The UK’s Financial Conduct Authority (FCA) has shared an update on the Dormant Assets Scheme expansion covering Investment assets and client money.
The FCA noted that they have amended their rules and guidance in ode “to enable dormant investment assets and client money to be available to the Dormant Assets Scheme (DAS).”
As stated in the release from the FCA, millions in dormant funds “have been unlocked for charities and social enterprises, as new rules set out … facilitate the expansion of the Dormant Assets Scheme.”
This second phase of the expansion will “bring dormant investment assets and client money in scope.”
Led by industry and backed by government, the Dormant Asset scheme “aims to reunite people with their financial assets.”
Where that is not possible, this money supports UK growth “through good causes such as getting young people into work or offering affordable credit to families.”
Since 2011, the UK Dormant Assets Scheme “has unlocked more than £745m for social and environment initiatives, from over £1.35 billion in dormant bank and building society accounts.”
The expansion of the scheme is “estimated to potentially unlock a further £880m.”
This initiative not only reunites people “with their lost money but also empowers local businesses to drive positive change across local communities.”
The policy statement outlines technical changes in their Handbook to “facilitate the full expansion of the Dormant Assets Scheme in the remaining expanded asset classes.”
The FCA’s intention is to ensure any Handbook changes “allow firms to participate in the Dormant Assets Scheme and consumers to access reclaims.”
In other key updates from the FCA, it was noted that the regulator “imposed restrictions on wealth management firm, London Stone Securities Limited.”
The firm cannot undertake “any regulated activity, charge any further fees to existing clients or take on new clients without their express permission.”
The firm was also required to withdraw “all financial promotions and keep assets in the business.”
This follows serious concerns “about London Stone Securities Limited not delivering good client outcomes.”
The firm was charging excessive fees, which do “not appear to be justified, clearly relate to benefits for the firm’s clients or provide fair value.”
Low value investment portfolios were particularly affected. In addition, charges were not communicated to or agreed with “all clients in advance, raising concerns that the firm has not appropriately disclosed and explained its service terms.”
This risk was exacerbated as “some of the firm’s client base have characteristics of vulnerability.”
They are also concerned London Stone Securities issued financial promotions which “did not follow their rules that appear to have directly targeted potential clients who were elderly, disabled and vulnerable.”