Proposals for dealing with the issue of dormant bank accounts are likely to be considered by the Government in the new year. Officials at the Department of Finance have been working on policy proposals to deal with the issue. The DIRT inquiry report proposed that the funds in dormant accounts would be used for specified social and community benefits. The Minister for Finance, Mr McCreevy said that financial institutions "should make greater efforts to trace the owners of unclaimed monies". In a reply to a Dail question from Mr Jim O'Keeffe of Fine Gael, Mr McCreevy indicated his preference that the benefit of dormant bank accounts would "not remain indefinitely with financial institutions".

The Minister's proposals are likely to include the recommendation of the DIRT inquiry that the public should benefit from monies in dormant accounts. They are expected to provide a definition of what is considered a dormant account and to set down a time limit after which the funds in such accounts accrue to the Exchequer.

It is believed that the Department of Finance is examining the constitutional implications in relation to property rights of any move to take the funds in dormant accounts into the Exchequer. Mr O'Keeffe said that "over £25 million lies unclaimed in life assurance companies due to the fact that people have failed to collect on their matured policies, in addition to the many millions in dormant bank accounts".

Banks and life assurance companies in the UK have formulated proposals for a register of unclaimed policies and accounts to help beneficiaries receive the money owned. Mr McCreevy said he would like to see a similar scheme introduced in this State.

At present, Irish financial institutions provide a service for the personal representatives of deceased persons whereby they can check the entire bank network to determine whether there are any accounts in the name of the deceased individual.

Mr McCreevy said he would bring a memorandum to the Cabinet following consultations with the banking and insurance industry as well as with the Tanaiste, Ms Harney, who has responsibility for the insurance sector.

There remains no accurate estimate of the amount held in dormant accounts. An unpublished report compiled by the financial institutions and submitted to the Department of Finance in the mid-1990s found that there was just £15 million in dormant accounts. However, the report was considered inadequate by Mr McCreevy because it defined an account not touched for 20 years as dormant. Until now each bank has used its own definition of a dormant account.

A spokesman for TSB said yesterday it considered accounts inactive after three years of non-use, while a spokesman for Bank of Ireland said the issue was dealt with on a case-by-case and branch-by-branch basis. Other major banks refused to comment.