One of the largest players in Ireland’s €4.5 trillion international funds industry has suggested the Government set up a dormant accounts-type system to put deserted investments toward good causes.
The chief executive of Bank of New York Mellon Corporation’s Irish unit, Paul Kilcullen, made the proposal to then minister for finance Michael McGrath during an informal conversation, according to a filing with the lobbying register.
It is understood this took place at a charity event in early June, weeks before Mr McGrath stepped down as he was nominated to become Ireland’s next European Union commissioner.
BNY services more than a trillion euro of investment assets domiciled in the Republic in funds, where the vast majority of underlying investors are overseas individuals.
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Mr Kilcullen highlighted “the benefits of having a dormant accounts regime for abandoned investments held by Irish collective investment schemes” that could see such funds used for charity or State programmes, according to the short record of the discussion.
The Irish Funds Industry Association, the sector representative group, is also said to be supportive of the idea of a dormant accounts scheme for the funds sector.
It would help address issues that arise when funds are coming to the natural end of their lifespan and there are problems returning some assets to their beneficial owners, according to industry sources.
This forces funds to continue beyond their planned duration, and results in ongoing fees and charges eroding the value of residual unclaimed investments.
Industry sources were unable to put a figure on the potential scale of long-term abandoned investments in funds based in Ireland, one of the largest hubs globally.
“The existing dormant account regime for abandoned investments has delivered much-needed funds for communities and charities in need across Ireland,” Mr Kilcullen said in a statement to The Irish Times that did not elaborate on the proposal. “Any additional funding for those groups and good causes should be welcomed.”
The Irish dormant account laws, dating back to 2001, allow banks, building societies and An Post to transfer funds in an account that has not had activity for 15 years to a dormant account fund operated by the National Treasury Management Agency (NTMA), after they have taken all reasonable steps to contact the owner or their estate.
Unclaimed life assurance policies were included in the regime from 2003, though these are considered dormant five years after maturing.
While transfers to the NTMA’s dormant accounts fund does not affect the rights of the owner – or, in the case of a death, their estate – to retrieve their money, the fund releases money deemed unlikely ever to be reclaimed to good causes every year.
Irish credit institutions, led by Bank of Ireland and AIB, had almost €623 million of unclaimed funds in dormant accounts as of the start of 2023, while life firms, spanning Aviva Life to Zurich Life, had a further €161.8 million, according to the NTMA’s latest annual report.
That was after these companies transferred a total of €70 million to the NTMA-run central account. The Government approved the release of €47.6 million from that account this year for various programmes to help people who are economically, socially or educationally disadvantaged or have a disability.
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