Memorandum submitted by Martyn Jones MP
I write to submit my formal written evidence
to the Treasury Select Committee's current Inquiry into "Unclaimed
assets within the financial system".
You may aware, I have campaigned for several
years in Parliament to "liberate" dormant account money
from banks, to enable such money to be used for the good of societyas
in other countries, most notably Ireland.
I was successful in persuading Gordon Brown
to include my vision for using dormant money for charitable purposes,
in the Labour Party's Manifesto in 2005.
I therefore welcome the Government's commitment
to addressing this important issue.
However, I do have concerns around any suggestion
of there being a voluntary nature to the involvement by the financial
sector in releasing unclaimed assets for charitable purposes.
During the early stages of my campaign, there
was a huge reluctance by the British Banking Association (BBA),
to even recognise that there was problem with unclaimed assets.
Furthermore, there was no desire by the BBA
to address issues such as the definition of a dormant account,
nor to reveal publicly even an estimate as to the total amount
of money residing in such accounts.
As a result of the uncooperative, defensive
and reluctant nature of the BBA to engage in an open debate on
unclaimed assets, I was convinced from a very early stage, that
a compulsory scheme was the only sensible way for the Government
to make progress on this matter.
I believe it is paramount that there should be establishedthrough
statutea compulsory scheme as introduced in Ireland, and
this should be independently regulated.
In my opinion, the present proposals for 15
year "cut-off" point are excessive, and allow banks
to continue to hold onto vast amounts of dormant money, that could
be otherwise used for charitable purposes.
As I have always said throughout my campaign,
any scheme must ensure that a fund should retain sufficient sums
to enable bank customers, who can prove ownership of their account,
to be re-united with their money.
On the "delivery side" of dormant
accounts, I also have concerns about the proposition put forward
by the Commission on Unclaimed Assets, in relation to the establishment
of a Social Investment Bank, as laid out in their consultation
paper: "A Social Investment Bank".
Indeed, the concept of "social investment"
is gaining increasing support from the Government as indicated
in its latest consultation document, "Unclaimed assets distribution
mechanism: A Consultation".
I believe that this approach is deeply flawed.
On the surface, the Commission hold-out the
seemingly attractive proposition of the "social investment
bank" concept, with the main aim of the "bank"
being to help "finance" the so-called third sector initiatives.
However, the word "finance" causes
me some concern.
In the Commission's proposals, there is the
possibility that dormant money may not go direct to those in most
What is being proposed is merely a new financing
body for investment.
This is not how I envisaged dormant account
money being used.
Through the proposed mechanisms, I believe that
far from helping the disadvantaged in society by direct meansas
in Ireland and other countries- what the Commission proposes,
is to use the money to attract other capital money and resources
to "finance" projects.
One has to question, where would such capital
and resources emanate from?
As a possible consequence of this proposal,
it could mean that the banking sector would remain as the final
arbiters of which projects are assisted, and which were not.
Worse still, in my view, under the Commission's
proposals, banks may actually profit from the funding such projects.
If this is what is being proposed, then the
Commission are in mind, heading in completely the wrong direction.
My entire campaign has been based on the principle
of divesting banks of control of dormant money, simply because
they have failed for decades to address this issue with any seriousness.
The Commission's proposals could mean that banks
remain with some degree of control over how dormant money is used.
This is totally unacceptable.
I also completely disagree with their assertion
that "using the assets as a traditional endowment or spending
the capital over a shorter period would have little impact on
If this were true, then how does the Commission
explain away the staggering success of Lottery funding in the
The proposals in the Commission's consultation
paper will not help those people and communities, in real need
of assistance in deprived areas of the UK.
Furthermore, I believe the Commission's proposal
of the "social investment bank", will merely create
a new bank "on-the-block", which will attempt to fill
the gap in financial service provision that does not currently
exist in some poorer communities.
This approach simply lets high-street banks
"off-the-hook" in their failure to provide those much
needed services at present.
I have deep reservations about the direction
that the Commission is heading on dormant accounts and their use.
Furthermore, if the Government were to follow
the Commission in this direction, it could mean that banks will
not only continue to profit from dormant account money which is
less than 15 years old, they could actually boost their profits
from financing "social investment bank" projects.
This proposal is not how dormant money should
be used, and I believe this approach is deeply flawed and not
in the public interest.
The Commission's idea that dormant money should
be used merely to encourage investment, entrepreneurship and financial
competence, is a million miles away from what I wanted to see
established. I also believe it is not what was envisaged in Labour's
Manifesto commitment in 2005.
The distribution of dormant account money for
charitable purposes, should be made through an independent body,
along the lines of the mechanism used for distributing Lottery
money in UK.
Finally I would urge the Government to extend
the unclaimed assets scheme to include dormant life insurance
at the earliest possible opportunity.
Thank you for the opportunity to contribute
to your inquiry.