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Register of dormant accounts

‘(1) The Treasury may make such regulations as are necessary for the establishment, maintenance and operation of a register of dormant account funds (“the register”).

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(2) The regulations made under subsection (1) shall provide for—

(a) particulars relating to the dormant account to be entered into the register;

(b) arrangements to allow any registered charity to enquire of the registrar whether the register includes an account in the name of a deceased individual from whom the charity might expect to benefit;

(c) arrangements to allow any registered charity to be able to trace an account or accounts at any one time; and

(d) other particulars as may be prescribed by the Treasury.

(3) Before making any regulations under subsection (1), the Treasury shall consult—

(a) such persons as are likely to be affected by those regulations; and

(b) such persons as the Treasury considers appropriate.

(4) Regulations made under subsection (1)—

(a) may make different provision for different cases; and

(b) may contain such incidental, supplemental, consequential and transitional provision as the Secretary of State thinks fit.

(5) The power to make regulations under subsection (1) is exercisable by statutory instrument.

(6) No regulations may be made under subsection (1) unless a draft of the statutory instrument containing the regulations has been laid before, and approved by a resolution of, each House of Parliament.’.— [Mr. Jeremy Browne.]

Brought up, and read the First time.

Mr. Jeremy Browne: I beg to move, That the clause be read a Second time.

As the Bill has commanded cross-party support throughout its progress, it might, in keeping with that spirit, be worth my drawing attention before I discuss the substance of the new clause to the distinguished list of Members from all parties who are signatories to it. They include the deputy leader of my party, my hon. Friend the Member for Twickenham (Dr. Cable), and the Chairman of the Treasury Committee, the right hon. Member for West Dunbartonshire (John McFall), whose report on unclaimed assets recommended that a reserve power to create a register be included in the Government’s proposals, which is precisely the purpose of the new clause.

Rob Marris: The hon. Gentleman was referring to the hon. Members who were signatories to the new clause. The amendment paper lists six names, so I am curious as to why it also says that the total number of signatories is seven. Who is the seventh?

Mr. Browne: I do not know; there are so many wise Members in this House, of all different parties, that the list could include hundreds. I can only speculate that those who have not signed have not been sufficiently attentive to notice that the new clause was there to be signed, because anyone who had had the opportunity to sign it would have taken that chance.

The new clause was signed not only by the widely respected deputy leader of my party, but by hon. Members from all three main parties in this House, including the Chairman of the Treasury Committee, the right hon. Member for West Dunbartonshire. The Committee’s report on unclaimed assets recommended that a reserve power to create a register be included in the Government’s proposals. The right hon. Gentleman was also primary sponsor of early-day motion 1581, which I, too, have
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signed, along with other hon. and right hon. Members. It calls for a reserve power to create a register if reunification efforts prove insufficient. That is the nub of the matter, and I shall address it in due course.

The new clause was also signed by the hon. Member for Norwich, North (Dr. Gibson), chairman of the all-party group on cancer, and by two Conservatives, the hon. Member for Bromsgrove (Miss Kirkbride), who I believe used to be a vice-chairman of that group, and the hon. Member for Broxbourne (Mr. Walker), who was a member of our Public Bill Committee. It was also signed by the Member who has perhaps devoted more time and effort to considering dormant bank accounts than any other—the hon. Member for Clwyd, South (Mr. Jones). He, too, has expressed support for a reserve power for a register, and did so on Second Reading and in Committee.

In summary, unlike the other new clauses that we have discussed this afternoon, this measure is supported by Members from all three parties; it is doubtless supported by Members from other parties too. That is because the intentions behind it are entirely laudable, and it would help the House if I were to provide a small amount of background. We are concerned with the ability of charities to access legacies, which are a vital strand of the income of charitable organisations. The Building Societies Association and the British Bankers Association have estimated that up to £500 million is sitting in dormant accounts, but that estimate is disputed—there are a range of views as to how much money will be realised as and when this Bill becomes law. Some think that the sum may be as high as £5 billion, so we are talking about a large sum.

It is worth setting out a few facts for the House to give context on unclaimed funds and the impact on the charitable sector. One in seven people leave legacy gifts to charity, and those average 5 per cent. of their total estate. The Institute of Fundraising estimates that legacies accounted for 36.3 per cent.—more than a third—of the voluntary income received by charities in 2007, and that that totalled £1.6 billion.

Let us consider the impact that those legacies have on specific well-known charities. Some 46 per cent., or almost half, of the British Heart Foundation’s voluntary income came from legacies last year, as did 33 per cent. of Cancer Research UK’s voluntary income, totalling £135 million. This is not controversial; hon. Members on both sides of the House understand how important it is for the charitable sector that legacies can be realised, because they form a vital part of their funding. This country has an extremely healthy charitable sector. Many charities in Europe caring and catering for people afflicted by illness or other circumstances look enviously at the British charitable sector, because it raises more money, and employs and deploys more people, for charitable causes than those in many comparable countries. We are very well served by our charitable sector, and it is important to ensure that it can access the funds that it requires and that were intended for it by people in their legacies.

In the view of many in the charitable sector, charities cannot adequately locate legacies left in dormant accounts. In that regard, everyone welcomes the industry’s main initiative: the website, which allows any person or charity to search online using basic information. That facility has been useful to many
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people, but nevertheless a feeling remains that it is not sufficient and that some charities will be unable to access the money intended for them.

Rob Marris: I am listening very closely to the hon. Gentleman; I understand his logic, but why does the new clause not refer to executors or administrators of estates? It is they who would be seeking to fulfil a bequest made, for example, by a deceased person in their will to the Royal Society for the Prevention of Cruelty to Animals, of which I am a member. In such a situation, the RSPCA would have a vested interest in accessing any money due to it from the estate and in ensuring, if it could, that the estate had sufficient funds. However, surely that is primarily the duty of the executor or administrator. Should the register not advert to them rather than to registered charities?

Mr. Browne: The hon. Gentleman makes a reasonable point about where the emphasis should lie. If the new clause does not cater for that point sufficiently, it is because it was inspired by representations from many charities keen for progress to be made.

In Committee, I tabled an amendment to create a reserve power allowing a register of dormant accounts to be set up in the triennial report, if the scheme’s reuniting practices were found to be inadequate, but the Government were reluctant to accept that reporting requirement. However, Government new clause 3 introduced a mechanism allowing for a one-off report after three years to consider how the legislation has worked out. New clause 1 is particularly appropriate given the adoption of Government new clause 3. If the report were to find that the ability to reunite charitable organisations with legacies intended for them is inadequate, new clause 1 would be all the more valuable.

In the Lords, an amendment to introduce a reserve power to create a register was narrowly defeated—this takes me to the crux of new clause 1. It had been argued that it was desirable for individuals to be able to access a register to find moneys that were rightfully theirs. Concerns were expressed, although representations were made that those concerns were unfounded, that a database that was drawn so widely and accessed by a large number of people might cause problems. New clause 1 has been drawn much more tightly to take account of those concerns.

5 pm

New clause 1 seeks to give the Treasury the reserved power to create a register to allow registered charities—not any organisation, but registered charities—to search for legacies left to them. Under subsection (2)(b), the register would be regulated by a registrar. Under subsection (2)(c), the search would be conducted across all dormant accounts that were registered. Subsection (2)(d) would provide the Treasury with flexibility to include other stipulations as it saw fit, and require it to consult those who were likely to be affected.

That is the essence of the proposal. I know that some concerns have been expressed, not least by the Conservative party, about whether a register would infringe people’s rightful expectations about data protection. I take those concerns seriously, because I share them. However, the
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advice that I have heard—other Members have received these representations, too—is that the new clause tabled by me and supported by Members of all three main parties would, as worded, not cause undue concern in that regard. The charities would have limited access to information and data that they would find useful in trying to access the legacy money that I described, which is essential to them, but people’s rightful expectations of privacy would not be infringed. Crucially—this is, in a way, a concession made by me and by others who share my view—that access would be restricted to registered charities only.

Some people have particular concerns. The United States, Canada and Ireland, as I understand it, all have registers as part of their dormant bank accounts initiatives, which have not been found to be susceptible to fraud and have not given rise to the type of concerns that some might have about the proposal in new clause 1. As to experience from abroad, the concession that has been made in terms of limiting charities’ access to the register is an attempt to find the common ground that has typified most of our deliberations on the Bill.

I hope that for all those reasons, as well as our collective desire for charities not only to raise as much money as possible but to raise money that was intended for them and for the causes that they wish to pursue, the new clause will be looked on sympathetically by Members from both sides of the House, and might even become part of the legislation.

Mr. Martyn Jones: I shall not detain the House for long, but I wanted to point out why I put my name to the new clause. One of the main tenets of the Bill is to encourage people to get their money back—to get as much as of this money as possible back to its original owners and to those who are entitled to it. They include those whose wills have lost contact with their bank accounts and so on. It should ensure that those who should have the money have the money. One of the best ways to do that, as has been seen throughout the world in all the other many countries that have such legislation, is to have a centralised register. That is so much easier than having to tout data around all the different banks and building societies.

If there is a central register that people know about, the process is much easier. I know that we have, but I do not see why the Government should set their face against the new clause, which would be an added benefit for people who have lost contact with their money. It would also mean that not many more data were flying around. At the moment, those data have to be put into whatever other process has to be gone through, and sent around to various different organisations. There cannot be so much risk of data falling into the wrong hands. I wish that the Minister would reconsider the issue at this late stage and try to accept the new clause.

Mr. Walker: If I have any concern about the Bill, this is one of the areas that I am most concerned about. We recognise in the House that charities derive a significant amount of their income from legacies, and the fact is that the Bill does not make adequate provision to ensure that that is adequately reflected when the money in dormant building society accounts is divvied up.

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I have added my name to the new clause almost in a probing way, because I would very much like the Government to accept that part of the large sums of money that we are talking about could make a significant difference to the funding of charities in this country. If 5 per cent. of legacies goes to charities, it would not be unreasonable for the Bill to reflect that by having 5 per cent. of the dormant bank and building society accounts fund set aside to be distributed to the charitable sector. I appreciate that, in going to the Big Lottery Fund, the money will go to good causes or to a good cause, but that is a very specific allocation.

I have listened to the arguments of a coalition of charities, and I am very sensitive and alive to them. In particular, the money that will be set aside from dormant bank and building society accounts could make a huge difference to less well-funded charities. Many popular charities do not struggle to secure funding and charitable giving, but a number of very worthy charities find it very difficult to raise funds, because they do not have the infrastructure or do not strike the same chord with the public.

I will not try your patience, Madam Deputy Speaker, by going through a range of the charities that struggle for funds, but I point out that mental health charities, for example, find it very difficult to raise funds. I go to many sporting events and see sporting teams wearing pink for breast cancer, which is an honourable and noble thing to do, but I see very few sporting teams wearing something to help to raise funds for the mentally ill, and I should like more of them to do so.

If I could prevail on the Government, I would say, “Please look at this.” We are talking about hundreds of millions of pounds. Would it not be possible to go away, rethink and ask officials, “Couldn’t we set aside 5 per cent. of the fund in a mechanism that would enable it to be distributed to the charitable sector?” That would find favour among many charities and among many of our constituents as well.

Rob Marris: I support the concept of a register, for some of the reasons set out. We could be doing many things to tighten data protection. For example, Wolverhampton city council has no port for a memory stick on many of its computers, so there is no chance of a memory stick with information on it going missing, because a memory stick cannot be plugged in.

We are focusing on charities in the new clause. Although that focus is extremely worth while—I very much support what has been said about charities—it is too narrow, because individuals who should inherit money from dormant bank accounts could not do so, because of the regulations envisaged in the new clause. Charities could do so, as one class of beneficiary, but not individuals. That takes us on to a little background on what happens on someone’s death, which some hon. Members might not be aware of—I am; I was a solicitor before I entered the House.

For shorthand, I will refer to executors, rather than referring in the legal way to executors and executrices and administrators and administratices, because that confuses people. In everyday terms, when someone dies without a will, administrators are appointed to deal with the estate. If someone dies with a will, executors are appointed. However, there will be a grant of letters of administration on intestacy or a grant of probate if
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someone dies with a valid will. However, for the sake of argument, let us simplify and say that those who deal with the estate are executors.

The executors will distribute the money of which they are aware in accordance with the deceased’s wishes if there is a will and in accordance with the law of intestacy if there is no will. If someone dies intestate and there is no beneficiary at all, the estate goes bona vacantia, which is referred to in the explanatory notes and means that the Crown gets it.

If someone dies with a will and leaves a bequest to a charity in it, the charity should get the money. However, there may not be enough money in the estate, or it may be that the charity is the residuary beneficiary. For example, the will might say, “I leave all my furniture to my kids, and everything else I’ve got goes to the Royal Society for the Prevention of Cruelty to Animals.” The RSPCA is then the residuary beneficiary, and gets everything that is left over after the furniture has gone to the kids. That residuary sum will be higher if there is a dormant bank account that can be brought back in to swell the estate. The RSPCA, in the example that I gave, would then get more.

The difficulty with the wording of new clause 1, worthy as it is, is that it focuses only on charities. Let us say that someone dies and leaves several bequests in their will, which is quite common; often they leave a specific bequest of a named sum to a charity, and the residuary beneficiaries are their children. In that situation, the residuary beneficiaries may not get all that they are entitled to if they did not know that their deceased parent had a dormant bank account that had been swept into the reclaim fund, but that could come out of it if they ever found out about the account.

David Taylor (North-West Leicestershire) (Lab/Co-op): I am grateful to my hon. Friend for imparting his professional knowledge to the House. Could he go a little further and say whether there is any legal obligation imposed on executors and administrators to conduct a reasonably thorough search for less obvious assets, such as dormant accounts, that the deceased may have left?

Rob Marris: My hon. Friend has an accountancy background, not a legal background, but he is absolutely right to use the term, “a reasonably thorough search”. Executors have to take reasonable steps; they do not have to search to the ends of the earth to find assets that might be brought into the estate and distributed in accordance with the law on intestacy, or the wishes of the deceased.

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