they can administer claims and will (acting as agent for Jersey Reclaim Fund) be required to return the money to customers. Banks will be entitled to claim quarterly for reimbursement from the fund. Where permitted by the bank's terms that bind the account holder, the bank may recover it's reasonable fees and expenses in relation to the claim.
Who will administer the Jersey Fund?
The Jersey Reclaim Fund will be run by the Chief Minister and administered by the Treasury and Resources Department.
What happens to the money?
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 UK, the Jersey scheme may generate significant revenue; the UK dormant accounts scheme has transferred £238 million to the Big Lottery Fund since 2009.
Are there precedents for the scheme?
The UK, US, Australia and the Cayman Islands all have dormant accounts schemes. The UK scheme is optional for banks but, in common with the Cayman Islands scheme, it is proposed that the Jersey scheme will be compulsory.
When will the scheme start?
The draft legislation has been debated and approved by the States of Jersey. It is currently awaiting Privy Council approval and if approved is expected to come into force towards the end of 2016.
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