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Dormant Bank and Building Society Accounts Bill [HL]


Dormant Bank and Building Society Accounts Bill [HL]
Part 1 — Transfer of balances in dormant accounts

1

 

[NOTE: The words marked in bold type were inserted by the Lords to avoid

questions of privilege.]

A

Bill

To

Make provision for, and in connection with, using money from dormant bank

and building society accounts for social or environmental purposes. 

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and

consent of the Lords Spiritual and Temporal, and Commons, in this present

Parliament assembled, and by the authority of the same, as follows:—

Part 1

Transfer of balances in dormant accounts

The general scheme

1       

Transfer of balances to reclaim fund

(1)   

This section applies where—

5

(a)   

a bank or building society transfers to an authorised reclaim fund the

balance of a dormant account that a person (“the customer”) holds with

it, and

(b)   

the reclaim fund consents to the transfer.

(2)   

After the transfer—

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(a)   

the customer no longer has any right against the bank or building

society to payment of the balance, but

(b)   

the customer has against the reclaim fund whatever right to payment

of the balance the customer would have against the bank or building

society if the transfer had not happened.

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Alternative scheme for building societies and smaller banks

2       

Transfer of balances to charities, with proportion to reclaim fund

(1)   

This section applies where—

 
Bill 8054/3
 
 

Dormant Bank and Building Society Accounts Bill [HL]
Part 1 — Transfer of balances in dormant accounts

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(a)   

a building society or a smaller bank transfers to an authorised reclaim

fund an agreed proportion of the balance of a dormant account that a

person (“the customer”) holds with it,

(b)   

the bank or building society transfers the remainder of that balance to

one or more charities,

5

(c)   

the charity, or each of the charities, either—

(i)   

is a charity that the bank or building society considers to have a

special connection with it, or

(ii)   

undertakes to apply the money in question for the benefit of

members of communities that are local to the branches of the

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bank or building society,

(d)   

the reclaim fund consents to the transfer to it, and

(e)   

the charity, or each of the charities, consents to the transfer to it.

(2)   

After the transfers—

(a)   

the customer no longer has any right against the bank or building

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society to payment of the balance, but

(b)   

the customer has against the reclaim fund whatever right to payment

of the balance the customer would have against the bank or building

society if the transfers had not happened.

(3)   

In subsection (1) “agreed proportion” means a proportion agreed between the

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bank or building society and the reclaim fund.

   

In agreeing that proportion, the reclaim fund must take account of the need for

the fund to have access at any given time to enough money to enable it to meet

whatever repayment claims it is prudent to anticipate.

(4)   

For the purposes of this section—

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(a)   

“repayment claim” means a claim made by virtue of subsection (2)(b);

(b)   

a “smaller” bank is one that meets the assets-limit condition (see section

3);

(c)   

a charity has a “special connection” with a bank if (and only if) the

purpose, or any of the main purposes, of the charity is to benefit

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members of communities that are local to the branches of the bank;

(d)   

a charity has a “special connection” with a building society if (and only

if) the purpose, or any of the main purposes, of the charity—

(i)   

is to benefit members of communities that are local to the

branches of the building society, or

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(ii)   

is especially consonant with any particular purposes that the

building society has.

(5)   

The reference in subsection (4)(d)(ii) to particular purposes does not include

the purpose mentioned in section 5(1)(a) of the Building Societies Act 1986

(c. 53) (making loans that are secured on residential property and substantially

40

funded by members).

3       

The assets-limit condition

(1)   

A bank meets the assets-limit condition if the aggregate of the amounts shown

in its balance sheet as assets on the last day of the latest financial year for which

it has prepared accounts is less than £7,000 million.

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(2)   

In relation to a bank that was a member of a group on the day referred to in

subsection (1), that subsection has effect as if the aggregate of the amounts

 
 

Dormant Bank and Building Society Accounts Bill [HL]
Part 1 — Transfer of balances in dormant accounts

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shown in its balance sheet as assets on that day also included the aggregate of

the amounts shown in each group member’s balance sheet as assets—

(a)   

on that day, or

(b)   

(in the case of a group member whose financial year did not end on that

day) on the last day of its latest financial year to end before that day.

5

(3)   

Where a balance sheet for a particular day shows amounts in a currency other

than sterling, for the purposes of this section the amounts are to be converted

into sterling at the London closing exchange rate for that currency and that

day.

(4)   

The Treasury may by order amend the figure in subsection (1).

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(5)   

An order under this section is subject to annulment in pursuance of a

resolution of either House of Parliament.

Shareholding members of building societies

4       

Effect of balance transfer on membership rights

(1)   

This section applies where a person (“the member”) holds a share in a building

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society represented by an account with the society, and either—

(a)   

a transfer is made to a reclaim fund with the result that section 1 applies

in relation to the account, or

(b)   

transfers are made to a reclaim fund and one or more charities with the

result that section 2 applies in relation to the account.

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(2)   

After the transfer or transfers the member is to be treated as having whatever

share in the building society the member would have if the transfer or transfers

had not happened (and accordingly as having whatever rights, including

distribution rights, a holder of that share would have as such).

(3)   

In subsection (2) “distribution rights” means rights to any distribution arising

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as mentioned in section 96 (amalgamation or transfer of engagements) or 100

(transfer of business) of the Building Societies Act 1986 (c. 53).

(4)   

Subsection (2) ceases to apply where the balance of the account is paid out

following a claim made by virtue of section 1(2)(b) or 2(2)(b).

(5)   

But where the balance of the account is paid out following such a claim and, as

30

soon as reasonably practical, the money is—

(a)   

paid back into the account, or

(b)   

paid into another share account with the building society in the

member’s name,

   

subsection (2) continues to apply until the account is credited with the money.

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(6)   

Where, after the transfer or transfers referred to in subsection (1), the building

society is succeeded by another building society as a result of an amalgamation

or transfer of engagements, a reference in subsection (2) or (5) to the building

society is to be read, in relation to any time after the amalgamation or transfer

of engagements, as a reference to the successor building society (or to the

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successor building society of the successor, in relation to any time after a

subsequent amalgamation or transfer; and so on).

 
 

Dormant Bank and Building Society Accounts Bill [HL]
Part 1 — Transfer of balances in dormant accounts

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Reclaim funds

5       

Functions etc of a reclaim fund

(1)   

A “reclaim fund” is a company the objects of which are restricted by its articles

of association to the following—

(a)   

the meeting of repayment claims;

5

(b)   

the management of dormant account funds in such a way as to enable

the company to meet whatever repayment claims it is prudent to

anticipate;

(c)   

the transfer of money to the body or bodies for the time being specified

in section 17(1), subject to the need for the company—

10

(i)   

to have access at any given time to enough money to meet

whatever repayment claims it is prudent to anticipate,

(ii)   

to comply with any requirement with regard to its financial

resources that is imposed on it by or under any enactment, and

(iii)   

to defray its expenses;

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(d)   

objects that are incidental or conducive to, or otherwise connected with,

any of the above (including in particular the prudent investment of

dormant account funds).

(2)   

Schedule 1 makes further provision about provision that must be made in the

articles of association of a reclaim fund.

20

(3)   

An alteration by a reclaim fund of its articles of association is ineffective if it

would result in—

(a)   

the company ceasing to have objects restricted to those mentioned in

subsection (1);

(b)   

the company’s articles of association not containing any provision that

25

they are required to make under Schedule 1.

(4)   

The Treasury may give a direction to a reclaim fund requiring it—

(a)   

to give effect to any specified object that it has, or

(b)   

to comply with any specified obligation or prohibition imposed on it by

a provision that its articles of association are required to make under

30

Schedule 1.

   

“Specified” means specified in the direction.

(5)   

In this section—

“company” has the meaning given by section 1(1) of the Companies Act

2006 (c. 46);

35

“dormant account funds” means money paid to a reclaim fund by banks

and by building societies in respect of dormant accounts;

“repayment claims” means claims made by virtue of section 1(2)(b) or

2(2)(b).

6       

Parliamentary accountability of reclaim fund

40

(1)   

A reclaim fund must send to the Treasury as soon as possible—

(a)   

a copy of its annual accounts and reports prepared in accordance with

Part 15 of the Companies Act 2006 (c. 46), and

(b)   

a copy of any information published under paragraph 3 of Schedule 1

to this Act.

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Dormant Bank and Building Society Accounts Bill [HL]
Part 1 — Transfer of balances in dormant accounts

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(2)   

The Treasury must lay before each House of Parliament—

(a)   

any directions issued to a reclaim fund under section 5(4) of this Act,

and

(b)   

any accounts, reports or information received from a reclaim fund in

accordance with subsection (1).

5

Interpretation etc

7       

Interpretation of Part 1

In this Part—

“account” has the meaning given by section 10;

“authorised”, in relation to a reclaim fund, means authorised for the

10

purposes of the Financial Services and Markets Act 2000 (c. 8);

“balance” has the meaning given by section 9;

“bank” has the meaning given by section 8;

“building society” means a building society incorporated (or deemed to

be incorporated) under the Building Societies Act 1986 (c. 53);

15

“charity” means a body, or the trustees of a trust, established for charitable

purposes only;

“dormant” has the meaning given by section 11;

“financial year”—

(a)   

in relation to a company (other than a building society) within

20

the meaning of the Companies Act 2006 (c. 46), has the meaning

given in section 390(1) to (3) of that Act;

(b)   

in relation to an undertaking that is not a company within the

meaning of that Act (and is not a building society), has the

meaning given in section 390(4) of that Act;

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(c)   

in relation to a building society, has the meaning given in

section 117 of the Building Societies Act 1986;

“group” means a parent undertaking and its subsidiary undertakings;

“parent undertaking” and “subsidiary undertaking” have the same

meaning as in the Companies Act 2006 (see section 1162 of that Act);

30

“reclaim fund” has the meaning given by section 5(1).

8       

“Bank”

(1)   

Subject to subsection (4), “bank” means an authorised deposit-taker that has its

head office, or one or more branches, in the United Kingdom.

(2)   

In subsection (1) “authorised deposit-taker” means—

35

(a)   

a person who under Part 4 of FSMA 2000 has permission to accept

deposits;

(b)   

an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to

FSMA 2000 that has permission under paragraph 15 of that Schedule

(as a result of qualifying for authorisation under paragraph 12(1) of that

40

Schedule) to accept deposits.

(3)   

A reference in subsection (2) to a person or firm with permission to accept

deposits does not include a person or firm with permission to do so only for the

purposes of, or in the course of, an activity other than accepting deposits.

 
 

Dormant Bank and Building Society Accounts Bill [HL]
Part 1 — Transfer of balances in dormant accounts

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(4)   

“Bank” does not include—

(a)   

a building society;

(b)   

a person who is specified, or is within a class of persons specified, by an

order under section 38 of FSMA 2000 (exemption orders);

(c)   

a credit union;

5

(d)   

a friendly society.

(5)   

In this section—

“credit union” has the same meaning as in the Credit Unions Act 1979

(c. 34) (see section 1(1) of that Act);

“friendly society” has the same meaning as in the Friendly Societies Act

10

1992 (c. 40) (see section 116 of that Act);

“FSMA 2000” means the Financial Services and Markets Act 2000 (c. 8).

9       

“Balance”

(1)   

The balance of a person’s account at any particular time is the amount owing

to the person in respect of the account at that time, after the appropriate

15

adjustments have been made for such things as interest due and fees and

charges payable.

(2)   

In relation to a time after a transfer has been made as mentioned in section 1(1)

or transfers have been made as mentioned in section 2(1), the adjustments

referred to in subsection (1) above include those that would fall to be made but

20

for the transfer or transfers.

10      

“Account”

(1)   

“Account” means an account that has at all times consisted only of money.

(2)   

A reference in this Part to an account held with a bank or building society is to

an account provided by the bank or building society as part of its activity of

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accepting deposits.

(3)   

In relation to a building society, “account” includes an account representing

shares in the society, other than—

(a)   

preferential shares, or

(b)   

deferred shares within the meaning given in section 119(1) of the

30

Building Societies Act 1986 (c. 53).

11      

“Dormant”

(1)   

An account is “dormant” at a particular time if—

(a)   

the account has been open throughout the period of 15 years ending at

that time, but

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(b)   

during that period no transactions have been carried out in relation to

the account by or on the instructions of the holder of the account.

(2)   

But an account is to be treated as not dormant if at any time during that

period—

(a)   

the bank or building society in question was under instructions from

40

the holder of the account not to communicate with that person about

the account, or

(b)   

under the terms of the account—

 
 

Dormant Bank and Building Society Accounts Bill [HL]
Part 1 — Transfer of balances in dormant accounts

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(i)   

withdrawals were prevented, or

(ii)   

there was a penalty or other disincentive for making

withdrawals.

(3)   

Notwithstanding anything in subsections (1) and (2), a bank or building society

must use its knowledge of its accounts, its account holders and any other

5

relevant matters in determining whether an account is dormant.

(4)   

For the purposes of subsection (1) an account is to be treated as remaining open

where it is closed otherwise than on the instructions of the holder of the

account.

(5)   

For the purposes of subsection (2)(b)(i) withdrawals are prevented if they are

10

prevented except as permitted by provision made under subsection (4)(d) of

section 3 of the Child Trust Funds Act 2004 (c. 6) (requirements to be satisfied

by child trust funds).

Supplemental

12      

Triennial report to Parliament

15

(1)   

Within three years of the commencement of this Act, and not more than every

three years thereafter, the Treasury shall prepare a report on the operation of

the dormant accounts arrangements.

(2)   

The report shall include—

(a)   

the effectiveness of arrangements that exist to enable those with rights,

20

including those whose rights are established by way of a will, in respect

of accounts with banks and building societies to trace those accounts

and to be paid money held in those accounts;

(b)   

the amount of money which has been transferred to one or more

reclaim funds under section 1 and to charities under section 2 in the

25

period covered by the report;

(c)   

an estimate of the money which could be transferred under sections 1

and 2 together with the Treasury’s view of the possible reasons for such

money not being transferred;

(d)   

the effectiveness of the arrangements made by reclaim funds to meet

30

repayment claims;

(e)   

the appropriateness of the way in which banks and building societies

have identified accounts as dormant within section 11;

(f)   

the desirability and practicality of establishing similar schemes for

other categories of assets which have or may become dormant; and

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(g)   

any other matters that the Treasury considers to be relevant to the

operation and scope of the dormant account arrangements.

(3)   

If the report shows any of the matters covered by the report are unsatisfactory

in any respect, the Treasury shall state—

(a)   

the improvements that could be made to the arrangements;

40

(b)   

whether those improvements require legislation or could operate on a

voluntary basis;

(c)   

the timescales involved in achieving those improvements;

(d)   

the detailed actions that the Treasury propose to take.

 
 

 
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