Cash in your dormant deposits

Forgetful savers and big changes in the way banks and building societies operate mean there are millions of pounds lying unclaimed in dormant accounts. So checking up on old pass books and statements can be a route to recovering lost cash.

Accounts fall dormant when account holders stop using them for a number of years. While banks and building societies try to keep in touch by writing to an account holder's last known address, most will stop issuing regular statements after periods of between one and five years if there have been no transactions or contact.

"It's difficult to give any one reason why people forget they have cash on deposit," says John Barker, in charge of dormant accounts at Bradford & Bingley, "perhaps they move more than used to be the case, often going out of area for the branch where they opened an account."

The British Bankers' Association (BBA) estimates there are some 60 million bank accounts spread among 38 million people in the UK. With 15 per cent of us operating more than one current account, the rise of "multiple banking" provides another explanation.

Meanwhile, our building societies have around 11 million members, but operate an estimated 37 million savings accounts. When Bradford & Bingley decided to contact dormant account holders in October 1995, they wrote to those with less than pounds 50 in accounts where there had been no customer transactions for at least five years.

"We sent 100,000 letters, getting an initial response of under 40 per cent," recalls Mr Barker, "and re-united the daughter of a deceased member with a total of pounds 14,000 still held in dormant savings accounts."

Bradford & Bingley have since consolidated their dormant accounts into a single holding account, cutting costs and paying extra interest as a result. While he deals with about seven cases each week, Mr Barker warns: "Don't get too excited if you find an old pass book; the average amount held in our remaining dormant accounts is just pounds 7."

Concluding that the amount shown in a pass book will be in an account with interest paid can also lead to disappointment. Most enquiries are dealt with by the society in question, but Brian Murphy, the Building Society Ombudsman, adjudicates on those where no agreement is reached.

"They can be very difficult for all concerned. You don't need a pass book to make a withdrawal. A society will pay out on other forms of personal identification, then make up the pass book only when it is finally presented.

"Our members are obliged to keep full records for six years in arrears, and the reality is that you may have a problem proving you have any money in a dormant account. On the other hand, we can't be expected to keep full records for ever, as the costs would be prohibitive."

The costs of checking up on a dormant account can easily exceed the amount held in it, but Mr Murphy points out: "Every building society is obliged by its statutes to take care of your money and will try to track down an account without making any charge."

The Banking Ombudsman deals with a larger number of dormant account cases: 171 for the year to October 1997. Most of these arise from pass- book accounts which were superseded by statement-based accounts in the early 1970's.

"Bank takeovers and the computerisation of records have helped exacerbate the problem, but our members also think the number of dormant accounts is increasing, so we are anxious to deal with the problem."

The amounts left in these bank accounts can be very small. National Westminster Bank recently dealt with a case involving 16 shillings from a passbook last updated in 1938. As with other clearing banks, NatWest has computerised written records dating back to the 1930's, and are as much concerned about the future growth in number of dormant accounts as those already in existence.

Lynsey Tapley, at NatWest, warns: "From a customer's point of view, these accounts hold lost money, but from our point of view they represent a growing overhead which has to be controlled. We want dormant account holders to come forward and take their money."

To this end, the BBA has introduced a standard claim form available through member banks' local branches, which is intended to provide a "common gateway" for those hunting dormant accounts. All banks are obliged to keep dormant account registers, including an account holders' full name and last-known address.

The Banking Ombudsman thinks that "nearly all complaints are brought to us in good faith, and the conversion of building societies bring out a lot of cases, as members claim windfall rights".

A growing number of claims arise after the death of an account holder. The solicitor handling probate should write to banks or building societies where the deceased was known to have held accounts. You can also save on solicitor's fees, by making a claim of your own, using copies of the death certificate and will.

Remember, if you are tracking down a dormant account start with the relevant bank or building society. Photocopy documentary evidence - old pass books, cheque books, statements, letters, or cards, and send these in with your letter of enquiry, but keep the originals.

If dealing with a bank, ask for a copy of the BBA's "Dormant Bank Accounts" form. Ask a building society for written guidance on its dormant account procedure. Only go to the relevant ombudsman once you have exhausted these routes and are unable to agree on a settlement. Your bank or building society will have details of each ombudsman's address.