Dormant Bank and Building Society Accounts Bill [HL]

– in the House of Lords at 3:00 pm on 26th February 2008.

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Clause 12 [Triennial Report to Parliament]:

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Crossbench 3:07 pm, 26th February 2008

moved Amendment No. 1:

Clause 12, page 7, line 31, at end insert ", and to be able to trace all such accounts at any one time"

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Crossbench

My Lords, I wish to speak to all the amendments together, as they address a principle that is at stake: enhancing reunification of bequeathed assets with the beneficiary, however small a benefiting charity may be. I have tabled these sharply defined amendments to enhance the amendment moved by the noble Baroness, Lady Noakes, and passed by the House on Report, providing for a triennial report to Parliament on the working of this Bill. These amendments simply provide for a clearly defined, specific enabling power. They would not impose any additional burdens or give the Secretary of State extensive powers. Instead, they would strengthen parliamentary accountability. The wording has been specifically chosen to reflect the helpful comments made on Report by noble Lords.

This Bill will have a considerable impact on the charitable sector. I declare an interest as vice-president of Marie Curie Cancer Care, which, along with 53 other charities, is part of the Unclaimed Assets Charity Coalition. The coalition supports these amendments.

Amendment No. 1 is crucial. Without it, the register would not work as a one-stop shop search facility, which is essential if charities are to be able to conduct searches quickly and cost-efficiently. In the case of deceased estates, information about the financial institution in which the asset is held is unlikely to be known, hence the difficulty in utilising the new industry tracing scheme, which requires an approach to each and every individual bank. My amendments would maximise the incentive for banks and building societies to reunite people, including the beneficiaries of wills, of which many are charities, with what is rightfully theirs—their assets in dormant accounts—while also ensuring that, where reunification efforts prove fruitless, as much as possible is available for reinvestment in society.

As drafted, the Bill will not require financial institutions to make data on unclaimed assets more easily accessible to potential beneficiaries of legacies. Instead, banks and building societies will simply be asked to publicise the fact that they hold unclaimed assets. This will be of no help to people who do not know which institution is holding a lost asset. Crucially, it will be of no help to charities trying to trace lost assets bequeathed to them from deceased people's estates. This will be a particular problem for small charities.

Why does it matter? One in seven people who die with a valid will leave legacy gifts to charity, which, on average, comprise 5 per cent of the total estate left, so there are potentially large sums of legacy income that have yet to reach the named charities. Legacies are an extremely important source of voluntary income for the charitable sector. For example, 46 per cent of the British Heart Foundation's voluntary income is from legacies, amounting to more than £47 million last year, while Cancer Research UK relied on legacies for a third of its income. There may have been many more bequeathed amounts that could have gone to the charities, but these are unknown at present.

The banking and building society industry has introduced a welcome new online tracing scheme, the launch of which coincided with the Bill. However, while this is a step in the right direction, it is completely inadequate and does not create the register needed if beneficiaries, including charities, are to be more easily reunited with their assets. The online tracing scheme is not straightforward. It requires knowledge of which institution holds the account and it does not enable searching across a broad range of banking institutions.

Let me now address a few of the issues raised by your Lordships on Report, when I proposed giving powers to the Secretary of State to establish a register if needed. The noble Baroness, Lady Noakes, suggested that charities want access to accounts long before they have become dormant. I have been reassured by the coalition that the key point is to establish a system where basic details of accounts can be searched for by registered charities after dormancy has been established. The charities may have to wait, but so be it.

The Minister, the noble Lord, Lord Bach, mentioned cost, stating that a register would be expensive. The Unclaimed Assets Charity Coalition believes that a register should be no more costly to run than a voluntary scheme. In fact, a register could be self-financing and need not be maintained by the Government. Moreover, in the longer term, having such a system in place would reduce administrative burdens. A central register would establish a consistent system and format for information about dormant bank and building society accounts and would facilitate searching, particularly by small charities which do not have the manpower to undertake widespread searches, as well as shorter processes for financial institutions to locate and return dormant accounts to their rightful owners.

The Minister also raised confidentiality issues. The coalition has sought advice from Withers legal partnership, which has now been shared with the Treasury. Withers confirms that data protection and fraud issues would not be a barrier to a register. I can therefore assure the House that the amendments would not breach confidentiality of information agreements. Indeed, a register would be less open to problems of data protection than the scheme operated by industry at the moment.

The industry's new online tracing scheme operates on a central website portal where people can enter their personal details. These details are then sent to a number of banks and building societies around the country, increasing the risk that information could be intercepted or diverted. In contrast, a central register would hold minimum data centrally, such as the name of the account holder, their date of birth and their previous or last known address. The register would enable someone to establish only whether there was a match between a legatee, for example, and a dormant account. It would then direct the charity conducting the search to a specific institution. The charity would still be required to go through stringent proof-of-identity processes with the institution holding the asset. That would be no less rigorous than any other proof-of-identity process required to access accounts. A number of other tried and tested schemes around the world use a register system, including in the US and Australia.

I agree with the point raised by the noble Baroness, Lady Noakes, that accountability to Parliament is vital and I am sorry that she is unable to be in her place today. My amendments would strengthen that accountability and enable Parliament to effect its wishes without recourse to further primary legislation. I worry that there is a presumption that assets in dormant accounts are somehow the state's money. They are not. These assets are not ours, the Government's or Parliament's, and they are certainly not the industry's. They are unclaimed assets in dormant accounts that in many cases have been bequeathed, as a proportion of a deceased estate, to a charity. The tightly drafted amendments would help to ensure that people's dying wishes were respected. This is a principle that transcends party politics and I hope that your Lordships will feel able to support it. I beg to move.

Photo of The Bishop of Exeter The Bishop of Exeter Bishop 3:15 pm, 26th February 2008

My Lords, I am delighted to support each one of these small but important amendments in this group. The noble Baroness, Lady Finlay, referred to the 54 charities that comprise the Unclaimed Assets Charity Coalition. I know from my own contacts with the group how passionately those charities feel about this matter. These amendments afford your Lordships' House an opportunity to improve the legislation before us and to enact a profound good.

At this stage of our deliberations I do not intend to repeat the powerful arguments advanced by the noble Baroness. Instead, I shall draw your Lordships' attention to the benefits of the amendments in a slightly broader strategic context. Here I declare an interest as a trustee of Christian Aid and chairman of the Melanesian Mission UK. Of the first of these charities most, if not all, of your Lordships must surely be aware, but of the second I suspect that few will have heard. Yet it is the latter, the Melanesian Mission UK, which, as the smaller charity, is particularly pertinent to our deliberations today. Why? For the simple reason that legacies are even more important to smaller charities, which simply do not have the means or the infrastructure to fundraise to anything like the same extent as the bigger charities. They lack the resources to engage in a complex search for assets that, in the form of legacies, it was intended that they should receive and they stand to lose disproportionately more from the lack of an ability to do so.

Like the noble Baroness, I have looked at the membership of the charity coalition that has expressed such concerns about the Bill in its present form. The breadth of the coalition is extensive and impressive. I also know from my own experience from chairing bodies such as the Devon Strategic Partnership—its aim is to improve the quality of life for people living in Devon by bringing together a huge and disparate range of interested parties to tackle a diverse range of issues such as transport, energy, domestic violence and welfare benefits—that bringing people together to sing from the same hymn sheet is not easy. Yet this coalition is singing from the same hymn sheet. It deserves to be listened to in this one respect more than it has been to date.

I am told that at least 26 Members of your Lordships' House are patrons of some of the charities within the coalition. Many others will have supported these and other charities in many different ways. With these amendments, we are being given the opportunity not just to do as the Minister rightly suggested on Report, which is to thank our marvellous charity sector for the invaluable work that it does, but to give a practical demonstration of our support for all charities, which are so vital in a healthy society, whether they be small or great, in memory of a loved one or an international charity such as Christian Aid that is literally changing the world for people in the direst poverty and offering them real hope of life before death.

The point at issue is not just about gratitude. It is also most profoundly about justice and respect—not just for and to the charities but for and to those who do, and wish to, support them and who have made their wishes very clear as they have drawn up their last will and testament in preparation for their own death. It is about the justice of doing everything that we reasonably can to respect people's dying wishes to leave something to charity and of ensuring that charities are thus reunited with any unclaimed assets that have been bequeathed to them; in other words, what is rightfully theirs. That is what the noble Baroness's reasonable, tightly defined and beneficial amendments would help to achieve and it is why I urge your Lordships to give them the support that they deserve.

Photo of Lord Hamilton of Epsom Lord Hamilton of Epsom Conservative

My Lords, with all due respect to the noble Baroness and the right reverend Prelate, I confess that when this issue was raised in Committee I had reservations about it. I have even more now. This will be a great opportunity for fraudsters to examine the register in detail to determine whether they can extract money from it. I do not altogether understand who will carry the cost of drawing up the register and, indeed, of maintaining it. Some cost must be involved and I am not at all certain who is supposed to carry it.

Another worry is that when charities look to people's wills they surely look to bequests that come off the top layer of a will. The only thing that will be left in a dormant account is the residual amount in that will. Therefore, the charity would have had to be left absolutely everything in somebody's will before it would be in a position to pick up what was left in a dormant account.

I have a further concern about our charities generally. So many of them now seem to have massive headquarters in London and spend their whole time playing politics. The rather depressing thought occurs to me that they would add to their numbers by having yet another person to go through the register to see whether they can leach a bit more money out of dormant accounts. So I have reservations about this measure and it is only right that I should mention them.

Photo of Lord Low of Dalston Lord Low of Dalston Crossbench

My Lords, I support the amendment most ably moved by the noble Baroness, Lady Finlay, and supported by the right reverend Prelate. Picking up the points just made by the noble Lord, obviously some costs will be entailed in maintaining a register, but I submit that they are surely worth bearing when a scheme short of a register, such as is offered by banks and building societies at the moment, is not fit for purpose and is ill adapted to enabling beneficiaries to be reunited with assets bequeathed to them.

The noble Lord spoke about residuary bequests. If one knows anything about legacies left to charities, one knows that residuary bequests are of great importance. They are the preponderance of bequests; only a comparatively small number of specific legacies are left. It is therefore very important for charities to be able to access residuary bequests if they are to benefit from legacies left to them.

Finally, the noble Lord referred to charities with large headquarters in London that carry on campaigning work with government. It is not necessary to reply to that. Anyone who knows about the large amount of work, across a broad range of activities, that such charities carry out, and their valuable work in making representations to government on behalf of the groups they represent, will realise the necessity for maintaining premises and employing substantial numbers of staff. I will not dwell on that point. I declare my interest as chairman of one such large society, the Royal National Institute of Blind People.

Turning to the amendments of the noble Baroness, Lady Finlay, I will not range over the whole course of the subject matter that she addressed. I underline the point I just made about the respects in which the current scheme offered by the banks and building societies is not fit for purpose in addressing the need for a register that charities and individuals benefiting from legacies can access. The banks and building societies have launched a new online tracing scheme. This obviously represents a step in the right direction. However, there are still key gaps in the scheme, which mean that it does not amount to a register. The charities coalition, as we have heard, therefore believes that it is vital to maximise the opportunity over the longer term for the industry to get the scheme right. The amendments tabled by my noble friend provide a framework within which that can be done.

The new online tracing scheme is problematic in at least six ways. First, it is far less straightforward to look for lost bank accounts than it is to search across building society accounts and the National Savings and Investments database. Secondly, it requires some knowledge of which institution the account is held in. Thirdly, it covers only dormant bank and building society accounts. Fourthly, it does not enable people to search across a broad range of banking institutions. Fifthly, it is not clear whether the scheme incorporates different types of bank accounts; for example, internet bank accounts. Sixthly, it is not clear what records are included, or how far back records go.

At the moment there is no requirement for individual institutions to take part and members of the public are currently unable to search across a range of banks if they are not sure which institution is holding a lost asset. That is why the charities coalition is calling for the creation of a register of all unclaimed assets, which would ensure that beneficiaries—whether individuals or organisations such as charities—were reunited with assets owed to them from deceased people's estates. To reunite assets and beneficiaries, members of the public and charities must be able to search a database with minimal information in the first instance—full name, last known address and, perhaps, date of birth, all of which are already publicly available. In the case of deceased people's estates, information about the financial institution in which the asset is held is unlikely to be known, hence the difficulty in fully utilising the new industry tracing scheme, which requires an approach to an individual bank.

Furthermore, currently there is no requirement for financial institutions to make data available to any schemes. For the Unclaimed Assets Charity Coalition, the key to establishing a successful system is to ensure full participation by all financial institutions. As currently drafted, the Bill will not compel financial institutions to make data more easily accessible to the general public. Banks and building societies will simply be asked to publicise the fact that they hold unclaimed assets. That will be of no help to people who do not know which institution is holding a lost asset, and it will be of no help to charities trying to trace lost assets belonging to deceased people's estates.

Any register need not be maintained by the Government. It will, however, need to be created and maintained using stringent measures against fraud, as applied by, for example, the many unclaimed assets schemes operating in the United States. That means that no data beyond confirmation of a match between an institution holding an unclaimed asset and the details, which I mentioned earlier, as input by someone conducting a search would be released unless and until full proof of identity is produced to the institution holding the asset. This would be no less rigorous than any other proof of identity required to access an account.

To sum up, although the banks and building societies are launching a new online tracing scheme, this is not the same as a register, which is what the charities coalition is calling for. There is no requirement for individual institutions to take part and members of the public will not be able to search across a range of banks if they are not sure which institution is holding a lost asset. That is why the charities coalition continues to ask for the creation of a register.

As my noble friend has indicated, this is a moderate amendment. It does not call for the establishment of a register straight away. It gives the opportunity to see how the Bill will work as an Act until we get the first report of how it is working. It creates a reserve power for the Secretary of State to establish a register only if and when the report indicates that the scheme needs to be improved. I also ask noble Lords to support this valuable amendment.

Photo of Lord Newby Lord Newby Spokesperson in the Lords, Treasury 3:30 pm, 26th February 2008

My Lords, as we debated the Bill at earlier stages, there was growing consensus that one of the most important things that it might achieve would be to increase the extent to which people were reunited with their assets rather than spending assets on worthwhile things that had been disunited—if that is the right word—from their owners. I very much agree with what the noble Baroness, Lady Finlay, said about that.

In Committee, we tabled an amendment for the creation of a register. We did not pursue it on Report because we wanted to ensure that we changed the Bill as far as we could, which required us to get the maximum level of support from across the House, which did not extend to the establishment of a register from the start. However, to have a reserve power to establish a register, which is what the amendment seeks, merely adds somewhat to the amendment that we successfully passed on Report. Therefore, we are very happy to give it our full support.

I hope that when the Minister replies, he does not use as a principal argument the fact that the scheme is technically a voluntary scheme. Again, we discussed that at great length at earlier stages. This is a statutory scheme in terms of how the money is spent, and I suspect that the only reason that noble Lords did not absolutely press for it to be a statutory or compulsory scheme from the start in legislation is that we received assurances from the trade associations, banks and building societies that every bank and building society that might be covered and affected by it would be a member of it. I do not believe that it is a valid argument that the amendment is irrelevant, unnecessary or inappropriate because it is a voluntary scheme.

However, I hope that it will never be necessary to bring the power into force. The British Bankers' Association, the Building Societies Association and NS&I have established the website www.mylostaccount. Although I accept that at the moment it does not meet all the requirements that we would like, the pressure that the legislation has already caused has meant that the website is now up and running. In the three weeks since its launch, it has had some 72,000 claim forms submitted—more than for the whole of last year. That progress has happened only because this Bill has been going through your Lordships' House. Having this reserve power hanging over the banks and building societies as a sort of Sword of Damocles should be used by the charities coalition as a means of getting improvements to the website over the next year or two so that it achieves everything that it wishes.

From my perspective, it does not matter desperately whether it is a formal register, against which every name on a dormant bank or building society account can be checked wherever it is held, or a simple search facility in which submitting a name and a few minimal details automatically searches across all of the banks and building societies that might be holding a dormant account. That seems to be a technical issue. However, I hope that, having established the website in its current form and having seen its success over the past three weeks, the banks and building societies will be encouraged to develop it further, particularly in the ways suggested by the noble Lord, Lord Low.

If it comes to a vote, we will therefore support the amendment in the Lobbies. I hope very much that that will not be needed.

Photo of Lord Walton of Detchant Lord Walton of Detchant Crossbench

My Lords, I warmly support these amendments that were so ably proposed by my noble friend Lady Finlay. I want to express my hope that the Government will give them a fair wind. I must declare an interest since in the course of my medical career I have become either president or vice-president, or patron or vice-patron, of about 11 medical charities of various kinds. While I accept some of the constraints that were mentioned by the noble Lord, Lord Hamilton, and others, I must point out that the contribution to medical research and care made by charities in the United Kingdom has been absolutely outstanding.

There is no doubt at all that, despite the significant increases of government funding that we have seen in recent years—through organisations such as the Medical Research Council, the National Health Service, and so on—those charities produce at least 50 per cent of the funds spent on medical research in the United Kingdom and they are largely dependent on bequests. I am, of course, not just talking about big players such as the British Heart Foundation, Cancer Research UK, or the Wellcome Trust, which has been quite outstanding in its support, but, more particularly, the smaller charities that have often been established by people with an interest in specific diseases. I refer to charities such as the Multiple Sclerosis Society, the Motor Neurone Disease Association, the Parkinson's Disease Society, the Alzheimer's Society and the Muscular Dystrophy Campaign, of which I have the honour to be an honorary life president. Such charities are, to a large extent, dependent on bequests and so on; in some instances, there is no doubt that funds which should and would have come to them under bequests have, somehow or other, been left in dormant accounts.

This amendment is a step along the road in trying to put that position right. Despite what was said by the noble Lord, Lord Hamilton, charitable foundations have made a tremendous contribution—not just to fundamental research and the care of sufferers from many of these diseases with which I have been familiar throughout my professional career, but in funding translational research. That has meant that they are funding research that translates the findings of basic laboratory research into developments in patient care. For that reason alone, I am very happy to support the amendments.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, as I understand it, we are debating Amendments Nos. 2, 3 and 4 as well as Amendment No. 1. I will concentrate my remarks on Amendment No. 2. When we discussed these matters in Committee and on Report, it became clear that charities, which are clearly concerned about these issues, could gain in one of two ways that are, to some extent, competitive. On the one hand, it could be that the rightful owners of the assets were not found, and that the assets then ended up in the so-called reclaim fund with the proceeds—or what remained in that fund—being distributed, unfortunately in my view, by the National Lottery to various deserving causes. So the charities could benefit in that way. Alternatively, it could be that they found that they were entitled to a legacy—as I understand it, that is very important in the case of small charities— and they would make a direct claim on a particular asset that had laid dormant in the bank. Obviously, if this second group made a successful claim, the first group would lose out, although in fact they might all be part of the same charity.

The other problem that arose was with regard to confidentiality. I have some experience in these matters, because I was asked some 10 years ago by Mr Paul Volcker, the chairman of the Federal Reserve, to become an arbitrator with regard to the Claims Resolution Tribunal for Dormant Accounts in Switzerland. I had not fully appreciated from that experience that that was a very unusual circumstance because the Swiss Government had legislated so that the names of the account holders could be revealed. I understand that that is not true except for accounts that have been dormant since World War 2. Therefore the situation in Switzerland and here is that bank confidentiality is regarded as very important and my understanding is that the banks are not prepared to release the names of the people concerned so that, for example, charities could discover whether they had a legacy or not.

Amendment No. 2 gets around that to a considerable extent but involves the establishment of a register, which would be a sensible development. The register could remain confidential, but under paragraph (b) of new subsection (3B) of Amendment No. 2, it would be possible for a charity which believed that it had a legacy in a dormant account to go to the registrar and ask him whether that was so. As the noble Baroness pointed out, that is an extremely difficult process at present because you do not know which bank might have the account, whereas if there was a register all the accounts would be coalesced.

This is the right approach; it would maintain confidentiality but enable the charities to ascertain whether in a particular case they were entitled to obtain what was rightfully theirs. It has been pointed out that this is a modest amendment; we can see how the scheme operates for three years before there is a report, but at least at that stage it will be sensible to consider the establishment of a register, and we can review the whole thing in the light of the experience of the charities in the mean time. We certainly do not want to come back to primary legislation at that stage and, therefore, it is right that we support the amendments.

Photo of Baroness Wilkins Baroness Wilkins Labour

My Lords, I apologise that I have not taken part in the previous stages of this Bill, but I would like to register my strong views and my strong support for these amendments proposed by the noble Baroness, Lady Finlay, and supported by the right reverend Prelate the Bishop of Exeter and the noble Lords, Lord Low and Lord Higgins. This issue crosses all sides of the House.

Like many of your Lordships, I have an interest to declare: I am a trustee of a small local charity—Hammersmith and Fulham Action on Disability, or HAFAD. It is run by and for disabled people to promote equality of opportunity, choice and independence for all disabled people by removing barriers and ensuring that support services meet the needs of disabled people in the borough. Services include a wide range of youth activities such as holiday schemes for profoundly disabled young people, help for disabled people with finding employment, welfare rights and benefits advocacy, support for people receiving direct payments for their personal assistance, and an information service.

HAFAD's funding comes from a wide variety of sources including the local authority, the National Lottery, the New Deal, and numerous charitable trusts. It is matter of constant juggling and piecing together of pockets of funding and trying to add them together to form viable projects which do not raise people's expectations only to dash them within a few months. In other words HAFAD's continued viability can be somewhat precarious and its reliance on the generosity of others, whether in terms of time or money, is constant. As we face the spectre of an economic downturn and a period of financial uncertainty, think what a difference finding an unclaimed asset in a dormant account left as part of a legacy might make to a charity such as HAFAD. That is what these amendments would help charities such as HAFAD to do.

The reason why these amendments are particularly important for small charities such as HAFAD is their simplicity. That point seems to have been ignored by the noble Lord, Lord Hamilton of Epsom. The proposed register would mean the least amount of bureaucracy possible to enable a charity to access the funds which local people have intended it to receive. While trustees might be able to gather together various pots of money for funding a project, trying to find funding for the ongoing management of the organisation is well-nigh impossible. Small charities simply do not have the person power to trawl through bank and building society accounts trying to trace lost assets, a point which has been so eloquently put by the right reverend Prelate the Bishop of Exeter. That is why this amendment is so important and why I am pleased to support the noble Baroness today. She understands the difference that small local charities, in particular, can make to people's lives, often with very little resource. I want charities to know that the law is on their side and that this House has done everything in its power today to reunite them with the assets which are rightfully theirs.

Photo of Viscount Tenby Viscount Tenby Crossbench

My Lords, I support wholeheartedly the amendment moved by my noble friend. In the wake of quite outstanding speeches in support of the amendment, which have been clear and concise and really quite moving, I declare an interest as chairman of a residential home for women with learning and physical disabilities. We are very local and very small. We exist on crumbs from the rich man's table. Consequently, anything that can be done in the form of help from the Government, charities, trusts and so forth is crucial to our continued existence. Therefore, I commend the amendment to the House.

Photo of Lord Howard of Rising Lord Howard of Rising Shadow Minister, Culture, Media & Sport

My Lords, the amendments proposed by the noble Baroness, Lady Finlay, about which the right reverend Prelate the Bishop of Exeter and many other noble Lords have spoken so movingly, are strongly supported by a most distinguished group of charities. Indeed, it would be difficult to find a single collection of institutions more worthy of support. I should declare, before going further, that I am a trustee or officer of a number of registered charities, most of which are small and local.

We on these Benches wish to assist in enabling charities to find bequests to which they are entitled, but the amendments raise some misgivings. With respect to the comments of the noble Lord, Lord Newby, the Bill provides for a voluntary scheme, with the banks and building societies administering it and continuing to maintain existing banking confidentiality. If a register is created, then there must be access to it for it to be of any use. Access by outside bodies, however honest, noble and reliable they may be, means an erosion of privacy, even if it is a modest one. The very existence of a bank account may be a confidential matter. I am uncertain whether the gains from having a central register would make up for the loss of this important principle.

In this day of easy, quick and cheap electronic communication, it is no more difficult to ask a number of financial institutions to search on your behalf than it is to search yourself—indeed, that is probably easier, especially for the smaller charities, which do not have the resources to make the search. The important principle of banking confidentiality would be maintained.

As was pointed out by the noble Baroness, Lady Finlay, Clause 12, which was introduced by my noble friend Lady Noakes, provides for a triennial review of the operation of the dormant account arrangements. With the knowledge that this spotlight will be pointed in their direction, there will be every incentive for financial institutions to make a success of the scheme and to give all assistance to those wanting help in finding assets that belong to them.

We should remember that banks and building societies are massive givers to charity—they give tens of millions of pounds—and it is unlikely that they would not want to help. The issues raised by the noble Baroness, Lady Finlay, have been raised in turn with the BBA, which has been most encouraging in its recognition of the need to work with charities, especially in the early days, when the backlog of dormant accounts will have to be dealt with. As my noble friend Lord Hamilton said, to set up the suggested register would involve expense. As has been pointed out, while it may be self-financing, there will certainly be an initial cost that must be met from somewhere, and there will be running costs thereafter.

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I am grateful to all noble Lords who have spoken in this extremely interesting debate and to the noble Baroness, Lady Finlay, for moving her amendment.

It will be appreciated from the debate how much there is agreement on all sides about the Bill's central purposes, which are to ensure that dormant accounts are reunited with their rightful owners and, where they are not, that after a 15-year period, the resources will be devoted to public advantage. There is not a single noble Lord who has spoken in this debate who has not subscribed to those objectives; all noble Lords have added a great deal of colour and emotion and emphasised the fact that some of the good from the development of this work will involve advantage to charities. The Government recognise the powerful statements made by the noble Lords, Lord Low and Lord Walton, and the right reverend Prelate the Bishop of Exeter on the advantages of charities—the roles that they play in our society. I make it absolutely clear that nothing that I say about the amendment is in any way critical of the objective that charities, which do so much good for the public, should have opportunities for the enhancement of their resources.

The first objective is how we ensure that account holders are reunited with their property so that only genuinely dormant accounts are transferred to the scheme. That is right and fair to customers; after all, it is their money which is the subject of this debate. Of course, a result of the reunification of accounts with customers will ultimately mean a reduction in the administrative costs of the reclaim fund, otherwise the reclaim fund, in certain cases, will be obliged to repay customer reclaims at a later date. That is bound to involve administrative costs, which will, therefore, reduce the amount of money available to benefit the public.

What is the effective and proportionate response? The noble Lord, Lord Hamilton, may be thought to be a lone voice on these issues today, but he was concerned in Committee about proportionate response; he is also concerned about confidentiality and the administration of the scheme. Those are also the proper concerns of Government. We have emphasised throughout the debate, today and in the earlier proceedings on the Bill, that the banking and building society sector and National Savings and Investments should take the lead in reuniting customers with their accounts prior to the launch of the scheme. The industry should put in place extensive and robust arrangements for continuing that work after the scheme is up and running.

We are very encouraged by the work that has been done over this period. We welcome the bank and building society sector's ongoing commitment, as set out in the Statement of 8 November, to a major reuniting exercise ahead of the scheme's launch. The launch of by National Savings and Investments, the British Bankers' Association and the Building Societies Association is a central part of that work. It is a free, cross-industry, one-stop shop for customers attempting to locate their lost accounts. In less than a month since its launch on 30 January, it has received more than 140,000 hits and, importantly, has led to more than 72,000 submitted claims for lost accounts.

That facility allows not just account holders but also executors and nominated representatives to initiate a search for a lost account. Executors and personal representatives will be able to search for lost accounts using the one-stop shop website which should help those entitled to legacy income to receive it because the executors will be working under the instructions of the person making the bequests. The advantage from this process is bound to accrue to charities where the intention was that bequests should be made to them.

The Government also welcome the public announcement on 8 November confirming, additionally, the commitment to proactive searching by individual institutions. The public progress made by such significant institutions as Halifax and Nationwide is to be welcomed. The Government look forward to other substantial financial institutions meeting the commitment through proactive reuniting activity soon. Of course, we welcome all constructive suggestions about how reuniting arrangements might be improved.

Is the central register, mandated through regulation, necessary or proportionate now or in the future? I note that the noble Lord, Lord Newby, welcomed it on the grounds that it was a sword of Damocles, but as I recall, that was an ever-present and continuing threat to people holding positions of power. That may be a salutary thing to look forward to, but on this particular sword of Damocles being backed by the noble Lord, it is expected to come into action. That is different from a threat. We are concerned to ensure that the industry makes the greatest efforts for the reunification of accounts. The noble Lord, Lord Newby, is entitled to carry the threat one stage further if it does not. I may have responded in a slightly jocular way, but it raises the central issue of the Bill that it is essentially a voluntary arrangement by the banks and building societies. They are expected to make an enormous contribution to this initiative through their activity. It is not an exercise in government regulation.

Of course the Government have a role to play in this Bill, as we have previously discussed. That is different from saying that whenever it can be detected that matters in the Bill might be advanced with greater efficiency, that should be done through the strong arm of government. That is not the nature of the Bill. I do not agree that the central register mandated through regulation is either necessary or proportionate. It would involve extensive legislation to set it up. The register would need to be run, which would place an administrative burden on the resources that we are always talking about. They are resources related to the scheme that would otherwise go towards the benign purposes that have been identified by all sides of the House as the objectives of the scheme.

There is a further difficulty. It would give the Government power to require data to be provided to a central source. That would not deal with how it would be enforced on the institutions, nor would the fact that banks and building societies—again I turn to the noble Lord, Lord Hamilton, who has expressed a view that is also held in other parts of the House—are subject to confidentiality requirements on customer information. A bank account is a private contract and confidentiality issues are raised by the concept that banks can be compelled to breach them—the sword of Damocles being translated into action, if the amendment were accepted. Transferring such information to a central source would mean that banks and building societies had to breach that confidentiality. It is difficult to see how that is compatible with the framework of law on confidential information and data protection that applies in the United Kingdom. It might also raise human rights issues. Although the Government considered every angle with regard to the proposed legislation, the issue of human rights was not raised, but the House will be all too well aware of the fact that Ministers are obliged to sign a document indicating that human rights are not contravened by legislation. We may have had trouble signing that if we had introduced a Bill carrying this concept. That is a difficulty for us.

As a result of the amendment passed last time, the Bill now includes a clause requiring regular reports to Parliament on a range of issues, including banks' and building societies' arrangements to trace accounts and repay customers. The same clause asks the Government to consider improvements to the scheme at a later date. The Government intend to carry out a post-implementation review of the scheme, as I have made clear all along. We always appreciated that we would have to form an evaluation of the success of the scheme after it had been launched.

However, I have real concerns about the review proposed in the amended Bill, requiring the Government to report on the scheme every three years in perpetuity. Every three years for 10, 20 or 50 years hence seems somewhat unnecessary. I cannot think of a precedent, nor has any noble Lord suggested one since this concept was introduced. I am also concerned about the detail and scope of the review as set out in the Bill and the implications for the scheme. So the Government will be seriously looking at these issues when the Bill moves from this place.

However, I ask the House to appreciate that an underpinning principle of the Bill is voluntarism. It is not a government Bill in that respect, which would actually involve government direction in every element. A great deal of the Bill involves the willing participation—in fact, the instigation of action, which they have already done—of the banks and building societies. That this why we have taken care to move forward with respect for that element of voluntarism in the Bill. There are real problems with confidentiality and the extent to which power is handed to government in circumstances in which it may be looked upon as excessive in the context of the banks' and building societies' work in this area.

Not that I would want to reduce the just flow of resources to the benign institutions that have been the subject of so many representations from all sides of the House in any way, shape or form. Of course the Government want the scheme to work well. Without the slightest doubt, this will mean that where individuals have sought to make bequests to charity but their accounts have become dormant, this level of activity—the work under the Bill and the voluntary work of the banks and building societies—will benefit charities. But that is different from introducing a compulsory element, which raises issues of confidentiality and possibly human rights. In the Government's view, it is therefore a step too far. That is the basis of the Government's argument for asking the noble Baroness to withdraw her amendment.

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Crossbench 4:00 pm, 26th February 2008

My Lords, I appreciate the response from the Minister, and the comments of all those who have spoken in support of the amendment. I remind the House that I am calling for a reserve power only, not creating a statutory arrangement in the Bill. I am simply calling for a reserve power in the event that the established voluntary arrangement, which currently looks as if it is doing a good job, fails to work well in the interests of the individual whose hard-earned money was left in their will to a charity, however small, and its beneficiaries: directly, the charity and, indirectly, all those who that person in writing their will wanted to benefit.

On confidentiality, we already have a system, which was set up as voluntary, for the reunification process. That has broken the complete code of secrecy around bank accounts anyway, because when a match is now made, there is confirmation of that. Therefore, despite the Minister's reservations and in the light of the support around the House, I feel that I must test the opinion of the House.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 107; Not-Contents, 130.

Division number 1 Private Parking: Ports and Trading Estates — Dormant Bank and Building Society Accounts Bill [HL]

Aye: 105 Members of the House of Lords

No: 128 Members of the House of Lords

Ayes: A-Z by last name


Nos: A-Z by last name


Resolved in the negative, and amendment disagreed to accordingly.

[Amendments Nos. 2 to 4 not moved.]

An amendment (privilege) made.

Bill passed, and sent to the Commons.