Dormant Bank and Building Society Accounts Bill [Lords]
2:30 pm
Mark Hoban (Shadow Minister, Treasury; Fareham, Conservative)
It is a pleasure to serve under your chairmanship, Dr. McCrea, for what is probably the first time.
The Minister highlights one difference between the two amendments and the approach that we have adopted—going down the positive route. We think that, because this is affecting customer assets, and we are all here to help to safeguard the interests of our constituents, there should be a debate over this matter. He says that it would be an inappropriate use of parliamentary time to go down the affirmative route, but we could pray against the measure and still take up the same amount of time.
One of the Minister’s predecessors, the hon. Member for Wentworth (John Healey), was very keen when he was a Treasury Minister on introducing the affirmative resolution procedure at every opportunity, because he felt it was so important that parliamentary scrutiny was seen to be working. That is an example that I encourage the Minister, 11 days into his new brief, to follow.
I would like to raise the issue of the period of dormancy, because both amendments offer the power to vary the period from the 15 years specified in the Bill. In a way, that is probably the more substantive issue. The Government amendment will enable the period of dormancy to be increased, while ours is a one-way bet downwards. It is quite important to get the period of dormancy right. The approach that the British Bankers Association has adopted is to achieve reasonable certainty that an account is dormant where there has been no customer-initiated activity for 15 years. It believes that after 15 years, 80 per cent. of accounts will genuinely be dormant, and about 20 per cent. might be subject to a repayment claim.
If the period of dormancy is reduced, the risk will be that the proportion of accounts subject to reclaim will increase, which could reduce the certainty in the reclaim fund’s business plan and affect the fund’s ability to ensure that it adopts a prudent view on transfers to the Big Lottery Fund.
The BBA has said:
“We would not consider the setting of a shorter maturity period to be compatible with the objective of releasing genuinely lost monies.”
The BBA, the Commission on Unclaimed Assets and Grant Thornton all agree, as does the Building Societies Association, with the principle of a 15-year maturity period. However, the Treasury Committee—we have not referred to it so far in the proceedings—suggested in its report, “Unclaimed assets within the financial system”, that the period of dormancy could be reduced from 15 to 10 years.
When one of the Minister’s predecessors—I think it was the right hon. Member for Normanton (Ed Balls), not the hon. Member for Burnley (Kitty Ussher)—gave evidence to the Treasury Committee, he drew a parallel with the Irish scheme, in which the period of dormancy is 15 years. The Committee took issue with that, as the definition used in the Irish scheme is much narrower than that used in the UK scheme, and in Ireland the scheme takes no account of customer activity, whereas in the UK it does.
It is clear from the Committee’s evidence that the UK is an outlier regarding the period of dormancy, compared to other jurisdictions. The table in the Committee’s report shows that Switzerland has a 10-year period, Australia seven years and New Zealand six. Nevada and California have periods of just three years. Interestingly, over the summer, I read reports that some US states are reducing the period to enable them to reap the proceeds and plug the hole in their coffers by declaring more accounts dormant. I do not know how desperate the Treasury feels about plugging holes—it may go down that route.