Examination of Witnesses (Questions 62
TUESDAY 15 MAY 2007
Q62 Chairman: Good morning and welcome.
Can you introduce yourselves for the record, please?
Ms Davidson: Gill Davidson, Secretary
and General Manager of Skipton Building Society.
Mr Goodfellow: John Goodfellow,
Chief Executive, Skipton Building Society.
Mr Clark: I am David Clark and
I am Chairman of Charity Bank.
Mr Hayday: Malcolm Hayday, Chief
Executive of Charity Bank.
Q63 Chairman: We have 30 minutes
to get through this. What is your view of the proposed unclaimed
assets scheme laid out in the consultation paper by the Treasury?
If we start with Skipton, please?
Mr Goodfellow: I guess we were
driven to submit evidence to the Committee because the difficulty
we feeland it seems to be a very pertinent one and it has
been touched on already this morningthere is a huge difference
between someone who has a bank account with a bank and someone
who has an investment account with a building society, and that
difference is membership and ownership and all the rights that
attach to the membership and ownership. Of course, it is quite
incongruous that the 15 years term that has been chosen will take
you back to the mid-90s when there was a large number of building
society demutualisations. To me it is absolutely crazy that the
account that is now dormant with the Halifax, say, will be captured
by the scheme but the shares that were granted to the person who
had the account at the time the Halifax converted will not be
captured by the scheme and it just seems to me absolutely pointless
to have a scheme which does that.
Q64 Chairman: So we should get the
shares captured as well?
Mr Goodfellow: Why not? Absolutely
why not because you are capturing mutual members, shares, because
that is in effect what you are doing, but you are not capturing
Q65 Chairman: Mr Goodfellow, we are
doing nothing; we are just taking evidence!
Mr Goodfellow: I am merely making
a point. It is the first time I have ever heard you say you do
Q66 Chairman: David?
Mr Clark: We come from the rather
privileged angle that once all the problems we have been discussing
this morning are solved in how to identify the assets and put
them into a fund it is then perhaps our experience in Charity
Bank that may be of assistance. We do not have the experience
of knowing how to identify where the funds and the assets might
be; what we have experience of is managing charity funds and,
most of all, lending to charities. We are both a bank and we are
a charity. There are three particular missions which relate partly
to depositors and investors, but our key mission is to lend to
not for profit organisations, which means charities, and we lend
money into the community, and we are attracted to having the details
come out of this scheme for the potential opportunity that we
have to be able to help you with identifying where and how the
monies may go and be invested into the community.
Q67 Mr Fallon: Mr Goodfellow, the
Halifax Building Society has already started an exercise to try
to reunify people with their forgotten accounts. Are you going
to do the same sort of thing before this scheme gets going?
Mr Goodfellow: Firstly I have
to point out that the Halifax Building Society does not exist;
Halifax plc exists. In the interests of our membersthis
is not driven by any interest on our part or indeed interest on
the part of the schemewe try to find them. These are people
who have, for whatever reason, lost contact with us. They are
generally not on the voters' roll because that is the most obvious
and easiest way to find someone in this country, so, yes, we will
continue to try. But how successful we will be I have no view.
Q68 Mr Fallon: I want to be clear,
is that part of your normal work?
Mr Goodfellow: That is part of
our normal work.
Q69 Mr Fallon: You are not mounting
any special initiative prior, the scheme itself coming into operation?
Mr Goodfellow: Assuming the scheme
comes in to operation we would expect to redo all the ones that
we have done in the past to see if we can find them yet again;
I think that is all we can do.
Q70 Mr Fallon: Do you use third party
Mr Goodfellow: Yes, we do.
Q71 John Thurso: Can I go back to
the point you made about mutuals because I would like to clear
that up so that I have an exact understanding of it? The Halifax
demutualised, I had an account at the time, I get some shares,
I maintain the account. The account becomes dormant but meanwhile
I have the shares and because they are mine and I have sold them
all, or whatever, therefore that split. But the point with an
existing mutual such as yourself is that the share and the investment
in the bank are one and the same thing.
Mr Goodfellow: Are one and the
Q72 John Thurso: Therefore by, if
you like, taking the dormant account you are actually removing
my property interest as a shareowner in the mutual?
Mr Goodfellow: I think the best
way to understand it is that it raises the whole question of are
you still a member of the mutual if the account is transferred?
There is a belief at the moment, I think the popular theory is
that, yes, you will retain your membership, but that will need
a change to the rules of all the mutuals.
Q73 John Thurso: In your submission
I think you said that the principle of utilising unclaimed assets
proposed by the Treasury is accepted, so what you are looking
for, if I get this straight, from whatever comes forth from the
Treasury is a formula that takes account of that, that either
clarifies it in law or exempts the mutuals?
Mr Goodfellow: That recognises
the difficulties that a mutual is in compared to a bank.
Q74 John Thurso: Thank you for clarifying
that. Under the current proposals do any of you envisage any inconvenience
or cost for the dormant account holder when they eventually come
to reactivate their account?
Mr Goodfellow: I do not really
think it is any different from the current situation. Someone
will appear with the passbook and say, "I have found this,
it was my mother's, who has died," or whatever. There is
a process to calculate actually what the sub-balance is in the
account and pay it. It is not painful and it does not particularly
take time. It is not difficult and I do not see it being any more
difficult in the future.
Q75 John Thurso: Is there any way
in which customers could be told or informed that their accounts
have been transferred to the central fund? Presumably not because
if you could find them
Mr Goodfellow: If we could find
them they would be dealt with. It is one of the difficulties.
Q76 John Thurso: I am answering my
own question! We will get a long way quickly at this rate! Let
me ask you one last question: how will the institutions maintain
customer records? Will it be a system of memorandum accounts running
a shadow book of accrued interest, or will you just carry on running
the thing as normal with a flag on saying that it has gone dormant?
Are you going to have problems there?
Mr Goodfellow: We do not generally
run the accounting side of it, the financial side of it but we
will run the membership side, so the last known name and address,
et cetera, side, so that you can start the proof of ownership,
if it turns up.
Q77 Chairman: To take the point that
John just mentioned about the shares. You want people to remain
members of the building society but building societies vary in
terms of the amount of money that has to be there to retain being
a memberfrom, say, £1 to £100. Is there not a
way through the Treasury, if this scheme comes into vogue, that
you could say, "Let us transfer money to the central fund
where we can keep sufficient in to retain their membership"?
Mr Goodfellow: I think it is the
recognition that membership is an issue which mutuals have, which
the banks do not have. As a voluntary scheme the change of rules
needs to be placed before the members by the boardwho can
say the board will all want to do that? Secondly, the members,
of course, have to approve it, and where is a mutual placed if
the members say, "No, we do not agree with this voluntary
scheme"? I think it could be quite difficult.
Q78 Jim Cousins: Just on this specific
point. Some mutuals do not allow membership accession rights on
death. I do not know what your own practice is but that has the
tendency to create apparently dormant accounts which are held
notionally by the executors of the previous member.
Mr Goodfellow: When a member dies
the account is in theory held by his estate, however his estate
is represented, whether it be executors or the will has been proven.
There is no concept of transferring membershipmembership
is an individual thing, it belongs to an individual and when you
die it ceases. There is no concept as far as I know of transferring
Q79 Jim Cousins: Exactly, so you
will have a number of dormant accounts which are held notionally
by executors, who wish to maintain the concept of membership.
Mr Goodfellow: Once they are run
by executors they would not normally go dormant of course, if
they have been resurrected almost. The reason for the dormancy
may well have been the person's death but once an executor is
appointed it is no longer dormant.