Dormant Bank and Building Society Accounts Bill [Lords]
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 confidencehave 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 after1992 particularlywould 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 accountsparticularly those mentioned by me and by other Members on Second Readingvolunteered 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. Friends 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 industrythey 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. Friends 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. Friends 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
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 Farehams 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 yearsthe bank in question was probably using three yearswould 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.
Triennial 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?
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
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.
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.
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..
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 accountsa 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 Foundations voluntary income came from legacies, and 33 per cent. of Cancer Research UKs voluntary income totalling well over £100 million came from legacies. I have the honour of serving as a vice-president of the Parkinsons 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
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 accountsinternet bank accounts, for examplewhere 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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