Government urged to support regional mutual banks with £738 million dormant funds
The Heart of the South West LEP is urging Government to support the establishment of regional mutual banks, to help support SMEs and drive inclusive economic growth.
The Dormant Assets Scheme (DAS) allows banks and building societies to pay financial products which have not been used for several years, such as dormant bank accounts or insurance, into a fund for good causes.
This year, the scheme has been widened to include dormant funds from insurance, pensions, wealth management, and securities sectors, releasing £738 million of funding for England. The public consultation to select the beneficiary good causes launched this summer.
The Heart of the South West LEP has put forward a proposal for a proportion of the funding to be used to support the establishment of regional mutual banks in the UK, including the South West. Mutual banks provide another source of business banking facilities, current accounts and loan capital to SMEs. Legislation governs what dormant assets can be used for, currently covering three priorities of youth, financial inclusion and social investment. Regional mutual banks complement existing work and help to further drive social inclusion, financial inclusion and economic independence in regions, through their local focus and community relationships.
Karl Tucker, Chair of the Heart of the South West LEP, said: “Other advanced economies have a regional tier of banking which has provided invaluable support to people and SMEs since the financial crisis of 2008. We lack this in the UK, meaning less finance is available to support growth at a local level. Enabling the creation of regional mutual banks in the South West will help to drive growth across our key sectors, such as clean energy, aerospace and marine, and establish a bedrock of community wealth and small business survival.”
The Heart of the South West LEP’s proposal is backed by the Mutual Banks Association and the Federation of Small Businesses. The Government is currently considering responses to the consultation.
