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Unclaimed funds to go to community use

Funds lying dormant in bank accounts and building societies could be used for community purposes under new plans being considered by the government.It is estimated that up to £400 million is currently lying in accounts which have been untouched for more than 15 years, with the chancellor, Gordon Brown, looking at plans to enable the government to reclaim the money.A consultation on the issue is set to end in June and, while some technicalities over the legality of such a move remain under scrutiny, the Treasury has made positive noises about the prospect of new legislation.The funds would be held by the Treasury and could even accrue interest in a holding account and receive top-up payments from accounts going dormant each year.At present it is understood there are no plans to touch the large level of untouched funds in National Savings and Investments, but the move could herald a broader effort to capitalise on unused accounts.Ahead of the launch of the consultation document, economic secretary to the Treasury Ed Balls described the idea as a "unique opportunity to provide for worthwhile reinvestment in youth services, financial inclusion and capability, while balancing the financial interest of consumers".Meanwhile, the British Bankers' Association (BBA) lent its support to the campaign, as long as safeguards were introduced to protect customers' access to their money.Angela Knight, chief executive designate of the BBA, commented: "All along our priority has been the protection of the right of customers to reclaim their monies at any time. "A key element of the approach proposed within the consultation paper therefore is that even after the transfer of their 'unclaimed assets' individuals will retain the right to reclaim their monies via their bank or building society as at present." A decision is expected in the spring on how the money will be spent, but the Treasury has stressed the community will benefit.

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