Mr.
Hoban: Before the Minister concludes, may I go back to a
point that he made before we had this digression on who should produce
the list? I thought he said—I would like clarity on
this—that it is not the reclaim fund’s job to scan the
horizon and that the FSA should have a role in that. Obviously, it does
that in the context of ensuring that all financial services
organisations are registered with it. Does the FSA have a role in
encouraging banks and building societies to look at the issue of
dormant accounts, and should it in any way supervise and regulate the
work that they do on reuniting accounts with their rightful
owners?
Ian
Pearson: It is not my job during consideration of the Bill
to comment on the role of the FSA in that respect, but we have a strong
commitment from banks and building societies that they will voluntarily
participate in the scheme. That is completely the right approach to
take and we have no reason to think that any major bank or building
society will not want to participate. The situation to which the hon.
Gentleman refers is not likely to arise, but I will reflect on his
amendment and come back to
him. Amendment
agreed
to. Amendments
made: No. 22, in schedule 1, page 17,
line 24, at end
insert— ‘( ) its annual
accounts and reports for that year (within the meaning given by section
471 of the Companies Act 2006
(c. 46));’. No.
23, in
schedule 1, page 17, line 26, after
‘fund’, insert ‘in that
year’. No.
24, in
schedule 1, page 17, line 28, after
‘fund’, insert ‘in that
year’. No.
25, in
schedule 1, page 17, line 31, after
‘transferred’, insert ‘in that
year’.—[Ian
Pearson.] Schedule
1, as amended, agreed to.
Clause
6Parliamentary
accountability of reclaim
fund Question
proposed, That the clause stand part of the
Bill.
Ian
Pearson: As I made clear earlier, we want the reclaim fund
to operate in a transparent way. Our amendments show that we have
listened to the debate and that we seek to reinforce transparency. We
did that with Government amendments Nos. 21 to 25, which require the
fund to publish the information referred to in clause 6 as soon as
possible after the end of each financial year. That information will be
available for all to see, including hon. Members. I hope that that
satisfies any concerns that there will not be full transparency and
scrutiny of the reclaim fund. However, requiring the reclaim fund to
lay its annual accounts and reports before Parliament would be
inappropriate and out of keeping with the
Bill. I
shall briefly restate why clause 6 is unnecessary and why I oppose it
standing part of the Bill. Representations have been made that the
reclaim fund should be regarded as a public sector body as a result of
the Treasury’s direction-making power, which has been discussed,
and that that justifies additional parliamentary scrutiny. We have
already debated those points, but I want to re-emphasise the fact that
the reclaim fund is not a public sector body; it is a private company
operating under company
law. As
I have said, we do not envisage using the direction-making power to
interfere in the day-to-day running of the reclaim fund and the
management of its money. The FSA is responsible for regulating the
reclaim fund for prudential
purposes. For
the reasons I have outlined, the improvements in transparency made by
Government amendments Nos. 21 to 25 and the explanations we
have given about why we envisage using the direction-making power only
in exceptional circumstances mean that a requirement for the reclaim
fund to put its annual report and accounts before Parliament would be
excessive and unnecessary. That is why I recommend hon. Members not to
support clause 6.
Mr.
Hoban: Given the consensus that we reached on the previous
amendments, I do not have a problem with the removal of the clause, but
removing subsection (2)(a) would be a retrograde step. That
subsection requires the Treasury to
“lay before each
House of Parliament...any directions issued to a reclaim fund
under section 5(4) of this
Act”. The
Government won the point about whether the positive method for
directions should be followed, but now not only will there be no
parliamentary scrutiny, but there will be no obligation on the Treasury
to publish such directions, which makes the situation even
worse. If
we remove the clause in its entirety, no one will know what directions
the Treasury has published. The directions might be used in pressing
emergencies—to use the Minister’s words—but it
would be helpful if we knew when they had been issued to the reclaim
fund. I am sure that this is an over-hasty deletion by the Government,
not a deliberate step to keep directions shrouded in
secrecy.
12.15
pm
Ian
Pearson: I welcome the hon. Gentleman’s support for
removing clause 6. If there is a problem with subsection (2)(a), I will
undertake to return to the matter on Report. It is not the
Government’s intention to be secretive in any way in the wholly
unexpected circumstance that we might exercise a power of direction; on
the contrary, we would want to ensure that we act transparently. We
have debated whether that should be through an affirmative or negative
procedure, perhaps because of the requirement for urgency. I will come
back to that later should it be necessary or if there is any lack of
clarity or transparency.
Question
put and
negatived. Clauses
7 to 10 ordered to stand part of the
Bill.
Clause
11“Dormant”
Mr.
Browne: I beg to move amendment No. 3, in
clause 11, page 6, line 37, at
end insert ‘and, (c) the bank or
building society in question has exhausted all reasonable efforts to
inform the account holder of the funds that bank or building society
holds on their
behalf.’.
The
Chairman: With this it will be convenient to discuss
Government amendment No.
16.
Mr.
Browne: The amendment would create a statutory obligation
for banks to attempt to reunite dormant accounts with their owners. It
amends the definition in subsection (1) by adding another paragraph to
require the financial institution to have
“exhausted all
reasonable efforts to inform the account holder of the funds that bank
or building society holds on their
behalf.” That
would ensure that financial institutions exercise appropriate
responsibility towards account holders before transferring their money
to a reclaim fund. The current system for allowing people to check
whether they have dormant accounts centres around the website,
www.mylostaccount.org.uk. That presupposes that the account holder
knows which institutions their account is with and believes that they
have a dormant account in the first place. It is also reliant on
voluntary information from the institutions, which can be patchy, and
on the account holder being able or willing to use a computer, which we
should not assume will automatically be the case. I am not trying to
undermine the Bill as a whole but to ensure that the interests of
depositors are safeguarded to an even greater degree than it currently
envisages by putting that greater obligation on the
banks.
Mr.
Hoban: I wonder whether the hon. Gentleman could expand on
the wording of his amendment where he says that
“the bank or
building society in question has exhausted all reasonable efforts to
inform the account holder.”
What does he believe
that “all reasonable efforts” might encompass? For
example, one bank has employed a tracing agency to track down the
owners of accounts
holding more than £1,000. Is that reasonable, or would it be
expected to go further to include lower-value
accounts? Mr.
Browne: The hon. Gentleman raises a reasonable point.
There is a useful debate to be had over how much effort the financial
institution should make. Many people take the view that the effort
should match the size of the deposit in the account. The process may
become not self-defeating but less obviously purposeful if it costs
more to try to trace the account holder than the total value of the
deposit. If the account held a higher amount of money, I would envisage
the efforts going somewhat beyond writing to an account holder at an
address at which he resided 15 years or more ago and having a website
that he or she could access if they so
wished.
There will be
several ways in which the banks go about trying to contact longstanding
customers who have not been in recent contact. The essential point is
that at the moment the banks have insufficient incentive to try to
reconnect the dormant bank account holder with his or her dormant bank
account and that the Bill does not give them any great incentive to do
so. After all, what does the bank stand to gain from tracking down a
person who has not been in contact for 15 years or more? Very little. I
fear that the bank will do the bare minimum in order to be seen to be
doing the right thing and that that will not be good enough in the
interests of the individual account holder. I would be pleased if the
Minister could assure me that greater and more strenuous efforts will
be
made.
Mr.
Field: I want to say a few words about the amendment, with
which I have a certain amount of sympathy. I also want to put on record
the specific concerns of a constituent of mine—Mr.
Manzetti of Belvedere house in Grosvenor road, Westminster—which
were answered in part by an exchange of correspondence with the
erstwhile Economic Secretary to the Treasury that took place in the
summer. Having worked in the insurance industry for more than 35 years,
Mr. Manzetti is worried that not enough is being done to
seek out the owners of assets, along the lines of the proposal by the
hon. Member for Taunton. In a modern world in which there are websites
and far more detail that can potentially be demanded and accessed by
the public, banks and building societies are becoming more proactive in
their efforts to hunt down the owners of assets. Mr.
Manzetti’s experience of this world leads him to believe that
there has been a reluctance on the part of insurers and others to
follow up unclaimed benefits or dormant accounts. There is still
concern as to whether that process has been adequately open.
As the hon.
Member for Taunton said, there is now a desire for companies to be
required to list on freely accessible websites the names of all holders
of unclaimed assets and for part of the cost of that exercise to be
borne by advertising of the company’s products on those sites.
At the moment, as the Minister will be aware, there is a pretty
extensive charging regime of some £18 per search. That is a
fairly significant disincentive unless the cost is to be paid by an
individual who is aware of some unclaimed assets for him or his
family. I
also want to put on the record, more broadly, that the Bill provides an
opportunity to improve on the reunification process and the procedures
for ensuring
that dormant accounts go back, where possible, to the correct person. As
is betrayed by his surname, many of Mr. Manzetti’s
ancestors come from various parts of Europe, including Italy, Germany,
France and the Czech Republic, and several accounts are unknown. That
will apply not only to many of my constituents but to those of hon.
Members throughout the country. The question is whether enough work is
being done by banks and building societies. Where are the incentives to
ensure that a proper job is done instead of merely making “all
reasonable
efforts”? In
her letter, which is dated 10 August, the erstwhile Economic Secretary
mentioned “tracing
systems being made more
user-friendly.” Can
the Minister give some indication as to the nature of those tracing
systems and how they can be more user-friendly in a world where people
will increasingly access websites through the internet? What process
will be put in place to ensure that we do not have a system suitable
only for 2008 that becomes defunct in the light of new
technology in the years and decades ahead? Is there a commitment from
the Government, alongside the banks and building societies, to ensure
that this information is kept up to date, as far as
possible? I
thank you for your indulgence, Mr. Benton, in allowing me to
stray slightly off the line, as I felt that the issues raised by my
constituent could best be discussed under clause 11. I hope that the
Minister is able to comment on them. I am happy, if need be, to forward
the correspondence that was responded to by the then Economic
Secretary, who is now Under-Secretary of State for Work and Pensions,
the hon. Member for Burnley (Kitty
Ussher).
Mr.
Hoban: This is an opportunity for us to spend a little
time thinking about the precursor to the work that the reclaim fund and
the Big Lottery Fund will do with dormant accounts. Consumers will want
to know that banks have taken all the appropriate steps to ensure that
they identify the rightful owners of accounts. The provision is
important, because it will give customers confidence that this is not
just an exercise to take money out of their accounts and put it in the
reclaim fund to be used for the causes mentioned in later clauses. It
is important to consider the approach that the banks and building
societies use to identify dormant accounts and reunite them with their
owners.
Having heard
the remarks of the hon. Member for Taunton, I am not sure whether I
support his amendment. The word “reasonable” is difficult
to explain and be clear about. Consumers will expect banks take all the
appropriate steps that they need to take to identify account owners.
The debate that we have had about unclaimed assets and dormant accounts
over the past six years, since the first document on such assets was
first published, has forced, or encouraged, institutions to consider
how they identify those accounts and what steps they should put in
place to reunite the accounts with their owners. National Savings and
Investments, the Building Societies Association and the British Bankers
Association have worked together to set up mylostaccount.org.uk. My
understanding is that there have been many more visits to that site,
and searches initiated on it, than there were on the previous websites
available to bank and building society customers. It appears to have
stimulated a great deal of interest in the
minds of customers about whether they might have accounts and about
initiating the process of searching for
them. 12.30
pm Some
banks have employed tracing agencies, particularly for larger accounts
and customers, and they appear to have been successful. It is
interesting that the banks have made quite a lot of progress in
whittling down the amount of their unclaimed and dormant accounts. On
Second Reading, other hon. Members and I said that HBOS had made
significant progress. We want that to continue. No matter how much we
want to go to the good causes, we want the banks to have as their first
priority trying to reunite those assets and getting their customers to
claim them. In the time between now, or Royal Assent, and the setting
up of the reclaim fund, we all want the banks to work carefully and
diligently to ensure that that takes place. We will touch on the
triennial reports in the next series of debates, but we certainly want
a mechanism to be in place that shines a light on the activities of
institutions in reuniting customers with their
accounts. I
am concerned about Government amendment No. 16, deleting subsection
(3), which was added in the House of Lords. That subsection would put
the onus on the banks to use the knowledge of their accounts, account
holders and any other relevant matters in determining dormancy. It
would try to encourage banks to take a holistic approach to their
customers, to determine whether there was any evidence that they were
aware of, or should be aware of, to suggest that the account was not
dormant. Amendments
tabled in the Lords stemmed from a series of discussions that tried to
define dormancy more carefully. Those amendments were unsuccessful,
because there was, rightly, a concern that people did not want
statutory impositions placed on the scheme, to try to preserve as far
as possible its voluntary nature. Lord Davies of Oldham said in the
other
place: “The
bank can follow its normal procedures for reaching a judgment on
whether an account is dormant”—[Official Report, House
of Lords, 10 January 2008; Vol. 697, c.
GC344.] There
is some uncertainty, and my amendments Nos. 47 and 46, which
we will come to next, highlight some of the dormancy issues. I am not
clear in my own mind whether the banking code, which is the fall-back
position in this situation, is enough of a prod to ensure that the
banks deal with their customers on a fair basis when looking at
dormancy. Under the code, each bank will have to publish its own policy
on dormancy, but that is voluntary in nature, like so much of the
scheme. I am not sure whether that will provide adequate protection for
customers, who might see their accounts being declared dormant.
Subsection (3), from our perspective, tries to provide some of that
protection for consumers. We are disappointed that the Minister seeks
to delete the amendment made by the House of
Lords.
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