Clause 5

Part of Dormant Bank and Building Society Accounts Bill [Lords] – in a Public Bill Committee at 11:30 am on 14 October 2008.

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Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform, Economic Secretary, HM Treasury 11:30, 14 October 2008

I understand the hon. Gentleman’s point. However, the reclaim fund will be set up as a private company and incorporated under UK company law. It will have articles of association and be regulated by the FSA. We will have a power under the Bill that can be used in exceptional circumstances if we believe that the company is in breach of its articles of association. That situation would not be normal. The normal situation will be that the company collects money that is given to it by banks and building societies from dormant accounts. It will have a business plan whereby it makes decisions about how much of that money can be distributed to the BLF, which will then issue it to good causes, and how much needs to be kept back as a proper contingency against future claims on the reclaim fund from existing customers with dormant accounts. Only in exceptional circumstances might the Government need to exercise a power to require the reclaim fund to do certain things. I do not think that it would happen, but if the reclaim fund suddenly decided that it did not want to publish information and there were serious concerns about the propriety of how the company was being run, the taxpayer would want the Government to intervene. That is the reason for the back-up. We do not intend to use it other than in wholly exceptional circumstances. It is normal to have reserve powers of that sort under legislation.