After years of discussion around the redistribution of funds lying dormant in bank accounts, a new Dormant Bank and Building Society Accounts Bill was announced in this year’s Queen’s Speech.

The bill will see dormant funds – broadly defined as unclaimed assets covering all bank and building society accounts where there has been no customer-initiated activity for 15 years - reinvested in communities via the BIG lottery fund. In England, initial spending will be on youth services, financial capability and inclusion and, resources permitting, a social investment 'wholesaler' - devolved administrations will determine their own priorities.

The bill will also provide for consumer protection, with those affected having the right to claim their money back at any time. Also, the legislation will be “enabling”, not compulsory for financial institutions.

While it is welcomed news that legislative action is being undertaken on dormant funds, the Community Foundation Network has warned that the bill will not get money to the grassroots organisations which, it says, are facing a mounting funding crisis.

The CFN believes that these groups stand to lose at least £30 million in government grants over the next year and millions more from European schemes. Its chief executive, Stephen Hammersley, said: “Many people had hoped this legislation would help address the funding crisis now looming for small community groups, many of which are among the most effective in getting money to the most disadvantaged.

“Government has pulled the plug on a huge swathe of local community funding,” he added. “This bill was supposed to refill the bath but with the legislation framed as it seems, the inward flow of funds could be little more than a dripping tap.”

Hammersley also called on BIG to ensure that any money raised goes to grass roots organisations, rather than to the “10% mega-charities that currently absorb nearly 90% of all charitable income”.