Can a Dormant Account Receive Money?

Bank accounts are used by almost every individual for making payments and transactions and for debit or credit card management. A bank account stays active if it is operated regularly. If the account is not used actively, it becomes dormant. This article encompasses all the details of dormant accounts, and can a dormant account receive money in the UK?

Talk to one of our intelligent and clever professional bookkeepers to get your further queries about bookkeeping services in London. We will be sure to come up with the best possible solution for you.

Can a Dormant Account Receive Money?

Can a dormant account receive money? In the UK, bank accounts are actively used for multiple reasons, such as receiving money in the form of salary, making cash transactions, and paying utility bills through current accounts. On the other hand, savings accounts are used to save money and manage investments.

Bank accounts also serve important purposes in government matters like Universal Credit, which is affected by the amount of cash held in the account. In addition, individuals are authorized to manage other persons’ accounts, holding the same powers as the account holder.

Core Functions

Below are the purposes served by bank accounts, such as

• Receiving Payments

Bank accounts are actively used for making transactions such as receiving salaries, benefits, pensions, and other payments.

• Making Payments

Bank accounts are used for making payments, purchasing things online, and transferring money to other accounts.

• Accessing Cash

Debit and credit cards are used through bank accounts for easy access to cash from anywhere in the world

• Managing Finances

Online mobile banking platforms enable customers to check balances, view transaction history, and manage finances from anywhere.

Dormant vs Active Account

A bank account is active when it is regularly operated by the account owner, while an account becomes dormant if it is not operated for a certain period.

Operations on a Dormant Account

As the name indicates, a dormant account is defined by low or no activity. No activity means no credit or debit card transactions or digital channel logins were done for a period by the account holder. The period required to label an account as dormant varies according to the policy of the financial institution and the account type, such as savings or current. When an account becomes dormant, it can generally be reactivated upon request of the account holder, which often requires visiting the branch and completing the request form.

Biometric verification is also a crucial step in account reactivation. An account labelled as dormant may have certain activity restrictions, such as online banking, ATM withdrawals, or cheque writing. Dormancy periods are implemented as a security measure to keep customer belongings and assets secure. They are also imperative measures against fraudulent activity, such as identity theft, which could occur if bank statements are sent to an outdated address.

The Dormant Assets Scheme

In the UK, the dormant asset scheme was established in 2011 through the Dormant Bank and Building Society Accounts Act 2008.  It is left with the aim, devised by industry and supported by government, to return the assets to the dormant account holders.

If the account holder is not found, the money is transferred to a social and environmental project led by the UK government. The core objective of the dormant asset scheme is consumer protection. The account holders can claim their belongings at any time if they have not transferred them to someone else.

Transferring Assets in a Dormant Account

A dormant asset is defined as a financial asset or product, such as a bank account, which is inactive for many years, and the institution is unable to locate the owner. The dormant asset scheme allows businesses to transfer funds from a dormant account to any other account. It depends on the owner if they want to reactivate the account, transfer all funds, or transfer a part of them.

It is the foremost priority of business to return or reunite assets to their rightful owners. They can do it by locating people through their given addresses and other contacts, Royal Mail, email, telephone, a tracing service, or a credit reference agency.

How Owners can Reclaim their Assets?

There are multiple ways through which rightful owners can reclaim their assets in a dormant account

• Banks and building societies

Under the dormant asset scheme, owners should contact the financial institution about their dormant assets, or they can trace their dormant bank account through the link.

• Insurance and pensions

Dormant bank account owners can visit the Association of British Insurers (ABI) website for guidance on finding lost or dormant bank accounts. The owners can also use this tool of the UK government for lost pension details.

• Investment and wealth management

Owners can also use another portal available online, named the Investment Association’s Unclaimed Assets Portal to inquire about investment and wealth management. They can contact the firm they have invested in through the registrars for support and tracking.

• Securities

The bank account owners or investors should contact their security issuers for their lost security amounts, or they can always contact the registrars for support in tracing.

Millions Released from Dormant Accounts

The UK government took this initiative of reuniting dormant accounts with their rightful owners. If the owners were not funded, they released the amounts in the dormant account for social welfare projects and environmental projects. In response to this step, £76 million was released from forgotten bank accounts.

This hefty fund was used by the government to help people in debt, assist social enterprises, and support energy-saving solutions. The dormant asset scheme is expected to help people living in the most vulnerable conditions, where beneficiaries will benefit from interest-free loans.

Conclusion

Can a dormant account receive money? The dormant accounts are the accounts that have remained inactive for a certain period. They can be rehabilitated by the owners, and they can reclaim the assets at any time by contacting a financial institution. The assets can be reunited with their owners through the dormant asset scheme introduced by the UK government. In response to this scheme, millions were released and given to social and environmental projects.

Disclaimer: All the information provided in this article on can a dormant account receive money, including all the text and graphics, is general in nature. It does not intend to disregard any professional advice.