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General Committee Debates

Dormant Bank and Building Society Accounts Bill [Lords]

The Committee consisted of the following Members:

Chairmen: Mr. Joe Benton, Dr. William McCrea
Barlow, Ms Celia (Hove) (Lab)
Blizzard, Mr. Bob (Lord Commissioner of Her Majesty's Treasury)
Browne, Mr. Jeremy (Taunton) (LD)
Dean, Mrs. Janet (Burton) (Lab)
Ennis, Jeff (Barnsley, East and Mexborough) (Lab)
Field, Mr. Mark (Cities of London and Westminster) (Con)
Hoban, Mr. Mark (Fareham) (Con)
Howell, John (Henley) (Con)
Jones, Mr. Martyn (Clwyd, South) (Lab)
Levitt, Tom (High Peak) (Lab)
McCarthy, Kerry (Bristol, East) (Lab)
Mallaber, Judy (Amber Valley) (Lab)
Newmark, Mr. Brooks (Braintree) (Con)
Pearson, Ian (Economic Secretary to the Treasury)
Taylor, Matthew (Truro and St. Austell) (LD)
Walker, Mr. Charles (Broxbourne) (Con)
Celia Blacklock, Committee Clerk
† attended the Committee

Public Bill Committee

Tuesday 14 October 2008

[Mr. Joe Benton in the Chair]

Dormant Bank and Building Society Accounts Bill [Lords]

10.30 am
The Chairman: Before we begin, I have a few announcements. Members may, if they wish, remove their jackets in Committee. Would all Members please ensure that mobile phones, pagers and so on are turned off or switched to silent running in Committee? I remind the Committee that there is a money resolution in connection with the Bill—copies are available in the room—and that adequate notice should be given of amendments. As a general rule, my fellow Chairman and I do not intend to call starred amendments. We also do not intend to call amendments that are not signed by members of the Committee, because we assume that they would not be moved.
Briefly, I remind the Committee of the procedure at the start of today’s sitting. The Committee will first consider the programme motion on the amendment paper. Debate is limited to half an hour. We will then proceed to a motion to report written evidence, before starting clause-by-clause scrutiny.
The Economic Secretary to the Treasury (Ian Pearson): I beg to move,
(1) the Committee shall (in addition to its first meeting at 10.30 a.m. on Tuesday 14th October) meet—
(a) at 2.30 p.m. on Wednesday 15th October;
(b) at 9.00 a.m. and 1.00 p.m. on Thursday 16th October;
(2) the proceedings shall be taken in the following order: Clauses 1-5; Schedule 1; Clauses 6 to 16; Schedule 2; Clause 17; Schedule 3; Clauses 18 to 33; new Clauses; new Schedules; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 4.30 p.m. on Thursday 16th October.
It is a real pleasure to serve under your chairmanship, Mr. Benton, and that of Dr McCrea.
It was evident from the debate on Second Reading that there was widespread support for the principles of the Bill. However, it is right to have detailed scrutiny of a number of issues. I welcome the sittings allocated to the Bill, which should allow sufficient scrutiny to enable the Bill to be improved.
Mr. Mark Hoban (Fareham) (Con): It is a pleasure to serve under your chairmanship, Mr. Benton, and that of your co-Chairman, Dr. McCrea.
As the Minister pointed out, there is widespread consensus on the Bill and its provisions. The Bill comes to us having been improved in the other place. From the amendments tabled, the Government clearly do not share that view. We have the time in our deliberations, I hope, to give proper airing to the Government’s arguments for those amendments. We shall have the opportunity to argue for further refinements to the Bill—to improve it, so that it has the support not just of those who are beneficiaries of the proceeds that will arise from the process, but of consumers and others who are interested in how dormant accounts are identified and reunited with their rightful owners.
Question put and agreed to.
That, subject to the discretion of the Chairman, any written evidence received by the Committee shall be reported to the House for publication.—[Mr. Pearson.]
The Chairman: Copies of any memorandum that the Committee receives will be made available in the Committee Room.

Clause 1

Transfer of balances in reclaim fund
Mr. Jeremy Browne (Taunton) (LD): I beg to move amendment No. 1, in clause 1, page 1, line 6, leave out from ‘fund’ to end of line 8 and insert—
‘(i) the balance of a dormant account that a person (“the customer”) holds with it, and
(ii) the name, date of birth and last known address of that customer, and’.
May I join the previous speakers in welcoming you to the Chair, Mr. Benton, and say how much I am looking forward to serving under your chairmanship? I am delighted to have the opportunity to kick off the deliberations on what the Minister rightly said is a Bill that has commanded support from all parties in the House of Lords, as well as in the House of Commons. I look forward to proceeding on that basis, but with the caveat that, as the Minister knows, we disagree on some points. As the Government do not have a natural majority in the other place, they were not able to force through provisions that the majority felt could be improved. We shall now seek to improve the Bill again with amendments in Committee.
Before I turn my mind specifically to the amendment, I am bound to say that it seems faintly peculiar that, yesterday in the Chamber, we discussed how £37 billion of public money could be put into the banking system, yet today we are discussing how a rather smaller amount can be taken out to assist public funds with youth projects and similar matters. Nevertheless, we are where we are, so we shall concentrate on what is before us.
The Chairman: Order. The hon. Gentleman is going beyond the scope of the Bill. Will he come back to the amendment?
Mr. Browne: Sorry for pushing your patience, Mr. Benton.
Mr. Martyn Jones (Clwyd, South) (Lab): I remind the hon. Gentleman that the funds to which he referred are funds not of the banks, but of people who have lost contact with their money.
The Chairman: Order. We do not need to focus on yesterday’s proceedings. Will the Committee return to the amendment?
Mr. Browne: Absolutely. I take the blame entirely for taking us down that road.
Amendment No. 1 concerns a matter on which the Minister sought to reassure me last week on Second Reading, but I should like further reassurance about the means by which a depositor can be reunited with his or her money if he or she goes to his or her bank more than 15 years after having last touched the account. As set out in the explanatory note, the banks and buildings societies will act as agents for the reclaim fund and continue to manage the customer relationship, but the precise details of agency arrangements will be a matter for negotiation between the bank or building society and the reclaim fund.
The individual will go to his or her bank to reclaim a sum—for the sake of argument, let us say £100—after which the bank will go to the reclaim fund, but at that point the reclaim fund needs to locate the money and may be unable to share sufficient details with the bank. The Minister might consider that I am concerned unduly about such matters and that the practical arrangements are better than I understand them to be, but the amendment would require the bank to transfer the customer’s name, date of birth and the last known address when transferring the balance of a dormant account to the reclaim fund. The purpose of the amendment is to ensure that the individuals concerned have the minimum administrative difficulty in being reunited with their money, which is why I hope that it will be supported by the Committee or that the Minister will reassure us to such an extent that it will not be necessary to press it to a Division.
Mr. Hoban: The amendment raises an issue about the relationship between the reclaim fund and the bank, which body people will go to for assistance and what records the reclaim fund will be required to hold. The hon. Member for Taunton suggested that we enable the reclaim fund to trace the money that has been transferred to it by the bank. I have a slightly different worry about that and why the reclaim fund needs to have such information. If the customer goes back to the bank and the bank acknowledges that a liability is due to that customer and tries to recover from the reclaim fund the money that is due to them, which I think is how the process is meant to work, how is the reclaim fund to know that the bank has not tried to reclaim money for that customer before? What controls will be in place to ensure that the reclaim fund only pays legitimate claims to banks? If the reclaim fund has simply transferred a lump of money from bank A, how will it know which customers that sum refers to, what the breakdown of that money is between different accounts and therefore what action it needs to take?
In the other place, my noble Friend Baroness Noakes commented that the reclaim fund
“could not have a proper system of internal control that did not identify the potential obligations that it took on—which would have to be on a named basis”—[Official Report, House of Lords, 11 December 2007; Vol. 697, c. 67.]
Baroness Noakes made an important point. It is difficult to know how the reclaim fund could properly perform its functions without that type of information. As I mentioned earlier, how would the reclaim fund know that it was paying a valid claim that the banks had not sought to recover in respect of that customer at an earlier stage and that no one was not coming back for a second bite of the cherry?
This issue is also relevant to the other functions of the reclaim fund. If I was administering the reclaim fund, I would want to know the liabilities that were being transferred across to me. For example, if £1 million was transferred to the reclaim fund from a bank, I would want to know whether I was accepting one block of £1 million or 1 million amounts of £1, because I would take a different approach to releasing that money to the Big Lottery Fund, depending on the nature of the breakdown of the assets being transferred. That relates to the proposed change to clause 1 set out in the amendment, which would ensure that the reclaim fund knows the balance of a dormant account that a person holds with the bank. It is important that such information is transferred, so that the reclaim fund is properly protected and so that it knows the make-up of the liabilities that it is meant to assume. That would allow the fund to make repayments to the banks in a controlled fashion and to have the detailed knowledge that is necessary for making the right decisions on the amounts to release to the Big Lottery Fund.
I am pleased that the hon. Member for Taunton has tabled the amendment, because it helps to tease out the issues about how the reclaim fund will function, what controls will be in place and what data it will hold. There was a significant debate in the other place about the amount of data that the reclaim fund should have. My noble Friend tabled an amendment suggesting a confidentiality agreement that the reclaim fund could enter into, to enable it to hold more data about the holders of dormant accounts. In that case, the Government maintained that the Data Protection Act 1998 would provide sufficient protection. We accept their assurances, but it would be useful if the Minister indicated in his response what information the reclaim fund will hold on individuals to enable it to perform its duties properly.
Ian Pearson: I hope that I can give the hon. Member for Taunton the assurances that he seeks, but I believe that the amendment is unnecessary. One of the key principles behind the Bill is that the bank or building society is expected to handle customer repayments. Customers should not notice any significant change as a result of their accounts being transferred to the reclaim fund; it remains their money and if they go to their bank or building society and ask for their money, they should get it. It will then be up to the bank to make a claim on the reclaim fund. Customer records are therefore expected to be retained by the original institution, to verify claims on behalf of the reclaim fund. In practice, there should be no need for confidential customer information to be transferred routinely to the reclaim fund. I, for one, would not feel comfortable with a situation where a customer’s natural right to privacy within their own bank or building society was, without their knowing it, jeopardised by information being given to a third party—the reclaim fund. We do not believe that that is necessary.
As the hon. Member for Taunton will be aware, a bank or building society normally has a duty not to disclose information about its customers’ affairs to third parties without the customer’s consent. However, we recognise that, in exceptional circumstances, a customer might be unable to seek repayment from their bank or building society and the claim might need to be handled directly by the reclaim fund. That could happen, for example, in a dispute about repayment in which the reclaim fund becomes directly involved as the respondent. As a result of that eventuality, clause 14 will allow a bank or building society to transfer customer information lawfully to the reclaim fund if that is necessary to enable it to deal with claims for repayment. Such a transfer of information would otherwise breach a legal restriction on sharing information, such as the bank’s duty of confidentiality.
10.45 am
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Prepared 15 October 2008