Banking eBulletin - April 2009

Originally published April 2009

This edition of our Banking E-Bulletin is being issued at a time when there are a wide variety of economic, legal and other developments affecting banks, asset based lenders, and their customers. Our own work reflects this and we are dealing with a wide variety of situations for, variously, lenders and borrowers.

Many of the developments are receiving widespread coverage in the press – for example the Government's Enterprise Finance Guarantee Scheme which aims to help viable businesses with turnovers of up to £25 million to source funding and which can be accessed by them through our High Street banks.

Another example is the new Banking Act and its related regulations, which amongst other things makes improvements to the insolvency regime applicable to banks. Its provisions have been extended to building societies and these have now been used for the first time in relation to the Dunfermline Building Society.

Other developments take the form of legislation which will be implemented in the coming months, for example the remaining provisions of the Companies Act 2006 will be implemented on 1 October 2009 and the Payment Services Directive will be implemented by the Payment Services Regulations on 1 November 2009.

Finally there are consultations and proposals looking at areas such as consumer lending, which seem likely to result in new legislation in the foreseeable future.

Against this background this edition looks at some recent legislation dealing with dormant bank accounts; a case on waivers (which is important for those waiving breaches under facility letters and loan agreements); and the increasing use of pre-pack sales in administrations. I hope that you find them of interest.

If you have any comments of queries please do not hesitate to contact me.

Kind regards

Gwen Godfrey Partner and Head of Banking and Finance Group

THE DORMANT BANK AND BUILDING SOCIETY ACCOUNTS ACT 2008

Article by Lucy Hall

Originally published 6 Apr 2009

Communities To Benefit From Forgotten Millions

Figures suggest that there may be as much as £20bn in bank and building society accounts in the UK that are lying dormant and unclaimed, often because people have forgotten about them. The purpose of this new Act is to set up the framework for a scheme under which some of the money in dormant bank and building society accounts will be reinvested in society, whilst ensuring that the right of owners to reclaim their money is protected. The Act was fully brought into force on 12 March 2009.

A "dormant account" (for the purposes of the Act) is an account on which there have been no customer-initiated transactions for 15 years. Banks and building societies are free to make use of money received from customers (subject to prudential rules which aim to...