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The amendments would remove the restriction to disclosures made only in connection with repayment claims under Clauses 1(2)(b) and 2(2)(b). As redrafted, the banks and building societies would be able to provide information on a broader basis, referring instead to any information needed by the fund to enable it to deal with claims on it. I hope that the Minister will see this set of amendments as helpful. I beg to move.
Lord Davies of Oldham: Banks and building societies are normally under a duty not to disclose information about their customers’ affairs to third parties without the customers’ consent. That is an important obligation subject to only very limited exceptions. The proposed agency arrangements, under which claims for repayment against the reclaim fund will be handled by a customer’s original bank or building society, mean that customer records will need to be retained by the original institution to verify claims on the reclaim fund’s behalf.
There should be no need for the confidential customer information to be transferred routinely to the reclaim fund. The Government recognise that there may be exceptional circumstances in which a customer is unable to seek repayment from their bank or building society and the claim may need to be handled directly by the reclaim fund, which would then require access to information. Nevertheless, it is envisaged that this would operate only where claims need to be properly verified in order to enable the reclaim fund to fulfil its function to repay the customer. The amendment would enable a bank or building society to share with the reclaim fund confidential information that is not directly related to customer repayments. We do not think that is necessary. We do not foresee circumstances, apart from those I have identified, where the reclaim fund may require confidential information. We want as far as possible to restrict the flow of information to just that consideration. I hope the noble Baroness will recognise our concerns in this respect.
Baroness Noakes: I entirely recognise the concerns outlined by the Minister. The point of the amendment put to us by the Law Society of Scotland was to make the ability of the banks to pass information to the reclaim fund slightly less restricted. It is still restricted to claims made on the reclaim fund, but not only to the specific claims made under those two subsections. I shall ask the Law
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Amendment, by leave, withdrawn.
[Amendments Nos. 45B and 45C not moved.]
Baroness Noakes moved Amendment No. 46:
(1) The Information Commissioner may assess any aspects of the way in which a reclaim fund holds, uses, discloses or shares information.
(2) The reclaim fund must provide any assistance or access that the Information Commissioner requests in connection with an assessment under subsection (1).
(3) If the Information Commissioner carries out an assessment under subsection (1), he is to report his findings to the reclaim fund and to the Financial Services Authority.
(4) The Information Commissioner may publish any report he makes under subsection (3) and any such report must be laid before each House of Parliament.”
The noble Baroness said: Amendment No. 46 takes us out of the detail about how the dormant accounts scheme will operate into slightly wider territory. It inserts a new clause after Clause 12 and gives power to the Information Commissioner to assess any aspects of the way in which the reclaim fund holds, uses, discloses or shares information. The reclaim fund will be subject to the Data Protection Act, but the powers of the Information Commissioner under that Act are severely limited. We have debated this topic in the context of other Bills over the past year, notably the Statistics and Registration Service Bill and the Serious Crime Bill. In each instance, the Government resisted amendments to give the Information Commissioner further powers which, in the light of recent developments in the way in which Government bodies have been handling personal data, might not have looked the right approach. That is why I am pursuing this issue again.
Under Section 57 of the Data Protection Act 1998, the Information Commissioner can assess the processing of personal data if, and only if, the data controller consents to the assessment. Otherwise his powers are limited to cases where a request comes from the person affected by the processing of the personal data. It will too often be the case that individuals are unaware of the correct processing of their data. Under EU law, the Information Commissioner should be able to initiate his own investigations, but the Data Protection Act does not give him that power. The reclaim fund may hold personal information about large numbers of individuals. While the banks will act as agents of the reclaim fund when claims for repayments are made, it would be surprising if the reclaim fund had no personal information because it could not function without it, if only to deal with appeals and other matters. We have seen from the recent cases at HMRC
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The Information Commissioner himself made it clear to the Justice Committee in another place that he wants significant new powers and duties. We have an opportunity in the Bill to make a modest start. Unfortunately, the scope of the Bill would not allow us to draft it for all the banks handling personal information relating to dormant accounts, but we can at least attach it to the reclaim fund, so I seek to take this modest legislative opportunity to improve the Information Commissioner's powers in ways that have been demonstrated over recent weeks to be absolutely necessary. I beg to move.
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Lord Davies of Oldham: The noble Baroness fairly described the powers of the Information Commissioner and I do not need to repeat those or enter into a debate on them. The amendment would go further than the Data Protection Act 1998 to allow the Information Commissioner to exercise powers in relation to any information held by the reclaim fund, and not only personal data. Of course, the role of the Information Commissioner and the whole question of data protection has been an issue of lively public interest in recent months. As the Committee will be aware, the Prime Minister announced on 21 November that the Government would give the Information Commissioner the power to carry out spot-check inspections of government departments. Further, he asked Richard Thomas and Dr Mark Walport, as part of their review, to look at the Information Commissioner's powers of assessment to see whether there was scope for extending them.
The issue is under lively consideration by the Government. It would not be right to extend the powers in the Bill only in relation to the reclaim fund and to what, in the wider scheme of things, is a fairly modest measure. I hope that the noble Baroness will give the Government due credit for addressing the Information Commissioner's powers and I hope that she will agree that it would not be appropriate at this stage to change the Information Commissioner’s powers in relation to this Bill.
Baroness Noakes: The Minister's response was wholly predictable. I put the Minister on notice that we regard the Information Commissioner's powers as important—as we have argued in the context of many Bills, not only over the past year but over an extended
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It would be very easy for that to get lost and for legislative time never to be found to make the appropriate amendments. I will not press the amendment further in the context of this Bill, but I wish the Government to be on notice that we will not let go the issue of the Information Commissioner's powers. There may come a time when we must force the Government to accept that changes need to be made, if they have not voluntarily done so ahead of that time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 [Banks making transfers under section 2: information in directors' reports]:
Baroness Noakes moved Amendment No. 47:
“( ) Where the directors of a company that is a bank are required by section 415(1) of the Companies Act 2006 (c. 46) (duty to prepare directors’ report) to prepare a report for a particular financial year, the report must state the amount of payments transferred to a reclaim fund under section 1 or if no such transfers were made that fact must be stated.”
The noble Baroness said: We now move on to a wholly different topic—with a wholly different Minister. In moving Amendment No. 47, I shall also speak to Amendments Nos. 48 and 49 in this group. The amendments home in on Clause 13, which deals with disclosure in directors’ reports. The clause is narrowly drawn so that it applies only to the disclosure by banks if they are taking part in a Clause 2 scheme—it will apply only to those banks with balance sheets below £7 billion which have chosen to take part in the alternative distribution scheme.
Amendment No. 49 inserts a new clause after Clause 13 requiring similar information to that in Clause 13 to be given in the directors’ reports of building societies which have taken part in the alternative Clause 2 scheme. I cannot see the distinction between small banks and small building societies when it comes to disclosure. Indeed, the relationship between a mutual and its members should make it even more important for a building society to communicate in this way to its members.
Amendments Nos. 47 and 48 are slightly different in that they require information to be contained in the directors’ reports of companies that have transferred money to a reclaim fund under the main Clause 1 scheme. The information disclosure is of the amount paid to the reclaim fund or, if no such transfers were made, to state that fact. In relation to information released by the reclaim fund under Schedule 1, I have already said that transparency should be an important element of this scheme. In that instance, I
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I also believe that the banks themselves should be required to state publicly what they have paid over or, if they have not participated in the scheme, to say so. I do not believe that there is any downside to this other than the possible need for a bank to explain why it was not participating, but that would be no bad accompaniment to this voluntary scheme.
I have not yet drafted an amendment which requires large building societies to make disclosures comparable to those in Amendment No. 47. That was an omission on my part. However, if the Minister were prepared to look kindly on these amendments, that could be rectified before Report. I beg to move.
Lord Newby: We support the amendments. There are several reasons for believing that it makes sense for the public to be able to see how much money individual banks and building societies are passing across to the reclaim fund. First, as we were discussing earlier, in theory the banks will go back into the mists of time to identify orphaned and unclaimed assets to include in the scheme. If one bank is successful and assiduous in doing that and another bank is lax, a figure will help to draw that out. Equally, if one bank spends a lot of time and effort reuniting customers with their money and therefore pays across less to the reclaim scheme, that will also be apparent from having this kind of information available. The ability to compare the performance of banks and building societies via this information being in the public domain could be a good and effective way of putting pressure on them to use maximum efforts to reunite people with their money and to ensure that they are putting into the scheme all suitable assets.
Lord Hamilton of Epsom: I also support the amendment moved by my noble friend. It strikes me that competition is very important, and the comparison between one bank or building society and another will play a significant role in applying pressure. There has also been some suggestion—I do not know how true the Minister thinks this is—that banks will cut their charitable contributions as they make contributions to the reclaim fund. Of course, that would then show up more clearly as well.
Lord Bach: We agree with the noble Baroness that the scheme should be transparent. We agree that information on how much banks and building societies transfer to the reclaim fund under Clause 1 should be disclosed and that building societies participating in the option for smaller institutions should be required to include in their annual reports the details of charities to which they have transferred dormant account money. We do not consider the amendments necessary, however. Under the provisions made by Schedule 1, the reclaim fund itself will publish information on how much money it receives from each individual institution, whether it is a large bank or a large building society.
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The comparison—the competition as the noble Lord, Lord Hamilton, described it—will be found in looking at what the reclaim fund publishes as information. It will be collected as a single source by the reclaim fund and we believe that that is the most transparent way of ensuring that people can access it and make comparisons. We do not feel that it is necessary to add to the Bill the provision for large banks—or even large building societies, should there be a forthcoming amendment at some future date.
The disclosure requirement in relation to small, locally based building societies participating in the scheme can already be imposed and will be imposed by the Treasury through an amendment to the relevant building society account regulations. I understand that the general principle is that when a regulation-making power exists, as it does for building societies, under which the relevant provisions can be made, it is normal practice for that power to be used rather than making new provision in primary legislation. That is why, as far as smaller building societies are concerned, Amendment No. 49 is not necessary because we will do what it proposes under regulation.
The Treasury intends to amend the relevant regulations dealing with building society accounts and reports that are made under the Building Societies Act 1997. Therefore, we do not believe that the amendments are necessary. I can see that the next question will be why the Bill includes provision imposing disclosure requirements for smaller banks as opposed to smaller building societies. That is because the relevant regulation-making powers lie with the Secretary of State under the Companies Act 2006, rather than being exercised by the Treasury. It was thought that, on balance, it would be better to include in the Bill a position for small banks, but I am telling the Committee that small building societies will be covered by regulation.
Lord Hamilton of Epsom: I should be grateful if the Minister would come back to me on the question of charitable contributions and the juxtaposition that one might make between them. If you compared one set of accounts for one year with another, you could see whether charitable contributions had been cut as contributions to the reclaim fund went up. If the reclaim fund is to publish this information, will it be done in the form of a league table? We are talking about percentages rather than bald figures, because the contribution to the reclaim fund vis-Ã -vis the total number of assets that that bank or building society manages is the relevant figure. Will they be put in a list in order of percentage?
Lord Bach: I cannot tell the noble Lord exactly how it will be done, but I take his point about year-on-year accounts as far as banks are concerned. I should have thought that a reclaim fund publication listing the banks and how much they had given under the scheme would be the best way to make the comparison that all Members of the Committee who have spoken in this short debate want to see, rather than having a whole load of different banks’ annual
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Baroness Noakes: I thank other Members of the Committee who have spoken in this short debate. I am grateful for the Minister’s explanation of why small building societies are not covered. It can be summed up by saying that the Treasury does not trust any other department to use statutory instrument powers properly so it will include them in its legislation. It is rather incongruous for the Treasury to use its powers but for another bit of government not to be trusted. That does not say much for joined-up government. However, I am grateful for the explanation and the Government’s commitment to make the appropriate order in relation to small building societies.
4.15 pm
That brings us back to the main disclosure requirements. I do not think that it is an either/or situation where either the reclaim fund or the banks are disclosing; there is a perfectly legitimate case for both to disclose. When we debated the requirement in Schedule 1 for the reclaim fund to disclose amounts, the Government resisted, on entirely spurious grounds of administrative complexity, the requirement for the reclaim fund to say which banks had not contributed to the reclaim fund and which had not transferred any money to the reclaim fund under the terms of the Bill.
It is entirely legitimate for us to look to the banks to make disclosures about how much they have paid, and whether or not they have paid, because there is a focus on a bank when it produces its annual report and accounts. My noble friend Lord Hamilton referred to the comparison that can rightly be made between the amounts that the banks devote to charitable funds and activities, which are required to be disclosed, and the amounts transferred to the reclaim fund because there may well be trends which do not reflect well on the banks over time. We hope that will not be the case, but at least it is the right place for that disclosure to be made.
We fully support disclosure being made by the reclaim fund as well. We also want the reclaim fund to name those banks and building societies which have not taken part in the scheme.
I accept what the Minister said about Amendment No. 49 but the other amendments are still relevant to the issue of transparency. As the Bill is drafted, the reclaim fund has only partial transparency and the complementary bank-specific disclosure still remains an entirely valid and appropriate way for banks to disclose their participation in this voluntary scheme. If it were a compulsory scheme, I would not be suggesting this because there would be mechanisms to ensure that the right amounts were being transferred. However, because it is a voluntary scheme, we want transparency to act as an underpinning to voluntarism. We are seeking transparency and I am disappointed with the Minister’s response. We shall
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Amendment, by leave, withdrawn.
Baroness Noakes moved Amendment No. 50:
(1) Within three years of the commencement of this Act, the Treasury shall prepare a report on the dormant account arrangements, including—
(2) If the report shows that the dormant account arrangements are unsatisfactory in any respect, the Treasury shall state in the report how it intends to improve the arrangements and over what timescale.
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