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The noble Lord said: It will be convenient to debate Amendment No. 6 along with this amendment, as in many ways it is complementary to it. Reference has already been made to the helpful way in which the Public Bill Office operates. However, I note, at the end of my Amendment No. 3, the appearance of the words,

I have no recollection of ever having written that, and while it may be that the Public Bill Office has long suffered from being unable to read my writing, it has not yet managed to imply that I was going to write something that I actually did not. I do not wish to raise the issue of six months.

I referred to this legislation in the course of the debate on the gracious Speech. Unfortunately arrangements for a funeral prevented me from being at Second Reading, but I have read the debate carefully. The Minister, and a number of others, stressed that reuniting account holders with their money must be the first priority wherever possible. I am sure that is right. On the one hand, as has been implied just now, the banks have an interest in hanging on to the money, while on the other hand the charities are saying how marvellous it would be if they could get their hands on it, but in the middle of all that are the actual account owners. We must ensure that everything possible is done to find them.

When I spoke in the debate on the gracious Speech I referred to the fact that almost exactly 10 years ago I was asked by Mr Paul Volcker, former chairman of the Federal Reserve in America and a distinguished American public servant, to act as one of the arbitrators on what became known as the Claims Resolution Tribunal for dormant accounts in Switzerland. I took that on, and on the whole it operated well. We were successful in uniting many of the dormant account holders or their heirs with the money that was rightfully

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theirs. I say to my noble friend Lord Hamilton that on the whole I found the Swiss banks extremely helpful in the course of that exercise.

The task we had was a much more difficult one than identifying dormant accounts in British banks will be. To start with, Swiss bank accounts, certainly in the earlier period, on the whole did not have anything by way of a signature. It was simply a numbered account—someone wandered in, opened the account and that was that. To try to find the heirs to that account 70 years later was not easy. It involved identifying individuals to see whether they were the right person at all. That ought not to be a difficulty so far as these bank accounts are concerned. Similarly, we had trouble tracing the addresses and so on. But that was a long time ago.

With this legislation we are talking about an account being dormant if it has been so for more than 15 years. I suspect that many of them have been dormant for a much longer period. We are not really seeking to find the “customer”, but probably the heir or even the heir of the heir, as the rightful owner of the account. The question then is how should one seek to find them? On the Claims Resolution Tribunal we were faced with this problem. What we did—and I am extremely grateful to the Library for digging this out—was publish in the press lists of names and addresses, as far as they were known. It will be easier in this case, because we could simply put in the last known postcode of the person. Eventually, we dealt with it on the internet, which was in its infancy. That would be a much easier way of doing this, together with an explanation of what it was all about—namely that these were dormant accounts. If you thought that the accounts belonged to you or your grandmother or whoever, then you should write in because we would be able to check.

4.30 pm

I notice from the banks’ briefing that two of the largest deposit takers have launched reunification exercises, while others are at an advanced planning stage. As I am coming a little late to this, I have not previously looked at the proposed legislation as closely as I might have. However, if two banks have launched reunification exercises, I am not aware of it, and I do not know whether many people in this room are aware of it. There is an overwhelming case for adopting a similar approach to the one we adopted on the Claims Resolution Tribunal—namely, to publish the names of the dormant accounts and the last known postcodes, inviting people to write in and apply if they think that an account is theirs or that it belonged to one of their relatives and they may be entitled to it. The individual cases can then be examined in the same way as the tribunal examined such claims. The scale of the operation would not be vastly different—some £250 million or so, and some £100 million or so in relation to building societies.

We were dealing with similar amounts regarding the Swiss accounts. I never totted up how much I actually disbursed, but it was certainly tens of millions of pounds and it may have even been hundreds of millions. Therefore, such an exercise can be carried out

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successfully, and it would be the right approach for us to adopt. I was concerned with the Holocaust accounts, but a great many others were nothing to do with the Holocaust and were accounts that had simply gone dormant. Very often a person died and did not tell their heirs or relatives of the account. Indeed, in some remarkable cases, having given the family everything else, a person had not mentioned that they were hanging on to a dormant account, for whatever reason. It is interesting, perhaps, to speculate on that.

This is a positive amendment and it would be helpful to incorporate it in the Bill. Perhaps the Minister can tell us what present arrangements are being made, but it is not my impression that a great deal is being done at the moment. It is essential to hit a balance between the banks and potential beneficiaries and I would like to consider whether those who have tragically suffered regarding their pensions in the past 10 years should be recipients, rather than charities, and whether this is the right approach. I hope that this amendment is a constructive suggestion.

Other questions arise, and one that I hate to raise relates to safe deposit boxes. Many safe deposit boxes may contain very large sums. Again, I say from my own experience that all kinds of different things turn up once you start to open up safe deposit boxes. In one instance, it was believed that the box contained a magical jewel that would allow a certain sect to, if not rule the world, be a lot better off.

This amendment is a constructive suggestion and I hope that we have a positive response from the Minister. I beg to move.

Baroness Noakes: It was not until my noble friend stood up that I realised that he had such a wealth of experience to offer on this Bill. Perhaps he could help the Committee with one question. When he did his work in Switzerland, how was the duty of confidentiality reconciled with publishing names and other personal details? That is one of the issues that has been raised as a reason not to advertise particular details. If that can be overcome, it is a very powerful tool to enable reuniting to occur.

Lord Higgins: It did not seem to us a particular problem at the time. I suppose that if you use just the name then it does not really breach confidentiality, because it could be anyone. If you put in the postcode, what is the confidence that one is breaking? We did not find it a problem, and I do not remember anyone ever raising the issue or asking whether it was wrong. Certainly, none of the newspapers concerned raised the point. I have here the Times of 23 July, which the Library very kindly dug out. The Times and other major newspapers were involved, and we covered the whole range of tabloids, and none of them seemed to feel that there was any problem with this at all. If the Minister has a legal angle on this, he should by all means tell us about it—but we were not aware of the problem.

Lord Newby: We absolutely support the noble Lord in his view that one of the main aims of the legislation should not simply be that the dormant assets end up in a reclaim fund; they should end up where they should

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properly be—namely, with the people whose accounts they are, or their heirs and successors. The amendment would be one way in which to begin to improve the proportion of people who reclaim their own assets. My query is whether it goes far enough. We have tabled our own amendment, Amendment No. 24, which seeks to do something slightly more comprehensive. One problem is that if heirs are unaware that there may be such a dormant account, having to trawl around a number of banks and building societies to find it is quite a business. How you do that is also a challenge. I do not think that for the clearing banks and big building societies you could do it by advertising in the newspapers because that would involve too many names. Using the internet would mean that you would not need a paper-based approach. Our approach is a slightly different one but would achieve the same aim as this amendment, and I shall be interested to hear how the Minister responds.

Lord Monson: Although I understand and to a considerable extent sympathise with the argument put by the noble Lord, Lord Higgins, if it is the case that the holders of dormant accounts will genuinely be no worse off when the balance has been transferred to a reclaim fund than they would have been if it had not been so transferred, are we really justified in imposing such burdens on banks and building societies? The larger banks and building societies could afford it, but for the smaller building societies to have to take up quarter-page advertisements in the whole national and much of the regional press is asking too much. I should be grateful to hear the Minister’s comments on that.

Lord Davies of Oldham: The whole Committee is at one on the objective, which is as far as possible to reunite people with their rightful resources, so I very much welcome the motivation behind the amendment of the noble Lord, Lord Higgins.

I shall be increasingly embarrassed in this Committee if the noble Baroness, Lady Noakes, continues to put forward my arguments for me, as she will render me redundant somewhat before my time. However, our concern is exactly as she articulated—namely, that the banks and building societies are concerned about confidentiality and identity fraud. Let us remember that under the amendment they would be writing after 15 years to an address which may or may not be correct. They would not know the recipient, otherwise they would be able to solve the problem of the dormant account. There are real anxieties on this score.

I hear what the noble Lord said about newspaper advertisements. Being costly, that may not be practicable for the smaller building society, but it beggars belief that we would expect the major banks to produce advertisements which would make sense to anyone. The process would therefore presumably involve a letter to an address, with all the risks that that would carry.

I emphasise that the banks and building societies are all too well aware that this legislation raises the question of how diligent and efficacious they are in seeking to ensure that dormant accounts are kept to

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an absolute minimum as they are not their property but the property of customers. Banks have a practice of pursuing dormant accounts. They have a clear definition of when an account becomes dormant in terms of a lack of activity in the account and they seek to reduce the number of such accounts.

All banks recognise that, when they signed up to the agreement which underpins this legislation, effectively they were throwing a searchlight on the whole process of dormant accounts. In doing that, it behoved them to address more vigorously whether they were guaranteeing that they had made strenuous efforts to reunite owners with their resources. They made it pretty clear on 8 November that they intended to make additional efforts in this field. A one-stop shop is being established for customers searching for their lost accounts. It will be launched in January and will enable people to initiate a free search covering banks, building societies and, in this respect, National Savings & Investments via a single application.

In addition, a great deal of publicity and activity will attend the development of this legislation. After all, a lot of institutions will be potential beneficiaries. The banks and building societies have entered into the agreement in the full knowledge that more effort will now be necessary to reunite owners with their money and there will be vigorous activity in that regard. The Banking Code will also identify progress on these issues. Therefore, there will be public recognition of the success of the work done in regard to dormant accounts in terms of both what it facilitates for other institutions and the effort that the banks make to ensure that these accounts are kept to a minimum. The customer is, after all, their main responsibility.

Lord Monson: Although this is not strictly germane to the Bill, can the Minister try to persuade company registrars to join this one-stop shop? They are the real villains of the piece here but they make absolutely no effort to reunite with their money those who are entitled to dividends and, in some cases, capital sums following reorganisations or takeovers. People change addresses and there must be hundreds and thousands of unclaimed assets knocking about but the registrars do nothing about it.

4.45 pm

Lord Higgins: A number of helpful points have emerged. On the one-stop shop argument, it is a question whether someone’s children or heirs know to go to the one-stop shop. Unless they have some positive indication that the account exists, I do not really see why they should. Whether it should be one shop, in the sense that it is not individual banks that should seek to discover the owners of the assets, or whether it should be done collectively, is something that is worth considering. In that context, given the point made by the noble Lord about the position of small building societies, it may be that they should get together in seeking the rightful owners.

I do not get the impression at the moment that this problem is being tackled sufficiently proactively. If I understand it correctly, these building societies and so on are not being proactive but are sitting and waiting

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for the owners to come along and say that they have their account. There is a big difference between those two things. The attitude that we took was that we wanted to find these people. I do not really get the impression that that is what is happening, although I may be doing them an injustice.

Lord Naseby: My noble friend mentioned small building societies. They are very regional; there is no point in a small building society in Cumbria getting together with a small building society in the depths of Kent and then another one from Norwich getting involved. That is a hopeless situation. We should leave the individual building societies to find their own people.

Those building societies are being proactive, in fact. Earlier last week I had a session with Nationwide and asked people there specifically how many dormant accounts there were—the answer was 25,000—and how long they had been trying to find the people whose accounts they were, to which the answer was “years”. They are still very active in trying to find them.

Finally, the vast majority of those dormant accounts are absolutely tiny. Of course, some are bigger. I can speak only for the mutual movement, but it is trying and has tried very hard to find the owners of those dormant accounts.

Lord Higgins: My noble friend has come precisely to the points that I was going to make. With regard to the smaller accounts, it could well be that the local or regional press is a better way in which to pursue this aim. Furthermore, there is presumably already some idea of the minimum amount; I presume that the banks are not chasing people with 50p in their account. Perhaps the Minister could let us know whether it is envisaged not to intend to find smallish accounts.

Lord Davies of Oldham: I am not going to reply. It is the noble Lord’s amendment, so he does the replying. However, I shall comment on one point that he emphasised very strongly—that there is no evidence of the banks or building societies upping their game on this issue. As agreement has been reached on this legislation and as the legislation proceeds, a searchlight has been thrown on their activities—and they are all too well aware of that. On 8 November, they said that they would take further steps on notification. One dimension is the concept of the one-stop shop in January. Halifax and Nationwide have already indicated that they are engaging in much more strenuous activity than they have in the past. So the noble Lord may be a little unfair in saying that there is no sign of the necessary response and urgency about this. What would be contended by the Government and certainly the industry is that they are all too well aware of the fact that they cannot see this legislation go through without making very strenuous efforts to reunite the owners of the property—that is, their accounts—with that property.

Lord Higgins: Of course the Minister is right—I am replying, not him—but I was not clear about the Government’s view on the minimum size of the accounts. Have there been discussions saying that anything less than £100 will not be pursued, for example?



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Lord Davies of Oldham: We are not seeking to prescribe in those terms—it is for the institutions to prescribe. But it is obvious enough what would be expected as a reasonable position. The noble Lord, Lord Shutt, said that he had a 60 year-old account containing 50p—

Lord Shutt of Greetland: Five shillings and 11 pence.

Lord Davies of Oldham: I am awfully sorry—I translated the sum into modern currency. That would certainly not fall within the area of diligent search, whereas once the sum got into three figures action would be expected. It is for the industry to define.

Lord Higgins: Obviously, if one sets the figure very high the number of claimants is likely to be lower. I am slightly worried about the five shillings and 11 pence as I was the Minister responsible for carrying decimalisation through. But be that as it may, I come to the important point originally raised by my noble friend Lady Noakes on the question of confidentiality. I find it difficult to believe that British banks are more worried about confidentiality than are Swiss banks, which had no problem with this. I suspect that, while it may be a helpful argument if you do not really want to become too proactive, it is not a genuine problem.

I am most grateful for the response from various colleagues. Let us see where we get to on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Higgins moved Amendment No. 4:

The noble Lord said: This amendment is related to Amendment No. 32 and raises the question of what the position is with regard to the payment of interest on dormant accounts. It may be that the consideration is not particularly relevant, but at all events we need to be clear on the position. With the Swiss situation, we had to set up a most distinguished group of economists to distinguish what the interest rate would have been over that period of 70 years. At some periods it was incredibly low and not really significant. But we ought to be clear whether these accounts will include interest, as the interest will not have been paid in the period during which the account has been dormant, although it may have been—and I presume normally would have been—added to the accounts as they rolled along. Can the Minister enlighten us on what the various banks do? Do they tot up the interest on a dormant account or do they wait until the account is finally claimed and then add it on? Of course, it does not matter either way because they still keep the money, but it would be helpful to know where we are on this point. I beg to move.

Lord Monson: I was slightly surprised that my Amendment No. 32 was grouped with Amendment No. 4 as Amendment No. 4 deals entirely with what happens to the account before it is transferred into a reclaim fund whereas Amendment No. 32 relates entirely to what happens after it has been transferred to a fund. None the less, it is probably sensible that I should continue and speak to my amendment.



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At Second Reading, I and at least one noble Lord on the Liberal Democrat Benches—perhaps the noble Lord, Lord Newby—raised the question of what interest would accumulate on sums transferred into a reclaim fund. That is an important matter that is not set out clearly in the Bill, and it is fair to say that we did not get a very clear answer; indeed, I am not at all sure that we got an answer at all. I had not at that point read the Explanatory Notes, which are much more precise and specific on the question of interest and charges. However, the Explanatory Notes have no legal validity and do not form part of the Bill. If I have interpreted them correctly, it is the Government’s commendable intention to see that account holders are no worse off—and, conversely, no better off—following a transfer into the reclaim fund, than they would have been if their account had remained open. That is by far the fairest option, albeit the most expensive to administer. I imagine, too, that the banks and building societies and not the taxpayer will pay for the administration. I hope that that can be confirmed.

Clause 8 as drafted is somewhat imprecise and ambiguous. I believe that Amendment No. 32 would go a long way to clarifying matters for all concerned.

Lord Bach: I am grateful to the noble Lord, Lord Higgins, for Amendment No. 4, which makes clear that when a bank or building society transfers a dormant account to the reclaim fund under Clause 1, this includes any interest due. The amendment would ensure that when customers reclaim their money, they are repaid the interest due on their accounts. We agree that this is a vital principle. Dormant account holders should be repaid in full. The amendment is unnecessary—and I believe that it is put forward in a probing way—as we have taken separate steps to ensure that this will be the case.

Clause 8, which defines the term “balance”, is an important clause in the Bill. It explains that the amount a bank or building society will transfer into the scheme, and the amount a customer is entitled to be repaid, must be adjusted according to the terms of the original deposit to include any interest accrued or charges deducted.


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