Dormant Bank and Building Society Accounts Bill

Charles Walker welcomes the Bill which would enable money from unused accounts to be given to good causes. Whilst applauding the motivation behind it, he stresses the importance of getting the detail right and welcomes the three year Parliamentary review.

Review and report to Parliament

Mr. Charles Walker (Broxbourne) (Con): I too served on the Committee, and it was an extremely enjoyable experience. The sittings were very good natured, and if all Committees were like that, this place would be far happier and more productive.

I am pleased with the direction of travel of the Bill. We are talking about large sums of money being taken from dormant bank accounts and being given to good causes, so it is important that once we establish the body overseeing that transfer of money, it is not out of sight and out of mind. We need to get it set up, and then be able to feel that we have done our job effectively and so move on. I am extremely pleased that in three years’ time we will revisit its performance when we can talk to the various parties involved in its operation to divvy up the cash. The banks and building societies will have their view, and some who have voluntarily signed up will have suggestions on how arrangements can be made even better. It will also give us the opportunity to talk to those who had not signed up to ask how we could persuade them to do so, without cajoling them with the threat of binding legislation. We can also talk to those who have been reunited with their money about their experience. There will be a good opportunity to sit down in three years’ time to establish whether the mechanism we are putting in place today is working and delivering efficiently and effectively.

I hope that new clause 2 will get a further hearing because, if we decide not to have further three-yearly reviews of the performance of the body in Parliament, it is important that there is a debate in Parliament when it can come to a settled view that it is happy with the direction of travel after three years and that it needs to have no further involvement. I prefer our new clause 2 to Government new clause 3 and, while there is no place for partisanship in this debate, I suggest humbly to my hon. Friend the Member for Fareham (Mr. Hoban) that if he does not like new clause 3, in three years’ time, he might be in a position—as a Minister—to change it and ensure that we have such debates regularly.

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Register of dormant accounts

Mr. Walker: If I have any concern about the Bill, this is one of the areas that I am most concerned about. We recognise in the House that charities derive a significant amount of their income from legacies, and the fact is that the Bill does not make adequate provision to ensure that that is adequately reflected when the money in dormant building society accounts is divvied up.

I have added my name to the new clause almost in a probing way, because I would very much like the Government accept that part of the large sums of money that we are talking about could make a significant difference to the funding of charities in this country. If 5 per cent. of legacies goes to charities, it would not be unreasonable for the Bill to reflect that by having 5 per cent. of the dormant bank and building society accounts fund set aside to be distributed to the charitable sector. I appreciate that, in going to the Big Lottery Fund, the money will go to good causes or to a good cause, but that is a very specific allocation.

I have listened to the arguments of a coalition of charities, and I am very sensitive and alive to them. In particular, the money that will be set aside from dormant bank and building society accounts could make a huge difference to less well-funded charities. Many popular charities do not struggle to secure funding and charitable giving, but a number of very worthy charities find it very difficult to raise funds, because they do not have the infrastructure or do not strike the same chord with the public.

I will not try your patience, Madam Deputy Speaker, by going through a range of the charities that struggle for funds, but I point out that mental health charities, for example, find it very difficult to raise funds. I go to many sporting events and see sporting teams wearing pink for breast cancer, which is an honourable and noble thing to do, but I see very few sporting teams wearing something to help to raise funds for the mentally ill, and I should like more of them to do so.

If I could prevail on the Government, I would say, “Please look at this.” We are talking about hundreds of millions of pounds. Would it not be possible to go away, rethink and ask officials, “Couldn’t we set aside 5 per cent. of the fund in a mechanism that would enable it to be distributed to the charitable sector?” That would find favour among many charities and among many of our constituents as well.

Charles' interventions in the same debate

Mr. Walker: I know that this issue was gone over in Committee and in another place, but is the Minister aware that charities are concerned that, in effect, they will be cut out of the loop and lose 5 per cent.—potentially—of the legacies in the dormant bank and building society account fund? Would it not be better for 5 per cent. of the fund to be earmarked for distribution to charities? Is it not something that the Minister might consider at this late stage?


Ian Pearson
: I heard the hon. Gentleman make that suggestion in his contribution, and if he feels that strongly about it, I am surprised that he has not tabled an appropriate amendment for discussion today.

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Mr. Walker: Does the hon. Gentleman accept that a register may well be complicated, and that if the Government do not like that complication, then why not, instead of giving the Big Lottery Fund 100 per cent. of the moneys contained in the dormant bank or building society account held by a third party, give it 95 per cent. and earmark 5 per cent. for distribution to charities?

Mr. Browne: That is an interesting alternative suggestion. Although it is not contained in the new clause, I imagine that the hon. Gentleman shares my concern about trying to ensure that the money intended for charities reaches them to the maximum degree.

I was asked whether this provision would be additional and complementary to the website or would replace it. I think that it could and should be complementary.

Points were raised about the cost. There would be a cost but, as the hon. Member for Broxbourne implied, there is currently a cost to the charities, who fear that they may not be united with money that was intended for them. Of course there would be an administrative burden if one were to set up a register, but one would hope that the total amount of money realised for charities would exceed the cost of administering the scheme many times over.

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Functions etc of a reclaim fund

Mr. Walker: This is an interesting set of amendments. When the Bill becomes an Act, it will result in the establishment of a reclaim fund, which will be a limited company. If it is to carry the support of the public, the operation of the scheme must be transparent and its decisions, as well those participating in the scheme, must be subject to scrutiny. We will look into that in three years’ time, but what we will really want to know is which banks and building societies are foot dragging and are choosing not to participate. If we know who they are and we can benchmark them against those who are participating, we could bring them before the Treasury Select Committee, for example, which could then ask them directly why they are not participating in the voluntary scheme.

It may be that banks and building societies have very good reasons not to participate, but equally it may be that they frankly cannot be bothered. Only through public scrutiny and public opprobrium can we bring them to the table. I say “only”, but there is, of course, another mechanism of statutory regulation. In that case, after three years, the House says, “You organisations are not pulling your weight. We have tried the voluntary route, but we are now going to go down the compulsory route—and you will participate in this scheme”. That would be a great shame, but it could happen.

As for the Treasury’s direction of this limited company—the Treasury’s right to direct it—it would be helpful if the Minister put some scenarios before the House to explain why or when the Treasury might wish to exercise such power. After all, having served in Committee, I believe I am right to believe that the Bill allows for the establishment of a limited company that would be regulated by the Financial Services Authority. Only extreme circumstances would allow the Treasury to start to interfere in day-to-day operations, but we know that such circumstances arise, as we have seen recently in the banking sector—I sincerely hope that this rather small organisation does not experience the same type of crisis in two or three years’ time.

I listened to the hon. Member for Wolverhampton, South-West (Rob Marris) and I heard his concerns, so I think it would be helpful if the Minister brought us in on some of the conversations he has had with his civil servants on what circumstances might trigger a direct intervention from the Treasury. If nothing else, that would put our minds at rest.

Charles' interventions in the same debate

Mr. Walker: It is quite simple: a list of participants should be published, and if the name of a building society or bank does not appear on it, shareholders, Ministers and Back-Bench Members of Parliament should be able to ask questions about its absence.


Mr. Browne
: Unless I have misunderstood it, the amendment proposes the publication of a list of banks and building societies that have not participated, rather than a list of those that have done so—although for those with a good knowledge of the sector, the end result would be the same.

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Mr. Walker: In essence, what my hon. Friend the Member for Fareham (Mr. Hoban) is rightly demanding is a factual demonstration of, and factual information on, the state of play.

Mr. Browne: Absolutely. We are not making a moral judgment about the names on the list, although others may seek to do so; we simply want factual information on whether the institution in question has chosen to participate in the scheme. The hon. Gentleman made a good point when he said that the Treasury Committee, for example, could invite non-participating institutions to appear before it and discuss why they did not wish to comply. They might, of course, have good reasons. The scheme might not be working as we expected it to when we passed the legislation. The group with most cause to reflect on why the institutions were not participating might be not the institutions themselves, but the Members of Parliament who had established rules that did not work as they had wished. That would, I hope, emerge in the review in three years’ time, and might make the scheme more attractive to those who had not participated but did not object, in principle, to doing so.

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Mr. Walker: I thank the Economic Secretary for the reassurances he gave me a few moments ago. Will it be for the company to set direct remuneration at the outset, or will it receive guidance from the Treasury?


Ian Pearson
: That will essentially be a matter for the company, because it is a private company. I imagine that discussions will be held between members of the Treasury and members of the reclaim fund, and that they will also include the Financial Services Authority, which has some overall responsibilities with regard to remuneration. Let me emphasise again that we expect the reclaim fund to be run in accordance with our legislation, FSA regulation and company law, and for it to meet the highest standards of corporate governance, but we need the power to ensure that that is the case, which is why we shall invite Members to reject amendment No. 10.

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Commencement

Mr. Walker: I would like to say how much I enjoyed serving on the Committee that considered the Bill. I spoke on Second Reading, I was on the Committee, and I am making a brief debut on Third Reading.

The amounts of individuals’ money we are talking about are probably quite small because people tend not to forget large amounts of money lying in bank accounts. I know that I have a couple of bank accounts—with the Chelsea building society and Barclays bank—from 20 years ago, with probably about £10 in each, and I am more than happy for that money to be put towards good causes. Although the amounts we are talking about are small in each individual dormant account—not in all, but in most—when we add them up, as the Minister did when he educated the House, we find that about £500 million of money is available to put towards good causes. Of course, the money does not belong to banks—they are its custodians. It belongs to people who have perhaps died or forgotten that it is there. If they or their executors do not intend reclaiming it, I see no harm in putting it towards good causes. It is a good and noble thing to give that money to good causes—alleviating poverty and helping young people get a foothold in life and a chance to make something of themselves.

I am pleased that there will be a review in three years of the reclaim funds’ performance and the limited company in charge of distributing the money. That review may provide an opportunity to examine the performance of the Big Lottery Fund and perhaps to tweak things around the margins. I know that I have tried the Economic Secretary’s patience—I will not try yours, Madam Deputy Speaker—but if it is decided in three years that charity should get perhaps 5 per cent. of that money, it would be no bad thing.

In responding to a point that the hon. Member for North Southwark and Bermondsey (Simon Hughes) made, the Economic Secretary referred to an ambitious timetable of implementation. We have waited so long for the Bill that he can afford to be a little cautious. Let us ensure that we get it right: if it is not ready to launch by the middle of next year, I do not believe that anyone would be too critical if we delayed it by two or three months. It is important to get it right the first time so that it carries the public’s confidence. If the Economic Secretary misses a June, July or August launch, he will receive no criticism from me.

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