Banks making active accounts dormant

simba27

In the last couple of months my wife and I have had three different banks trying to declare our accounts dormant and take our money.

First was Cater Allen, they wrote us a letter saying that there had only been two transactions on our account in the last 13 months, so it had been declared dormant and unless we wrote to them within 14 days it would be closed. We only received the letter a couple of days before the 14 day period was due to expire.

We were very angry because that account contained a large amount of our savings. After a strongly worded letter, they reactivated the account. But our money was inaccessible for a period of time.

Next was ICICI. We got an email saying that our savings account had been made dormant because we hadn't made any transactions for a year. Again, this account contained a large amount of our savings. It tooks us a few phone calls to sort that out, and again, our money was inaccessible for a time.

Finally this morning, my wife gets a letter from Nat West saying that one of her accounts has been closed because there haven't been any transactions for a year. After contacting them, they refused to restore the account and said the only way to recover OUR MONEY is to go into the branch and fill out a form and wait at least 3 weeks.

This is nothing short of a scam by the banks to steal people's money. The dormant bank accounts act says the banks can only declare an account dormant if there is no communcation in 15 YEARS. But the banks are using it as an excuse to close accounts that have only 1 or two transactions in 1 year. Surely this is unlawful?

The whole point of having savings, is to put them in an account and not touch them except for emergencies. That's why there are few transactions on these accounts. But now after one year the bank can just close it and take OUR money, leaving us with the hassle of trying to reclaim it.

The banks don't seem to have any procedure where you can instruct them that a particular account should never be made dormant. So presumably this is going to happen to all of our savings accounts every year.

premierfella

I agree with your sentiments, but references to scams and stealing your money simply weaken what you say as this is very obviously not the case. You may lose immediate access, but you don't lose the ability to reclaim your money.

The Act you refer to gives definition of dormant as it relates to the government's ability to redistribute the unclaimed monies. Banks and building societies have in the main always had a much shorter timeframe for classifying accounts with them as dormant (usually around 5 years) and terms and conditions usually allow for them to close savings accounts after giving due notice anyway.

In all three of the cases you cite the bank made contact to advise what they were about to do with the money, which to me seems to be good practice?

I would query your statement about the "whole point" of having savings. It may be one point, but I doubt it is the "whole point" for all.

I agree though that in your position I would also be annoyed that accounts were being classified as dormant given such a short period of inactivity. I just would not see it as a scam or feel that my money had been stolen, because neither is true.

davidgmmafan

I agree that it is a hassle, and the timescale seems to short. I concur with the reply posted that the scheme, as I understand it, allows funds in dormant accounts to be used. However the funds MUST be returned to the account holder if requested. For sometime this has left me puzzled as to the viability of the scheme.

Bank uses funds in dormant account for charities of other worthy causes and then the account holder claims it back. Does the bank just have to stand the loss? Or do they ask for the money back from a charity which has already spent the money?

13 Months is a ridiculously short period of time and I would've thought five a six years is a much more reasonable timescale. Most financial advisors would tell people to keep some of thier savings in an instant access account. Quite why you should have to jump through hoops to do so is beyond me. You could of course keep the money in a current account, but most banks aren't paying interest these days.

If there is any kind of vested interest for the banks that would be the extent of it I imagine.

premierfella

davidgmmafan wrote: »

Bank uses funds in dormant account for charities of other worthy causes and then the account holder claims it back. Does the bank just have to stand the loss? Or do they ask for the money back from a charity which has already spent the money?

AIUI the banks place the money in a fund from which monies are distributed to "good causes" (via the Big Lottery Fund or similar) and smaller building societies can distribute the money directly to charities they choose. I would assume that the "fund" and the building societies keep a significant liquid amount undistributed/segregated to meet the reclaims from account holders who eventually come forward to get their savings back, although equally the reclaims could probably be comfortably met from new monies falling into the fund on an ongoing basis given the low percentage of "dormant" savings that are reclaimed.

System

Transactional accounts like current account are normally considered dormant after 12 months since the last transaction. Savings accounts are normally 24 or 36 months.

The main reason they ask for you to jump through hoops is to establish your identity.

As for Carter Allen, they are part of Santander - enough said.

As for NatWest, it costs them money to keep an account open.
They obviously didn't wish to retain you as a customer.

jonesMUFCforever

They never steal your money as you can reactivate a dormant account upon showing adequate identification.

simba27

The 2008 Act, allows banks to make accounts dormant after 15 years of inactivity. It specifies where the money must go and provides a safeguard that should in theory allow the customer to get their money back.

But if the banks are making accounts dormant after only 1 year then they cannot be doing it under the 2008 Act. None of the provisions of that act apply in this case.

So what legal authority do they have to close our account and take our money? Where does the money go? What safeguards are there to ensure that we will get our money back?

The banks must be making money from this, otherwise they wouldn't do it. Perhaps this is a clue to where the money goes.

simba27

jonesMUFCforever wrote: »

They never steal your money as you can reactivate a dormant account upon showing adequate identification.

I'm sure that's how it's supposed to work.

But in reality, when the account gets made dormant, unless you object within two weeks, the money gets transferred out and the account is closed. Closed accounts cannot be reopened, so you have to open a new one and get new cards/cheque book/pin etc.

Cater Allen and ICICI at least informed us that the account had been made dormant. We heard nothing from Nat West until after they had closed the account.

Kavanne

Natwest are only making unused current acounts dormant, not savings. They have sent your wife multiple notifications with her statement (or by separate letter if statements are online)

The money is held centrally for 15 years for you to claim. If there is no money in the account they will close it rather than make dormant.

simba27

Kavanne wrote: »

Natwest are only making unused current acounts dormant, not savings. They have sent your wife multiple notifications with her statement (or by separate letter if statements are online)

Are you actually reading my wife's mail, or just making an assumption? The first we knew of this was when we received a statement showing that all our money had been transferred out and the account had been closed.

Kavanne wrote: »

The money is held centrally for 15 years for you to claim. If there is no money in the account they will close it rather than make dormant.

There was a lot of money in the account and they closed it.

The 2008 Act says that after 15 years of inactivity the account can be made dormant, not that they can make it dormant after 1 year and then you have 15 years to reclaim your money.

I am actually astonished that some people seem to think it's OK for a bank to arbitrarily close a persons account and take their money. I personally think it's outrageous.

It's a bit like saying it's OK to steal a person's car if they haven't driven it for a while. Just so long as you promise to return it within a few weeks if they notice it's gone. I can see no legal or moral justification for it.

Kavanne

I work for natwest so I am telling you what has been communicated to us