Mr.
Jones: The Minister will be aware that I have problems
with the definition of dormancy. One possible problem concerns how the
start date of dormancy is interpreted by the banks. He said that the
notion of a dormant bank account was established in 1992, under the
banking code changes. However, I am suspicious that some banks may be
using 1992 as the start date for the dormant bank accounts period, and
that all their consideration of whether an account is dormant or not
starts from 1992. Has the Minister made any inquiries about that? Would
he accept a limited interpretation of that nature? I informed his
predecessor of a bank that claimed that it had £400 million in
dormant bank accounts, but which is now claiming only £50
million. I told his predecessor the name of that bank, in
confidence—have any inquiries been made in that respect? A
further problem with the interpretation of dormancy is that some banks
may consider certain accounts to be dormant only if they contain a
minimum amount. That excludes a great deal of small moneys in accounts,
which could add up to significant sums.
Mr.
Hoban: Taking the hon. Gentleman back to his comment about
the banking code, is he saying that accounts opened before to 1992
would not count as dormant? Clearly, accounts opened in 1992 and
after—1992 particularly—would now be deemed dormant under
the Bill. Is it the pre-1992 accounts that he believes are being
excluded from the
definition?
Mr.
Jones: That is indeed my suspicion. The hon. Gentleman has
hit the nail on the head. I have a great deal of suspicion that the
number of accounts—particularly those mentioned by me and by
other Members on Second Reading—volunteered by the banks has
decreased significantly from the figures that I obtained in 2004.
I suspect that 1992 may be a factor. It may not be, but I
would be interested to know whether the Minister has looked into that.
To get back to the minimum amount definition, does the Minister agree
that there should be no minimum amount standard when banks set their
definition of
dormancy?
Ian
Pearson: On my hon. Friend’s first point, about
banks using 1992 as their start point, I am happy to say that that is
not the case and that dormancy may begin under the legislation at any
point. It is helpful to make that clear. With regard to banks
participating in the scheme, we have widespread support from the
banking industry—they want to participate and there is no
evidence that they will hold back accounts. As my hon. Friend will be
aware, banks will publish their policies on dormancy as part of the
normal banking code. At the moment, different banks have different
interpretations of dormancy. One of the strengths of the voluntary
approach, and of the flexibility that we are allowing for banks to
determine what is dormant, is that it will lead to an efficient way of
operating the reclaim
fund. As
we made plain in earlier debates, we want a clear legal definition of
dormancy for banks to have certainty and to enable them to use their
judgment on whether accounts are genuinely dormant, rather than putting
words in the Bill that will detract from the overall clarity that we
are seeking. We have been very clear about the principles on which we
want the scheme to operate. I appreciate my hon. Friend’s
concerns about banks possibly not wanting to transfer all the funds
over. The system will be transparent, so we will know from each
institution how much they are transferring into the reclaimed fund on a
regular basis, because it will be recorded.
Mr.
Hoban: I want to pick up on a point that the hon. Member
for Clwyd, South made, which arose on several occasions on Second
Reading, about the amounts involved. There were estimates when the
process started, of significant sums of money, and over time those
estimates have reduced. There are two interpretations of that. One is
that the banks are holding back and the other, which I hold, is that
there has been a lot of “finger in the air” estimation.
As banks have focused much more on dormancy and have gone through their
accounts more rigorously, they have been able to produce a more
accurate estimate than hitherto. Does the Minister share his hon.
Friend’s view or my view as to why the estimates have
changed?
Ian
Pearson: I do not want to pick sides. Both my hon. Friend
and the hon. Member for Fareham have made valid points. We have no
evidence that banks
want to stash away accounts that they think are dormant, and do not want
to put them into the reclaim fund. Recently there has been substantial
activity by banks and building societies wanting to reunite customers
with their accounts through www.mylostaccount.org.uk and other
institutions. There has been a stronger focus on, and assessment of,
the issue of whether accounts are dormant or not. The definition of 15
years for dormancy has affected that. Banks and building societies have
undertaken a pretty rigorous exercise, looking at the savings on their
books and concluding whether those accounts are genuinely dormant or
not. The figure has become more accurate and is the best estimate
available at the
moment.
Mr.
Jones: I am grateful to the Minister for giving way
again; he is very patient. The truth is probably somewhere between the
hon. Member for Fareham’s position and mine, but I have still
had hard evidence from one particular high street bank, which told me
that it had £400 million in 2004. We are now talking about a
figure of £450 million for all high street banks. The bank that
I was talking about told me that it now has £50 million, so,
somewhere, somehow, there has been a change in definition. Does my hon.
Friend think that the proposed change to 15 years—the bank in
question was probably using three years—would make much of a
difference? If so, that may be the
reason.
Ian
Pearson: I strongly suspect that that is the case.
Before these discussions on the Bill, banks would have had a particular
view of dormancy, and it is unlikely to have been 15 years. I strongly
suspect that the figures vary widely and that that is the explanation
in this case, but I am more than happy to discuss this matter offline
with my hon.
Friend. Question
put and agreed
to. Clause
11, as amended, ordered to stand part of the
Bill.
Clause
12Triennial
report to
Parliament
Mr.
Browne: I beg to move amendment No. 48, in
clause 12, page 8, line 2, after
first ‘of’, insert ‘or who are affected
by’. May
I ask for your guidance, Dr. McCrea? All three proposed amendments to
clause 12 were tabled in my name, but the most substantial is amendment
No. 7. Although amendments Nos. 48 and 49 are important, they are
secondary to amendment No. 7. Will you permit me, Dr. McCrea, to
discuss all three or would you rather I made a cursory nod at amendment
No. 48, then sat down and started again on amendments Nos. 7 and 49 in
a
moment?
The
Chairman: It would be advisable to remain with amendment
No.
48.
Mr.
Browne: In that case, I will touch briefly on that
amendment. Clause 12 requires a report to go before Parliament every
three years, and the amendment requires consultation to be expanded to
include those affected
by the dormant account scheme. The particular group that I have in mind
is charities. Perhaps when I speak to amendment No. 7, I will expand on
that
point.
Mr.
Hoban: If I had realised that the hon. Gentleman was going
to be so brief, I might have been sharper on my feet while he was
speaking. I understand the point that he made. Looking at his
amendment, I guessed that that was the group to which he was referring.
Is this amendment not rather broad in its wording? The words,
“who are affected by”, could cover all sorts of groups. I
am all in favour of consultation, but I wonder whether the hon.
Gentleman has drawn his amendment so broadly that we will have a
consultation process that will be quite difficult to complete when
considering the triennial review.
Ian
Pearson: Briefly, I invite the Committee to oppose
amendment No. 7, which would give the Government powers to establish a
central register.
The
Chairman: Order. We are talking to amendment No.
48.
Ian
Pearson: I also invite Committee members to oppose
amendment No. 48. Along with amendment No. 49, which we cannot discuss,
it would add to the reports that the Treasury is required to make under
this clause. I will invite hon. Members to oppose clause 12 standing
part of the Bill, but I want to say that we recognise the fundamental
requirement, both for a review and for thorough transparency in the
reporting on the operations and working of the reclaim fund. We do not
believe that the amendment is necessary or, as I will explain later,
that the clause is appropriate.
Mr.
Browne: I am happy to withdraw amendment No. 48, because
it overlaps amendments Nos. 49 and 7. I can touch on some of the themes
again if I am called to speak to those amendments. I beg to ask leave
to withdraw the
amendment. Amendment,
by leave,
withdrawn. 3
pm
Mr.
Browne: I beg to move amendment No. 49, in
clause 12, page 8, line 3, at
end insert ‘and the
operation of the register of dormant account
funds.’.
The
Chairman: With this it will be convenient to discuss
amendment No. 7, in
clause 12, page 8, line 5, at
end add— ‘(6) Where the
report recommends the establishment and maintenance of a register of
dormant account funds, the Secretary of State may make such regulations
as are necessary for the establishment and maintenance of a register of
dormant account funds (“the
register”). (7) The
regulations made under subsection (6) 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 an individual from whom the
charity might expect to benefit; and
(c) other particulars as may be prescribed by the
Secretary of State. (8) Before
making any regulations under subsection (6), the Secretary of State
shall consult— (a) such
persons as are likely to be affected by those regulations;
and (b) such persons appearing
to him to be representatives of persons likely to be so
affected. (9) Regulations under
subsection (6)— (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. (10) The power to make
regulations under subsection (6) is exercisable by statutory
instrument. (11) No regulations
may be made under subsection (6) 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.
Browne: What a build-up. I had better be worth listening
to, but I fear that I may
disappoint. The
important point covered by the amendment has been made by several
representative parties interested in the Bill, especially charities,
which is why the grouping of the amendments is not as I would have
anticipated. Amendment No. 7 is of the greatest import, as it would
create a reserve power for a register of dormant accounts, while
amendment No. 49 would require those affected by knowledge of the
scheme and its operation, such as charities, to be consulted. It would
provide affected charities with greater ability to trace the
accounts. I
wish to make a slightly more substantial speech about such matters,
because they are of importance to those people who raised them with me.
Legacies are a vital source of income for charities. The BBA and the
Building Societies Association estimate that up to
£500 million is sitting in dormant accounts—a
point that we discussed a moment ago with regard to the previous
clause. The Commission on Unclaimed Assets estimates that that is about
£3 billion to £5 billion. It is a substantial amount, but
legacies are a particularly significant form of income and the ability
to trace that money is most important for the charitable sector. One in
seven people leaves legacy gifts to charity that average 5 per cent. of
their total
estate. The
Institute of Fundraising estimates that legacies account for 36.3 per
cent. of its money, and more than one third of the voluntary income
received by charities in 2007 totalled £1.6 billion. By way of
illustration, last year, 46 per cent. of the British Heart
Foundation’s voluntary income came from legacies, and 33 per
cent. of Cancer Research UK’s voluntary income totalling well
over £100 million came from legacies. I have the honour of
serving as a vice-president of the Parkinson’s Disease Society,
and I take a close interest in that cause. I attended a meeting with
its trustees earlier this week, and I was told that its income from
inherited money, gifts and legacies was about half of its total income
as a charity. Legacies are extremely important to part of the voluntary
sector that everyone in the House wishes to see
assisted. At
present, charities are unable to locate legacies adequately that are
left in dormant accounts. I welcome
the setting up of the industry’s main initiative, the website
“mylostaccount.org.uk”, which allows any person or
charity to go online and search using basic information. It is part of
the recent reuniting scheme undertaken by the sector, but it has
several shortcomings. Searches can be conducted only if the charity
knows what bank or building the unclaimed assets are in. The Minister
shakes his head. If he can reassure me on that point, I would be
grateful. I
suppose that people must have to put in a certain amount of information
and that it would be helpful to have some idea of where to search. A
person might have a better sense of the starting point if he were
looking for his own account than trying to find the unclaimed or
dormant assets of someone who has died. I do not assert what I have to
say with absolute confidence, but raise it as a cause of concern. I do
not believe that I am necessarily in the right and that the Government
are wrong, but there might be some accounts—internet bank
accounts, for example—where searching is harder to achieve. I do
not know how far back records go and the degree to which individual
banks would co-operate to make the system as efficient as
possible. Amendment
No. 7 deals with an enabling power that could be invoked if the
triennial report found that arrangements for reuniting owners with
their assets were insufficient. An amendment introduced in the other
place with a reserve power to create a register was narrowly defeated
in a Division. The Government claimed that current initiatives were
enough to ensure strong take-up of the scheme by the financial
institutions and that success, although it cannot be guaranteed, should
be sufficient to reunite charities with the funds, but concerns
remain.
I am given to
understand that other countries operate practices that allow charities
to locate money more efficiently and effectively. That is the
motivation behind amendment No. 7. Although it is in the distant past
and the Committee has already rejected it, I accept that amendment No.
48 was rather broadly
worded. Tom
Levitt (High Peak) (Lab): Amendment No. 48 was indeed
widely worded, given the nature of the phrase, “who are affected
by”. However, similar wording appears in proposed new subsection
(8) in amendment No. 7. Is the hon. Gentleman suggesting that any
potential beneficiary from any charity that might at some time benefit
from funds in dormant accounts should be able to question that issue?
That seems to be a recipe for
disaster.
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