Select Committee on Treasury Written Evidence


Memorandum submitted by the Unclaimed Assets Charity Coalition

SUMMARY

  1. The Unclaimed Assets Charity Coalition is keen to provide any further information required by the Committee, in either oral or written evidence, at the Committee's convenience. Contact details are provided in our covering email.

  2. The Unclaimed Assets Charity Coalition represents a group of 51 UK charities who are owners of unclaimed assets in the form of lost legacy income.

  3. Our principle interest is in:

    (i) Widening the definition of unclaimed assets.

    (ii) Ensuring a mechanism for return of unclaimed assets to owners is designed such that it facilitates the collection of these assets by charities owed them as lost legacy income.

  4. Although the Government has begun work with the banking sector to release unclaimed assets, the Unclaimed Assets Charity Coalition believes that there is more that could be done to help UK charities recover their funds. We urge the Committee to consider these opportunities as part of this Inquiry.

  5. This submission provides the following information:

    —  A membership list for the Unclaimed Assets Charity Coalition.

    —  An explanation of what unclaimed assets are owned by UK charities.

    —  Our comments on the definition of unclaimed assets, including comparative information from the USA in an appendix.

    —  Our comments on the necessary mechanism for reuniting assets to owners, specifically the need for a publicly searchable national register of unclaimed assets.

  6. Reclaiming unclaimed assets is an important issue for individuals as well as charities. In our proposals as set out in this submission, our primary aim is to fulfil the wishes of our supporters by ensuring that money pledged to a charity reaches that charity. Ensuring that charities are given access to this lost money pledged to them as legacy donations is an affordable and practical way that Government can unlock funds for the UK charity sector, and put right an injustice in the way unclaimed financial assets are currently held.

  7. The limited resources of the member charities of the Coalition mean that we have not been able as yet to conduct detailed research into our proposals to present their full practical and financial implications. We hope nevertheless that the Committee feels able to give due consideration to the arguments we put forward.

ABOUT THE UNCLAIMED ASSETS CHARITY COALITION

  8. The Unclaimed Assets Charity Coalition is a group of UK-based charities representing a range of causes who are working together to ensure that the Government helps charities gain access to the funds left to them by their supporters but lost in the form of unclaimed financial assets. Currently, the coalition's membership stands at 51 organisations:

    —  ACEVO.

    —  Action for Blind People.

    —  Alzheimer's Society.

    —  Amber the disadvantaged youth charity.

    —  Animal Health Trust.

    —  Barnardo's.

    —  Battersea Dogs and Cats Home.

    —  BMS World Mission.

    —  British Heart Foundation.

    —  Brooke Hospital for Animals.

    —  Cancer Research UK.

    —  Canterbury Cathedral.

    —  Civil Service Benevolent Fund.

    —  Elizabeth Finn Care.

    —  Epilepsy Action.

    —  Guy's and St Thomas' Charity.

    —  Great Ormond Street Hospital.

    —  Heart Research UK.

    —  Henshaws Society for Blind People.

    —  Hope and Homes for Children.

    —  Institute of Fundraising.

    —  Institute of Legacy Management.

    —  Marie Curie Cancer Care.

    —  Methodist Homes for the Aged.

    —  Musicians Benevolent Fund.

    —  National Trust.

    —  Oxfam.

    —  Parkinson's Disease Society.

    —  PDSA.

    —  Practical Action.

    —  RNIB.

    —  RNLI.

    —  RSPCA.

    —  Salvation Army.

    —  Save the Children UK.

    —  Shelter.

    —  St. Joseph's Hospice.

    —  Tenovus the cancer charity.

    —  The Diocese of Chichester.

    —  The Donkey Sanctuary.

    —  The Elisabeth Svendsen Trust for Children and Donkeys.

    —  The Guide Dogs for the Blind Association.

    —  The Roy Castle Lung Cancer Foundation.

    —  The Royal British Legion.

    —  The Royal Star & Garter Home.

    —  Unicef UK.

    —  WaterAid.

    —  World Cancer Research Fund.

    —  World Vision UK.

    —  WWF UK.

    —  YMCA England.

  9. Cancer Research UK co-ordinates the coalition, and is supported by two steering groups of members dealing with campaign planning and technical matters whose membership comprises British Heart Foundation, the Institute of Fundraising, the Guide Dogs for the Blind Association, World Vision UK, WWF UK, Save the Children and World Cancer Research Fund.

EXPLANATION OF WHAT UNCLAIMED ASSETS ARE OWNED BY UK CHARITIES

  10. When a person dies leaving a will, the executor of that will and the person's next of kin may not have access to relevant paperwork and other items relating to certain assets when arranging the person's affairs. As a result, assets such as old bank accounts and shareholdings belonging to the deceased person can go unclaimed. If a person dies leaving undiscovered assets in this way, and has left a percentage of their estate to charity in their will, then the chosen charities receive a percentage of an incomplete estate, and miss out on their percentage of the value of any unclaimed assets.

  11. This issue will affect a significant proportion of the existing unclaimed assets in the UK. Since efforts to release unclaimed assets in this country have remained limited for decades, we expect that the majority of them will have belonged to people who have now died. And since one in seven of all people that die leaving valid wills leave money to charity, on average five per cent of their total estate, it is reasonable to assume that charities are owed a significant proportion of the total value of unclaimed assets in the UK.

  12. Although we lack access to the data to enable us to estimate an exact figure, we believe that UK charities could be being deprived of hundreds of millions of pounds through this lost legacy income. Appendix 1 to this submission outlines how we reached this figure.

  13. Legacies are an extremely important source of voluntary income for the charity sector. Although other fundraising methods such as sponsored events and "chugging" receive more publicity, legacy income is, for a great many charities, by far the largest single source of voluntary income. In total, legacies form thirty per cent of all voluntary income in the UK.

  14. As the Committee is aware, HM Treasury is currently working with the banking sector on ways to strengthen the banks' efforts to reunite unclaimed bank accounts with their owners. The Unclaimed Assets Charity Coalition welcomes this move and believes it presents an important opportunity for charities to reclaim the funds left to them by their supporters but lost as unclaimed assets. We want to make sure that both private individuals and charities have access to the money that is rightfully theirs, across the full range of unclaimed financial assets.

THE DEFINITION OF UNCLAIMED ASSETS

  15. We are disappointed that the only sort of unclaimed asset currently being considered by HM Treasury is dormant bank accounts. Unclaimed assets cover a much wider range of products, from wages and shares to land and the contents of deed boxes. We believe it is essential that the Government sees its work on dormant bank accounts as the start, and only the start, of wider work to reunite owners with the full range of their unclaimed assets.

  16. We see three main problems with a narrow definition:

    (i) Charities and individuals will not have adequate access to information about all other types of unclaimed asset that they might have claim to.

    (ii) If one type of unclaimed asset is looked at in isolation, for example dormant bank accounts, it can more easily be argued that the sums owed to charities are not large enough to warrant significant time and effort on the part of the banking industry and Government on developing a system that reimburses charities effectively.

    (iii) Without considering all types of unclaimed asset at the outset, the system developed for one type of unclaimed asset may well not be suitable for "scaling-up" to include other types of unclaimed asset at a later date.

  17. Appendix 2 to this submission provides a list of the categories of unclaimed asset currently collected by the US state of Vermont, which totals 110 types of asset.

  The collection of unclaimed assets and reuniting them with owners

Mandatory not voluntary

  18. We believe that a mandatory obligation must exist on the banks and financial institutions to publish and surrender the dormant assets they hold. This would follow the US model, where Consumer Protection Legislation of this nature has been operating successfully for some 30 years.

  19. Government and industry plans to date are for a voluntary system whereby banks are encouraged to promote voluntarily the existence of unclaimed assets they hold, and invite requests for their release. We acknowledge that better advertising and promotion of the existence of unclaimed assets could increase the numbers of individuals who come forward to make a claim. However, fundamentally, we believe that such an approach is unacceptable because it would continue to place financial institutions under no legal duty to publish details of their assets. As a result, the rightful owners of the assets are unable to as easily ascertain whether or not the assets exist. And charities in turn are not able to collect all assets owed to them.

A national register

  20. We would like to see the Government create a comprehensive national register of unclaimed assets to ensure that both charities and individuals have full access to information to enable them to find the money they are owed. We believe that a comprehensive register that is searchable using the name and last known address of lost asset-holders, would provide the best mechanism for ensuring, as far as possible, that assets are reunited with their owners. We believe a public agency would be best placed to own and manage this register.

  21. We are disappointed that earlier expressions of interest from Government in a register model have since been dropped. In 2002, the Government discussion paper "Next Steps for Volunteering and Giving in the UK" stated "We want to [understand] ... how a comprehensive database might be achieved that would lead to a significant increase in charities' income." By the 2005 Budget, the onus for investigating a register had moved to the banking sector: "The Government also expects the [banking] industry to explore what more could be done to reunite owners and assets, including the possibility of a National Register". And by 2006, no public mentions of the national register concept were made.

  22. We urge the Committee to call on the Government to conduct its own investigation into the value of a comprehensive register and the benefits that would accrue to charities.

What a register would look like

  23. A register should be:

    (i) Mandatory—so that all financial institutions are required to declare the unclaimed assets they hold;

    (ii) Comprehensive—so that all types of unclaimed assets are included;

    (iii) Public—so that any individual or organisation can access the register;

    (iv) Searchable—including the full names and addresses of asset-holders, so that charities can match the register with their legacy database and searches can be done by Executors using a selection of names and addresses relevant to one individual;

    (v) Free—so that beneficiaries are not excluded from accessing the register because of cost.

  24. There are two broad categories of charity legators whose names and addresses we would wish to match to an Unclaimed Assets Register: firstly, the retrospective bulk of legators who died many years before the register is established, and who will form the bulk of register entries; and secondly, the new legators that are added to the register as the process continues.

Clearing the historical bulk of register entries

  25. When the register is launched, executors can be prompted by beneficiaries of previous wills to search out any previous names and addresses of the deceased persons, for these will provide the key to locating assets on the register belonging to the backlog of deceased unclaimed asset holders. These historical details will be available from old correspondence, solicitors' files, utility companies' bills, Registers of Electors, friends and relatives and so on.

  26. Charities could also run their legator databases against the register to find those assets which historically have remained unclaimed and to which they have legal title. In a recent survey of the membership of the Unclaimed Assets Charity Coalition, the charities between them hold over 139,000 comprehensive historical records of their residuary legacies which can be easily interrogated. Charities could incur some cost from a search such as this, but it is likely that many of the larger legacy charities would choose to conduct a one-off search of the register soon after it is launched.

  27. It is very likely that heirfinder agencies will establish themselves, offering to locate the beneficiaries of valuable estate assets, as has happened in the US. Charities and private individuals could choose to pay these agencies to search on their behalf. Legislation imposing a ceiling on the fees such agencies can charge may be necessary; in the US, legislation commonly sets this ceiling at 10 per cent of the value of the asset.

Using the register on a regular basis

  28. As the length of time since the launch of the register increases, Executors will be familiar with it and will trawl the Register for information on changed names and addresses as they administer estates, assimilating the Unclaimed Asset Register search into their normal procedures at the outset of an administration. It would then rarely be necessary for a charity to interrogate the register in the same way, but this opportunity would still be open to charities and private individuals if they so wished.

Further research and discussion

  29. The Unclaimed Assets Charity Coalition held a useful introductory meeting with representatives of the British Bankers' Association and Building Societies' Association last year. At the meeting, we discussed ways to improve charities' access to their lost legacy funds within the current and planned voluntary system, rather than through a national register. We hope to continue working with the BBA and BSA in the future, to test options for matching samples of Coalition members' legacy data with the unclaimed asset data accessible by the BBA, in order to establish what values of asset this process would provide in practice.

CONCLUSION

  30. Although the Government has begun work with the banking sector to release unclaimed assets, the Unclaimed Assets Charity Coalition believes that there is more that could be done to help UK charities recover their funds. Principally, we would like to see a widening of the definition of unclaimed asset and the establishment of a publicly-searchable national register of unclaimed assets. We urge the Committee to consider these opportunities as part of this Inquiry. In our proposals as set out in this submission, our primary aim is to fulfil the wishes of our supporters by ensuring that money pledged to a charity reaches that charity. Ensuring that charities are given access to this lost money pledged to them as legacy donations is an affordable and practical way that Government can unlock funds for the UK charity sector, and put right an injustice in the way unclaimed financial assets are currently held.



 
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