CP22/09: Expansion of the Dormant Assets scheme

Expansion of the Dormant
Assets scheme
CP22/9
13 May 2022

1 Summary
2 The wider context
3 Sector specific changes
4 Additional changes
5 Financial Ombudsman Service
Questions in this paper
Cost benefit analysis
Compatibility statement
Abbreviations in this document
Draft Handbook text

How to respond
We are asking for comments on this Consultation Paper (CP) by Friday 17 June You can send them to us using the form on our website at:
https://www.fca.org.uk/cp22-9-response-form Or in writing to:
Marvin Narayanen
Banking Policy
Financial Conduct Authority
12 Endeavour Square
London E20 1JN
Telephone: 020 7066 1802
Email: cp22-09@fca.org.uk

1 Summary
Why we are consulting
1.1 The Dormant Asset Scheme (DAS) allows banks and building societies to pay
dormant monies to an authorised reclaim fund which then puts this money towards funding good causes. In 2016, HM Government established the Independent Commission on Dormant Assets to examine what new assets could be brought into an expanded Dormant Asset Scheme. The Commission identified dormant assets in a range of financial services sectors that could be included in an expanded DAS.
1.2 In February 2022, the Dormant Assets Act 2022 received Royal Assent. The Act
amends the Dormant Bank and Building Society Accounts Act 2008 to expand the scope of dormant assets that can be contributed to the DAS.
1.3 We have been working closely with HM Government and Reclaim Fund Limited (RFL)
to facilitate the expansion of the scheme. We are now proposing amendments to our rules and guidance to enable insurance, pension and securities firms to contribute dormant assets to an expanded scheme. Who this applies to
1.4 Reclaim Fund Limited (RFL) and providers of insurance and pensions products should
read this consultation. Other stakeholders interested in the treatment of dormant assets, for example consumer organisations, may also want to read the consultation. Next steps
1.5 We want to know what you think of our proposals. Please use this online form or
email: cp22-09@fca.org.uk by Friday 17 June 2022.
1.6 Depending on the feedback received to this consultation we hope to finalise our
proposals in July 2022. We have agreed with HM Government and RFL for expansion of the dormant asset scheme to happen in a staggered approach. This will mean a second consultation on asset classes not covered in this consultation.

2 The wider context
2.1 The Dormant Bank and Building Society Accounts Act 2008 supported the creation of
the Dormant Assets Scheme (DAS). Under the DAS, bank accounts are deemed dormant when they have been untouched for a minimum of 15 years and the bank or building society has been unable to trace the owner. Banks and building societies can voluntarily channel funds from dormant accounts to the DAS via an Authorised Reclaim Fund (ARF). The ARF is responsible for meeting any reclaims and the distribution of dormant funds to good causes.
2.2 The DAS is underpinned by three principles

• Reunification first: participants’ priority is to trace and reunite people with their
  assets
• Full restitution: asset owners are able, at any point, to reclaim the amount that
  would have been due to them had a transfer into the scheme not occurred; and
• Voluntary participation: potential participants can choose whether to
  contribute to the scheme and to what extent.
  Reclaim Fund Limited
  2.3 There is one ARF in the UK - Reclaim Fund Ltd (RFL) which was established in 2011
  by the Cooperative Banking Group (now Angel Square Investments Ltd). Since 2011, over £745m has been made available through the DAS to social and environmental initiatives, including £150m allocated to support coronavirus recovery. After ten years of operation, the current Scheme is reaching a mature state, with significantly fewer funds flowing through the system each year. Expansion
  2.4 The Dormant Assets Act 2022 expanded the current DAS to facilitate the inclusion of
  assets from new sectors. The new assets in scope of the expanded scheme fall under five asset classes:
• Insurance
• pensions
• securities
• investment assets
• client money
  2.5 The full list of assets in scope, new definitions of dormancy and reclaim values can
  be found in the Dormant Assets Act 2022.
  2.6 With HM Government and RFL, we have agreed a staggered approach to facilitating
  expansion of the DAS. This is to reflect differences between the different asset classes and their resolution processes. We are consulting now on changes to FCA

rules to facilitate expansion in three asset classes: insurance, pensions and securities. We will continue to work with HM Government, RFL and industry to facilitate expansion for investment assets and client money.
2.7 The UK’s insurance and pensions sector is the third largest in the world and manages
investments worth £1.8tn. In 2017, there were over 58 million life and long-term savings policies in force, generating premium income of £180bn per year and paying out benefits worth £175bn. The government’s consultation on expanding the DAS estimated that there could be up to £2.1 billion of dormant insurance and pensions sector products. Based on RFL’s existing reserve estimates, approximately £575 million could be released to social and environmental initiatives. The consultation also estimated that there could be up to £158 million of dormant security sector assets and that approximately £66 million could be released. Financial Services Compensation Scheme
2.8 Under current Prudential Regulation Authority (PRA) Dormant Account Scheme rules,
customers would be able to make a claim for compensation from the Financial Services Compensation Scheme if a dormant account fund operator is unable, or likely to be unable, to satisfy a repayment claim.
2.9 The PRA is considering the implications of the expansion of the dormant assets
scheme on FSCS protection.
Equality and diversity considerations
2.10 We have considered the equality and diversity issues that may arise from the
proposals in this Consultation Paper. We do not consider that the proposals materially impact any of the groups with protected characteristics under the Equality Act 2010 for the reasons set out in our compatibility statement at annex 3.
2.11 We will continue to consider the equality and diversity implications of the proposals
during the consultation period and will revisit them when making the final rules. We welcome your input on the equality impacts of this consultation.

3 Proposed changes to facilitate expansion in the securities, insurance and pensions sectors
3.1 This Chapter sets out the specific changes to FCA rules we are proposing to facilitate
the expansion of the DAS to the securities, insurance and pensions sector as defined in the Dormant Assets Act 2022. Record keeping Insurance and pensions assets
3.2 Section 3 of the Dormant Asset Act defines eligible insurance proceeds. These are
defined as the cash proceeds of a contract of long-term insurance, after the appropriate adjustments have been made for such things as interest due and fees and charges payable. Section 6 defines eligible pension proceeds as being either:
first, benefits in the form of income withdrawal that have become payable under a personal pension scheme, or second, benefits that have become payable under a personal pension scheme. Our proposed rules in this consultation paper define these assets by reference to the relevant provisions of the Dormant Asset Act 2022.
3.3 We are not proposing to introduce any additional rules or guidance in relation to
record keeping as we consider that our existing rules are sufficiently detailed and broad to protect consumers where insurers and pension providers voluntarily participate in the DAS.
3.4 We considered introducing additional rules and guidance to require providers
participating in the DAS to provide customers with information regarding the terms of the schemes, as we have previously done in another part of the Handbook1. However, we consider that it is already implicit from the existing rules that providers must have adequate record keeping in place. For example, existing obligations in SYSC already require firms to keep adequate records in relation to their dealings with customers such as transactions, communications and contact details.
3.5 We note that some eligible pensions assets could be client money under the Client
Assets Sourcebook (CASS). As part of this proposed first phase of expansion, no assets that are client money under CASS will be transferred to the DAS. As noted in
Chapter 2, we are working closely with HM Government, RFL and industry to
facilitate further expansion of DAS in other asset classes (including client money) and will issue a further consultation in due course. Securities
3.6 We do not regulate companies that may contribute securities assets to the DAS
except insofar as these are regulated financial services firms. We are therefore not proposing to introduce new rules in this area.
3.7 The Companies Act 2006 set a requirement that the companies owners/directors
must maintain a register of shareholders which is also submitted as part of the 1 See BCOBS 5.1.9R and BCOBS 5.1.10R

annual filings for Companies House. Shareholders who qualify as having significant control have to provide names and addresses to Companies House. While we set obligations for companies that list in the UK through our Listings Rules and for issuers with transferable securities admitted to trading on UK regulated markets through our Disclosure Transparency Guidance and Rules (DTRs), these requirements on issuers, for example, obligations (under DTR 4) for companies to submit annual financial information, and (under DTR 5) to notify us when shareholdings change (as a % of shareholder voting rights), are not related to DAS rules.
3.8 We encourage all firms that choose to participate in the DAS to work with RFL or any
other authorised reclaim fund throughout the process to mitigate any risk of harm to customers. This includes keeping sufficient records to identify customers who assets have been contributed to the scheme and working with RFL to manage records in the event of winddowns or insolvency. Q1: Do you agree with our proposed approach to expansion? If not, what should we consider? Amendments to our glossary
3.9 We are proposing several changes to the FCA glossary where dormant assets arise to
reflect the amendments brought on by the Dormant Assets Act 2022. These changes will ensure that the definitions relating to dormancy in our handbook capture the widening of the DAS to include insurance and pensions assets.
3.10 A full list of changes to the glossary can be found in the draft handbook text in
appendix 1.
Q2: Do you agree with our amendments to glossary definitions? If not, what should we consider? Amendments to DISP
3.11 The Financial Ombudsman Service (Financial Ombudsman) is an independent body
set up by Parliament to resolve certain complaints between eligible complainants and businesses that provide financial services. Its role is to resolve these disputes quickly and with minimum formality, on the basis of what is fair and reasonable in all the circumstances of the case.
3.12 The FCA is responsible for setting the rules for the complaints under the ‘compulsory
jurisdiction’ (CJ) of the Financial Ombudsman. Rules in our ‘Dispute resolution:
Complaints’ sourcebook (DISP) cover (amongst other things) what kinds of complaints the Financial Ombudsman can consider under the CJ and who is eligible to complain.
3.13 The Financial Ombudsman also has its own voluntary jurisdiction (VJ) which covers
some types of complaint not covered by the CJ and which financial services firms may choose to participate in and which the Financial Ombudsman oversees. The Financial Ombudsman is planning not to mirror our proposed changes to the CJ in the VJ. Given the nature of the regulated activities in question, the fact that RFL is presently the only entity that has been authorised to carry them out, and that RFL is

already subject to the CJ, the Financial Ombudsman considers it unnecessary to mirror the changes to the CJ in the VJ.
3.14 As a result, the Financial Ombudsman is proposing to make certain amendments to
the VJ rules, guidance and standard terms, in order to make it clear that activities relating to the dormant asset scheme are not covered by the VJ.
3.15 As such, this part of the consultation is issued jointly by the FCA and the Financial
Ombudsman.
3.16 RFL is already subject to the CJ and is required to comply with DISP, including the
complaint handling rules in DISP 1, which contains rules and guidance on how firms should deal promptly and fairly with complaints from eligible complainants.
3.17 To be an ‘eligible complainant’ for the purposes of the CJ a person must be a
‘consumer’ or one of the other categories of eligible complainant set out in DISP 2.7.3R. The person must also have a complaint which arises from a matter relevant to one or more of the relationships listed in DISP 2.7.6R.
3.18 Under the existing scheme, a customer who is (or was) a customer of a bank or
building society which transferred any balance from a dormant account to the dormant account fund operator is eligible to refer a complaint about RFL to the Financial Ombudsman (DISP 2.7.6R(14)).
3.19 We propose to amend DISP 2.7.6R by adding a couple of new provisions (see DISP
2.7.6R(14A) and (14B) in draft instrument) so that customers (or former customers) of insurers and pension providers that transfer assets to RFL are also eligible to complain to the Financial Ombudsman about RFL. This will provide customers of insurers and pension providers, who have assets transferred to RFL under the expanded scheme, with the same access to a dispute resolution service that is available to those who have assets transferred under the existing scheme. Q3: Do you agree with our proposal to enable customers (or former customers) of insurers and pension providers who have assets transferred to a dormant asset fund operator to refer a complaint about the dormant asset fund operator to the Financial Ombudsman? Q4: Do you agree with the Financial Ombudsman’s proposals to exclude activities relating to the dormant asset scheme from the VJ?

Questions in this paper
Q1: Do you agree with our proposed approach to expansion? If not, what should we consider? Q2: Do you agree with our amendments to glossary definitions? If not, what should we consider? Q3: Do you agree with our proposal to enable customers (or former customers) of insurers and pension providers who have assets transferred to a dormant asset fund operator to refer a complaint about the dormant asset fund operator to the Financial Ombudsman? Q4: Do you agree with the Financial Ombudsman’s proposals to exclude activities relating to the dormant asset scheme from the VJ?

Cost benefit analysis

1. FSMA, as amended by the Financial Services Act 2012, requires us to publish a cost
   benefit analysis (CBA) of our proposed rules. Specifically, section 138I requires us to publish a CBA of proposed rules, defined as ‘an analysis of the costs, together with an analysis of the benefits that will arise if the proposed rules are made’.
2. We believe that our proposed changes will lead to no increase in costs or that the
   increase will be of minimal significance. We are not introducing new rules but are instead making amendments to allow firms to voluntarily participate in the DAS.

Compatibility statement
When consulting on proposed changes to our Handbook, we are required by section 138I(2) of FSMA to explain why we believe that making those changes is consistent with our strategic objective, advances one or more of our operational objectives, and has regard to the regulatory principles in section 3B of FSMA. We are also required, to have regard to the principles in the Legislative and Regulatory Reform Act 2006, the remit letter, and the Regulators’ Compliance Code. We are satisfied that our proposed changes are compatible with our objectives and regulatory principles. The changes that we are proposing enhance consumer protection and promote market integrity by amending the FCA handbook to enable expansion of the Dormant Assets Scheme. As set out above, we consider the proposed updates to the FCA handbook will support firms in contributing assets to the DAS. In turn, more dormant funds can be put towards good uses and to benefit UK consumers. We consider the measures to be proportionate considering section 3B of FSMA, since we do not expect these changes to create any material costs. Equality and diversity We are required under the Equality Act 2010 in exercising our functions to ‘have due regard’ to the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by or under the Act, advance equality of opportunity between persons who share a relevant protected characteristic and those who do not, to and foster good relations between people who share a protected characteristic and those who do not. Whilst assets transferred to the DAS will likely come from older demographics, overall, we do not consider that the proposals materially impact any of the groups with protected characteristics under the Equality Act 2010. This is because the DAS ensures all money contributed can be repaid fully in perpetuity. However, we will continue to consider the equality and diversity implications of the proposals during the consultation period and will revisit them when making the final rules. Mutual Societies
Section 138K of FSMA requires us to state whether, in our opinion, our proposed
rules have a significantly different impact on authorised persons who are mutual societies, compared to other authorised persons. The proposed changes are not expected to have a significantly different impact on mutual societies.

Abbreviations in this document
Abbreviation Description
ARF Authorised Reclaim Fund
DAS Dormant Assets Scheme
FSCS Financial Service Compensation Scheme RFL Reclaim Fund Limited

Draft Handbook text
DORMANT ASSETS INSTRUMENT 2022
Powers exercised by the Financial Conduct Authority A. The Financial Conduct Authority (“the FCA”) makes this instrument in the exercise of the following powers and related provisions in or under:
(1) the following sections of the Financial Services and Markets Act 2000 (“the Act”):
(a) section 137A (The FCA’s general rules); (b) section 137T (General supplementary powers); (c) section 138D (Action for damages); (d) section 139A (Power of the FCA to give guidance); and (e) section 226 (Compulsory jurisdiction). B. The rule-making powers listed above are specified for the purpose of section 138G(2) (Rule-making instruments) of the Act.
C. The Financial Conduct Authority consents to and approves the rules and guidance
and standard terms made and amended and fixed and varied by the Financial Ombudsman Service Limited, as set out Annex F. Powers exercised by the Financial Ombudsman Service Limited D. The Financial Ombudsman Service Limited makes and amends the rules and guidance for the Voluntary Jurisdiction and fixes and varies the standard terms for Voluntary Jurisdiction participants, as set out in Annex F to this instrument, in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 227 (Voluntary jurisdiction); (2) paragraph 8 (Information, advice and guidance) of Schedule 17; (3) paragraph 18 (Terms of reference to the scheme) of Schedule 17; and (4) paragraph 20 (Voluntary jurisdiction rules: procedure) of Schedule 17. E. The making and amendment of the rules and guidance and the fixing and varying of the standard terms by the Financial Ombudsman Service Limited, as set out at paragraph D above, is subject to the consent and approval of the Financial Conduct Authority.

Commencement
F. This instrument comes into force on [date].
Amendments to the Handbook
G. The modules of the FCA’s Handbook of rules and guidance listed in column (1) below are amended in accordance with the Annexes in this instrument listed in column (2). (1) (2) Glossary of definitions Annex A Senior Management Arrangements, Systems and Controls sourcebook (SYSC)
Annex B
Fees manual (FEES) Annex C
Banking: Conduct of Business sourcebook (BCOBS) Annex D Supervision manual (SUP) Annex E Dispute Resolution: Complaints sourcebook (DISP) Annex F Amendments to material outside the Handbook H. The Perimeter Guidance manual (PERG) is amended in accordance with Annex G to this instrument. Citation
I. This instrument may be cited as the Dormant Assets Instrument 2022.
By order of the Board of the Financial Conduct Authority [date]

By order of the Board of the Financial Ombudsman Service Limited [date]

Annex A
Amendments to the Glossary of definitions In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. Insert the following new definitions in the appropriate alphabetical position. The text is not underlined. dealing with unwanted asset money the regulated activity specified in article 63N(1)(c) of the Regulated Activities Order. Amend the following definitions as shown. account (in relation to a dormant account) has the meaning given in section 9 of the Dormant Bank and Building Society Accounts Act 2008, which is in summary:
(1) (in relation to a dormant account asset relating to a bank or building society) has the meaning given in section 9 of the Dormant Bank and Building Society Accounts Act 2008, which is in summary:
(a) an account which has at all times consisted only of money and is provided by a bank or building society as part of its activity of accepting deposits; and (b) in relation to a building society, it includes an account representing shares in the society, other than:
(i) preferential shares; or
(ii) deferred shares within the meaning given in section 119(1) of the Building Societies Act 1986. (2) (in relation to a dormant asset relating to a long-term insurance contract) has the meaning given in section 3 of the Dormant Assets Act 2022 in relation to eligible insurance proceeds, which

in summary is cash proceeds of a long-term insurance contract, after the appropriate adjustments have been made for such things as interest due and fees and charges payable, but excluding a contract relating to a with-profits policy, or an industrial assurance policy, or a policy that is subject to a trust, or proceeds held in a lifetime ISA where their transfer to a dormant asset fund operator would result in liability to pay a withdrawal charge to HMRC. (3) (in relation to a dormant asset relating to a personal pension scheme) has the meaning given in section 6 of the Dormant Assets Act 2022 in relation to eligible pension benefits, which in summary means any of the following amounts (that have become payable after the appropriate adjustments have been made for such things as interest due and fees and charges payable):
(a) pension benefits in the form of income withdrawal that have become payable under a personal pension scheme; or (b) pension benefits that have become payable under a personal pension scheme:
(i) under which all benefits that may be provided are money-purchase benefits; and (ii) which is not and has at no time been a qualifying scheme or an automatic enrolment scheme in relation to the member to or in respect of whom the benefits are payable; or (c) any amount available to be paid as benefits under a personal pension scheme of a kind mentioned in (b), but excluding benefits provided from sums invested in a with￾profits fund. balance (in relation to a person’s account) has the meaning given in section 8 of the Dormant Bank and Building Society Accounts Act 2008, which is in summary the amount owing to the person in respect of the account at any particular time, after the appropriate adjustments have been made for such things as interest due and fees and charges payable. In relation to a time after a transfer of the balance to a dormant account asset fund operator, the adjustments include those that would fall to be made but for the transfer or transfers. client … (B)

…
(6) …
(7) (in relation to a dormant account money transferred to a dormant account asset fund operator) a person entitled to the balance in the dormant account held with a bank or building society which was transferred to a dormant account fund operator. make a repayment claim. common platform firm (a) a MIFIDPRU investment firm; or (aa) a bank; or (ab) a building society; or (ac) a designated investment firm; or (ad) [deleted] (b) [deleted] (c) [deleted] (d) a dormant account asset fund operator. dormant account asset (1) (in relation to a bank or building society) has the meaning given in
section 10 of the Dormant Bank and Building Society Accounts
Act 2008, which is in summary an account that at a particular point in time:
(a) has been open throughout the period of 15 years ending at that time; and (b) during that period no transactions have been carried out in relation to the account by or on the instructions of the holder of the account.; or (2) (in relation to long-term insurance contract) has the meaning given in section 4 of the Dormant Assets Act 2022, which in summary is any of the four conditions set out in section 4 that must be met for an asset to be considered dormant in relation to eligible insurance proceeds; or (3) (in relation to a personal pension scheme) has the meaning given in section 7 of the Dormant Assets Act 2022, which in summary is any of the four conditions set out in section 7 that must be met for

an asset to be considered dormant in relation to eligible pension benefits. dormant account asset funds (1) (in relation to a bank or building society) has the meaning given in
section 5(6) of the Dormant Bank and Building Society Accounts
Act 2008, which is money paid to a dormant account asset fund operator by a bank or building society in respect of a dormant account. asset; or (2) (in relation to long-term insurance contract) is money paid to a dormant asset fund operator by an insurer in accordance with
section 2(1) of the Dormant Assets Act 2022; or
(3) (in relation to a personal pension scheme) is money paid to a dormant asset fund operator by an operator of a personal pension scheme in accordance with section 5(1) of the Dormant Assets Act 2022. dormant asset account fund operator a firm with permission for operating a dormant account asset fund. managing dormant account asset funds (including the investment of such funds) the regulated activity, specified in article 63N(1)(b) of the Regulated Activities Order, which is the acceptance of a transfer by a bank or building society of the balance of a dormant account, or a proportion of such a balance, and the management of those funds (including the investment of such funds) in such a way as to enable the dormant account fund operator to meet whatever repayment claims it is prudent to anticipate. means:
(a) the acceptance of a transfer by a bank or building society of the balance of a dormant asset, or a proportion of such a balance, and:
(i) the acceptance of transfers of amounts as mentioned in section 1(1)(a) or 2(1)(a) of the Dormant Bank and Building Society Accounts Act 2008; or (ii) section 2(1)(a), 5(1)(a) or 14(1)(a) of the Dormant Assets Act 2022; (b) the management of those funds in such a way as to enable the dormant asset fund operator to meet whatever repayment claims it is prudent to anticipate; and (c) dealing with those funds with a view to the transfer of amounts to the body or bodies for the time being specified in section 16 of the Dormant Bank and Building Society Accounts Act 2008.

meeting of repayment claims the regulated activity, specified in article 63N(1)(a) of the Regulated Activities Order, which is the meeting of repayment claims by a dormant account asset fund operator. operating a dormant account asset fund any of the regulated activities of:
(a) meeting of repayment claims; or
(b) managing dormant account asset funds (including the investment of such funds). regulated activity (A) in the PRA Handbook:
…
(sj) managing dormant account asset funds (including the investment of such funds) (article 63N(1)(b)); … (B) in the FCA Handbook: (in accordance with section 22 of the Act (Regulated activities)) the activities specified in Part II (Specified activities), Part 3A (Specified activities in relation to information) and Part 3B (Claims management activities in Great Britain) of the Regulated Activities Order, which are, in summary:
…
(sj) managing dormant account asset funds (including the investment of such funds) (article 63N(1)(b)); … repayment claim (in relation to a dormant account) a claim for repayment made by virtue of sections 1(2)(b) or 2(2)(b) of the Dormant Bank and Building Society Accounts Act 2008, that is, in summary, that the customer has against the dormant account fund operator whatever right to payment of the balance the customer would have against the bank or building society if the transfer (or in the case of section 2(2)(b), transfers) had not happened. In this definition, ‘customer’ is the person who held with a bank or building society the balance of a dormant account transferred to a dormant account fund operator or of sections 2(2)(b), (3)(b), 5(2)(b), or 14(2)(b) of the Dormant Assets Act 2022.

Annex B
Amendments to the Senior Management Arrangements, Systems and Controls sourcebook (SYSC) In this Annex, underlining indicates new text and striking through indicates deleted text. 1 Application and purpose … 1 Annex 1 Detailed application of SYSC …
Part 2 Application of the common platform requirements (SYSC 4 to 10)
…
2.11 R The common platform requirements on financial crime apply as set out in
SYSC 1 Annex 1 2.8R, except that they do not apply:
…
(2) in relation to the following regulated activities:
…
(h) meeting of repayment claims and managing dormant account asset funds (including the investment of such funds). …
Part 3 Tables summarising the application of the common platform requirements
to different types of firm
…
Common platform firm
3.2 G For a common platform firm (other than a dormant account asset fund
operator not subject to MiFID):

…
…
3.2-A R For a common platform firm (other than a dormant account asset fund operator not subject to MiFID), articles 1(2), 21 to 25, 30 to 35 and 72 of the MiFID Org Regulation apply to the firm’s business other than MiFID business or structured deposits regulated activities as if the MiFID Org Regulation applied to the firm as rules in accordance with SYSC 1 Annex 1 2.8R and SYSC 1 Annex 1 2.8AR. 3.2-B R For a common platform firm that is a dormant account asset fund operator and is not subject to MiFID:
…
…

Annex C
Amendments to the Fees manual (FEES)
In this Annex, underlining indicates new text and striking through indicates deleted text. 3 Application, Notification and Vetting Fees … 3 Annex 1R Authorisation fees payable …
Part 2- Pricing categories applicable to applications made in the following activity
groupings in the A, B, C, CC and CMC fee blocks Activity grouping Description Applicable pricing category in FEES 3
Annex 1AR
A.1 Deposit acceptors (excluding e-money issuers and credit unions) and dormant account asset fund operators … 3 Annex 16R Fees for an application for variation of permission The fee relevant to the application is due on or before the date the application is made. Application type Applicable pricing category in FEES 3
Annex 1AR
1 Reduction in the scope of the applicant’s permissions and no other increases N/A

…
6 Any applicant in activity group A.1 which applies for the permissions of meeting of repayment claims or managing dormant account asset funds (including the investment of such funds) … … 4 Periodic fees … 4 Annex 1AR FCA activity groups, tariff bases and valuation dates The fee relevant to the application is due on or before the date the application is made.
Part 1
This table shows how the FCA links the regulated activities for which a firm has permission to activity groups (fee-blocks). A firm can use the table to identify which fee-blocks it falls into based on its permission. Activity group Fee payer falls in the activity group if:
A.1 Deposit acceptors its permission includes accepting deposits or operating a dormant account asset fund BUT DOES NOT include either of the following:
effecting contracts of insurance; carrying out contracts of insurance. …
Part 2
This table sets out the activity groups (fee blocks) in relation to (i) the minimum fees payable to the FCA and (ii) the prudential fee payable to the FCA. Activity group Fee payer falls into the fee-block if

A.0 FCA minimum fee
(1) it is in at least one of the fee blocks under Part 1; and (2) it is not:
(a) a UK ISPV; or
(b) a firm whose only permission is operating a dormant asset fund account; or (c) a firm exclusively carrying on credit-related regulated activities. …
Part 3
This table indicates the tariff base for each fee-block set out in Part 1. The tariff base in this Part is the means by which the FCA measures the amount of business conducted by a firm for the purposes of calculating the annual periodic fees payable to the FCA by that firm. Activity group Tariff base A.1 … Note:
For a dormant account asset fund operator the tariff base is not relevant and the flat fee in FEES 4 Annex 2AR is payable. …
Part 4
This table indicates the tariff base for each fee block set out in Part 2. The tariff base in this Part is the means by which the FCA measures the amount of business conducted by a firm for the purposes of calculating the annual periodic fees payable to the FCA by that firm. Activity group Tariff base … AP.0 The total periodic fees payable as a result of fee blocks A.2 and A.7 to A.19 and A.23 in Part 1 of FEES 4 Annex 2AR excluding any periodic fee for operating a dormant asset fund account.

…
4 Annex
2AR
FCA Fee rates for the period from 1 April 2021 to 31 March 2022 …
Part 1
This table shows the tariff rates applicable to each of the fee blocks set out in Part 1 of FEES 4 Annex 1AR. … Activity group Fee payable A.1 … … The tariff rates in A.1 are not relevant for the permissions relating to operating a dormant account asset fund. Instead a flat fee of £6,367 is payable in respect of these permissions. … 5 Financial Ombudsman Service Funding … 5 Annex 1R Annual General Levy Payable in Relation to the Compulsory Jurisdiction for 2021/22 … …
2. The total amount expected to be raised through the general
levy in 2021/22 will be £96.0m
Compulsory jurisdiction - general levy

Industry block Tariff base General levy payable by firm 1-Deposit acceptors, home finance providers, home finance administrators (excluding firms in block 14) and dormant account asset fund operators Number of accounts relevant to the activities in DISP 2.6.1R as at 31 December In the case of dormant account asset fund operators, the tariff base is the number of eligible activated accounts (8). £0.12010 per relevant account, subject to a minimum levy of £100 … Notes … 8 Eligible activated accounts are the number of repayment claims met by the dormant account asset fund operator as at the 31 December. … 6 Financial Services Compensation Scheme Funding … 6 Annex 3AR Financial Services Compensation Scheme - classes and categories … Class 2 Investment Intermediation Claims … Category 2.4 Structured deposits provision Firms with permission for:
accepting deposits and/or operating a dormant account asset fund. BUT does not include any fee payer who either effects or carries out contracts of insurance.

…
Class 6 Deposit acceptors’ contribution
Firms with permission for:
accepting deposits and/or operating a dormant account asset fund. BUT does not include any fee payer who either effects or carries out contracts of insurance.
Annex D
Amendments to the Banking: Conduct of Business sourcebook (BCOBS) In this Annex, underlining indicates new text and striking through indicates deleted text. 5 Post sale
5.1 Post sale requirements
…
Lost and dormant accounts assets
…
5.1.10 R If a firm participates in the scheme under the Dormant Bank and
Building Society Accounts Act 2008, it must inform a banking customer of this fact and provide appropriate information regarding the terms of the scheme on entering into communications with a banking customer regarding a dormant account asset.

Annex E
Amendments to the Supervision manual (SUP) In this Annex, underlining indicates new text and striking through indicates deleted text. 3 Auditors
3.1 Application
…
3.1.2 R Applicable sections (see SUP 3.1.1R)
…
(1) Category of firm (2) Sections applicable to the firm (3) Sections applicable to its auditor … (4) Bank, building society or dormant account asset fund operator which in each case carries on designated investment business (Notes 2A and 6) SUP 3.1 - SUP 3.7, SUP 3.11 SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10 (5) Bank, building society or dormant account asset fund operator which in each case does not carry on designated investment business (Notes 2A) SUP 3.1 - SUP 3.7 SUP 3.1, SUP 3.2, SUP 3.8 … 6 Applications to vary and cancel Part 4A permission and to impose, vary or cancel requirements …
6.2 Introduction

…
Firms with long term liabilities to customers
6.2.8 G Discussions with the appropriate regulator are particularly relevant
where the firm has to discharge obligations to its customers or policyholders before it can cease carrying on a regulated activity. This may be the case, for example, where the firm is an insurer, a bank, a dormant account asset fund operator, or, as is often the case, holding client money or customer assets.
6.2.9 G If an insurer, a bank, or a dormant account asset fund operator wishes
to cease carrying on all regulated activities for which it has Part 4A permission, it will usually be necessary to wind down the business over a long term period which is normally more than six months. This may also be the case for a firm holding client money or customer assets. In these circumstances, it will usually be appropriate for the firm to apply for variation of its Part 4A permission and/or imposition of a new requirement, variation of any existing requirement or cancellation of such a requirement before commencing the wind-down. A firm should only make an application for cancellation of permission when it expects to complete its wind-down (run-off) within six months. …
6.4 Applications for cancellation of permission
…
6.4.4 G Additional guidance for a firm carrying on insurance
business, accepting deposits, operating a dormant account asset fund or which holds client money or customer’s assets is given in SUP 6 Annex 4. As noted in SUP 6.2.9G, it will usually be appropriate for a firm to apply for variation of its Part 4A permission and/or the imposition, variation or cancellation of a requirement while winding down (running off) its regulated activities and before applying to cancel its Part 4A permission. …
Annex
4.1G
Additional guidance for a firm winding down (running off) its business

1. If a firm has Part 4A permission which enables it to hold client
   money or to carry on regulated activities including:
   …

(d) meeting of repayment claims or managing dormant account asset funds (including the investment of such funds); … … 15 Notifications to the FCA …
15.3 General notification requirements
…
Communication with the appropriate regulator in accordance with Principle …
15.3.8 G Compliance with Principle 11 includes, but is not limited to, giving
the FCA notice of:
(1) any proposed restructuring, reorganisation or business expansion which could have a significant impact on the firm’s risk profile or resources, including, but not limited to:
…
(e) entering into, or significantly changing, a material outsourcing arrangement (a bank, a building society and a dormant account asset fund operator should also see SYSC 8, and an insurer should also see SYSC 13.9 for further details); or … (i) in relation to a dormant account asset fund operator, notify the FCA when the operator intends to rely on a third party for the performance of operational functions which are critical or important for the performance of relevant services and activities in connection with operating a dormant account asset fund on a continuous and satisfactory basis; … … 16 Reporting requirements

16.1 Application
…
16.1.3 R Application of different sections of SUP 16 (excluding SUP 16.13,
SUP 16.15, SUP 16.22 and SUP 16.26)
(1) Section(s) (2) Categories of firms to which this section applies (3) Applicable rules and guidance … SUP 16.10 All categories of firm except:
…
(a) an ICVC; and
…
(d) a dormant account asset fund operator.
…
16.7A Annual report and accounts
…
Requirement to submit annual report and accounts 16.7A.3 R A firm in the RAG in column (1) and which is a type of firm in column (2) must submit its annual report and accounts to the FCA annually on a single entity basis. (1) (2) RAG Firm type 1 UK bank Dormant account asset fund operator A non-UK bank

16.10 Verification of firm details
Application
16.10.1 G The effect of SUP 16.1.1 R is that this section applies to
every firm except:
…
(2A) an AIFM qualifier; or
(4) a dormant account asset fund operator.
…
16.12 Integrated Regulatory Reporting
…
Reporting requirement
…
16.12.4 R Table of applicable rules containing data items, frequency and
submission periods
(1) (2) (3) (4)
RAG number
Regulated activities Provisions containing:
applicable data items reporting frequency/ period due date RAG 1 • accepting deposits

• meeting of
  repayment claims
• managing
  dormant account asset funds
  (including the investment of such funds)
  RAG 1 firms should complete their prudential reporting requirements as set out in the PRA Rulebook.

…
App 2 Insurers: Regulatory intervention points and run-off plans App 2.1 Application … App 2.1.5 G SUP App 2.1.7G is made by the FCA for the purpose of its application to dormant account asset fund operators, rather than insurers. … App 2.2 Interpretation App 2.2.1 R For the purpose of SUP App 2.1 to 2.14:
(1) “capital resources”:
…
(c) in relation to any other firm which is not a Solvency II firm, means the firm’s capital resources as calculated in accordance with:
(i) in the case of a dormant account asset fund operator, the version of GENPRU 2.2.17R that applied as at 31 December 2015 (the effect of which has been preserved for the purposes of INSPRU 7); and … App 2.7 Capital resources below the level of individual capital guidance App 2.7.1 G For a dormant fund account asset fund operator, unless any of SUP App 2.4.1R, SUP App 2.5.1R, SUP App 2.5.3R or SUP App 2.6.1R applies, if a firm’s circumstances change, such that its capital resources have fallen, or are expected to fall, below the level advised in individual capital guidance given to the firm by the FCA, then, consistent with PRIN 2.1.1R Principle 11 (Relations with regulators), a firm should inform the appropriate regulator of this fact as soon as practicable, explaining why capital resources have fallen, or are expected to fall, below the level advised in individual capital guidance, and:
(1) …

…

Annex F
Amendments to the Dispute Resolution: Complaints sourcebook (DISP) In this Annex, underlining indicates new text and striking through indicates deleted text. 2 Jurisdiction of the Financial Ombudsman Service …
2.5 To which activities does the Voluntary Jurisdiction apply?
2.5.1R R The Ombudsman can consider a complaint under the Voluntary Jurisdiction if:
…
(2) it relates to an act or omission by a VJ participant in carrying on one or more of the following activities:
(a) an activity (other than auction regulation bidding, and administering a benchmark, meeting of repayment claims and managing dormant asset funds (including the investment of such funds)) carried on after 28 April 1988 which:
…
(c) activities, other than regulated claims management activities, and activities ancillary to regulated claims management activities, meeting of repayment claims and managing dormant asset funds (including the investment of such funds), which (at 30 April 2021 21 July 2022) would be covered by the Compulsory Jurisdiction, if they were carried on from an establishment in the United Kingdom (these activities are listed in DISP 2 Annex 1G); …
2.7 Is the complainant eligible?
…
2.7.6 R To be an eligible complainant a person must also have a complaint which
arises from matters relevant to one or more of the following relationships with the respondent:
(1) …

…
(14) (where the respondent is a dormant account asset fund operator) the complainant is (or was) a customer of a bank or building society which transferred any balance from a dormant account asset to the respondent; (14A) (where the respondent is a dormant asset fund operator) subject to DISP 2.7.6AR, the complainant is (or was) a person to whom the proceeds of a long-term insurance contract were payable by an insurer, but which instead were transferred by the insurer to the respondent; (14B) (where the respondent is a dormant asset fund operator) subject to DISP 2.7.6BR, the complainant is (or was) a member of a personal pension scheme which transferred any eligible pension benefits due to the complainant to the respondent; … 2.7.6A R (1) In DISP 2.7.6R(14A) a long-term insurance contract does not include:
(a) a with-profits policy;
(b) an industrial assurance policy; or
(c) a policy that is the subject of a trust.
(2) DISP 2.7.6R(14A) does not include proceeds of a contract of insurance held in a lifetime ISA if their transfer to a dormant asset fund operator resulted in (or would result in) liability to pay a lifetime ISA government withdrawal charge. 2.7.6B R (1) In DISP 2.7.6R(14B) ‘eligible pension benefits’ means:
(a) benefits in the form of income withdrawal that have become payable under a personal pension scheme; (b) benefits that have become payable under a personal pension scheme:
(i) under which all benefits that may be provided are money-purchase benefits; (ii) which is not and has at no time been a qualifying scheme or an automatic enrolment scheme in relation to the member to, or in respect of, whom the benefits are payable; or

(c) an amount available to be paid as benefits under a personal pension scheme of a kind mentioned in paragraph (b). (2) Benefits under a personal pension scheme are excluded from being ‘eligible pension benefits’ (in DISP 2.7.6R(14B)) if (or to the extent that) they are provided from sums invested in a with-profits fund. … 2 Annex Regulated Activities for the Voluntary Jurisdiction at 30 April 2021 21 July This table belongs to DISP 2.5.1R G The activities which were covered by the Compulsory Jurisdiction (at 30 April 2021 21 July 2022) were:
(1) for firms:
(a) regulated activities (other than auction regulation bidding, and administering a benchmark); … The activities which (at 30 April 2021 21 July 2022) were regulated activities were, in accordance with section 22 of the Act (Regulated Activities), any of the following activities specified in Part II and Parts 3A and 3B of the Regulated Activities Order (with the addition of auction regulation bidding and administering a benchmark):
(1) accepting deposits (article 5);
…
(38D) managing dormant account asset funds (including the investment of such funds) (article 63N(1)(b)); … 4 Standard terms … Application of DISP 1 to DISP 3
4.2.3 R The following rules and guidance apply to VJ participants as part of the
standard terms, except where the context requires otherwise:
…

(2) DISP 2 (Jurisdiction of the Financial Ombudsman Service), except:
(a) DISP 2.3 (Compulsory Jurisdiction); and (b) DISP 2.7.6(14); (c) DISP 2.7.6(14A); (d) DISP 2.7.6(14B); and …

Annex G
Amendments to the Perimeter Guidance manual (PERG) In this Annex, underlining indicates new text and striking through indicates deleted text. 2 Authorisation and regulated activities …
2.5 Investments and activities: general
…
2.5.1-A G The following regulated activities may be carried on in relation to property of any kind:
…
(8) meeting of repayment claims; and
(9) managing dormant account asset funds (including the investment of such funds).; and (10) dealing with unwanted asset money. …
2.7 Activities: a broad outline
…
Dormant account funds
2.7.20C G There are two three regulated activities associated with the activities of a dormant account asset fund operator under the Dormant Bank and Building Society Accounts Act 2008:
(1) the meeting of repayment claims; and
(2) managing dormant account asset funds (including the investment of such funds).; and (3) dealing with unwanted asset money.

…
Agreeing
2.7.21 G Agreeing to carry on most regulated activities is itself a regulated activity.
But this is not the case if the underlying activities to which the agreement relates are those of accepting deposits, issuing electronic money, effecting or carrying out contracts of insurance, operating a multilateral trading facility, operating an organised trading facility, managing dormant account asset funds, the meeting of repayment claims, dealing with unwanted asset money, managing a UK UCITS, acting as trustee or depositary of a UK UCITS, managing an AIF, acting as trustee or depositary of an AIF, establishing, operating or winding up a collective investment scheme, establishing, operating or winding up a stakeholder pension scheme or establishing, operating or winding up a personal pension scheme. A person will need to make sure that it has appropriate authorisation at the stage of agreement and before it actually carries on the underlying activity (such as the dealing or arranging).