Select Committee on Treasury Written Evidence


Supplementary memorandum submitted by the Association of British Credit Unions (ABCUL)

EXECUTIVE SUMMARY

  1.1  Following the publication of the HM Treasury Consultation Paper A UK Unclaimed Asset Scheme: a consultation, the Association of British Credit Unions Ltd would like to add a small piece of supplementary written evidence to our previous submission to the Treasury Committee's enquiry. This shows our support for the exemption of credit unions from the definition of organisations participating in the scheme.

DEFINITION OF BANKS AND BUILDING SOCIETIES PARTICIPATING IN THE SCHEME

  2.1  As the principal trade association for credit unions in England, Scotland and Wales, representing around 70% of credit unions and representing 85% of the share capital in the movement, ABCUL welcomes the proposal, contained in paragraph 4.9 of the consultation document, for a specific exemption for credit unions from participation in the scheme , which means that money held in dormant credit union accounts will not be included in any future scheme to ensure such funds are reinvested in society.

  2.2  Credit unions have clear procedures for dealing with inactive accounts; members are contacted at an early stage of inactivity in their accounts (after 12 months) which means that it is more likely that members will be reunited with their money and/or encouraged to continue using the accounts.

  2.3  If an account is declared dormant, the credit union writes to member at his/her last known address containing information on reactivating or closing the account. If six weeks elapses without the member making contact with the credit union, the credit union has the discretion to transfer the money in the dormant account to a suspense account. The money remains in the suspense account indefinitely and can be reclaimed by the member at any time.

  2.4  In the meantime, money in the suspense account can be used to boost the funds of the credit union; any money retained in credit unions' suspense accounts can be on-lent to other credit union members, thereby providing a valuable source of affordable credit for other members of the community. In this way, credit union funds are already put to good use so it is not necessary for money from their dormant accounts to be included in a UK Unclaimed Asset Scheme.

  2.5  We believe that credit unions' ability to access funds including loans from a social investment bank funded from unclaimed assets from banks and building societies will contribute effectively to the growth and sustainability of credit unions and their ability to impact upon financial exclusion. We consider that taking unclaimed assets from credit unions for a social investment bank which they may benefit from would be inappropriate and may result in a situation where money is being given with one hand and taken away with another.

CONCLUSION

  ABCUL agrees with the proposal in the A UK Unclaimed Asset Scheme: a consultation to exempt credit unions from the scheme. We would like this to be included as supplementary evidence along with our main submission sent on 21/02/07.

April 2007





 
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