Dormant Bank and Building Society Accounts Bill [HL]

My Lords, I hope to be relatively brief. While freely acknowledging the good intentions of its sponsors and supporters, I must confess to considerable misgivings about this Bill, specifically Part 1. Despite the safeguard incorporated in it designed to prevent the effective confiscation of an individual's assets, I none the less fear that de facto confiscation could sometimes occur in whole or, more likely, in part as the Bill stands. At the very least, it could involve individuals in unwelcome time and trouble when they finally come to discover their entitlement, particularly if they are old or confused, as may statistically often be the case by the nature of things. There are many reasons why people may want to keep sums of money undisturbed in an account for 15 or more years. For example, they may not want to keep their rainy day nest egg in the proverbial sock under the mattress for fear of being assaulted or robbed in their home—an increasingly likely scenario, unhappily. At the same time, they may have a deep distrust of stocks and shares in whatever form. You and I would almost certainly advise anyone investing for 15 or more years to put their money into a selection of well-run unit trusts or, better still, well-run investment trusts standing at a good discount to net asset value. But there are many who would never entertain such a sensible proposal, in particular if they burnt their fingers over Railtrack or Northern Rock shares. People should not be penalised for being suspicious, stubborn or unsophisticated. Moreover, someone who puts money into certain types of building society account for 15 years—accounts whose relatively high interest is earned in return for restricted withdrawals and substantial notice periods—is not necessarily being silly or irrational. Their funds may sometimes even keep or very occasionally exceed the rate of inflation. Another aspect came to light yesterday evening in your Lordships' House when I briefly mentioned this Bill to a friend from overseas who was dining here. She told me of a Jewish acquaintance living in the near East who deposited a five-digit sum with a London bank and left it totally undisturbed for 20 years, just in case life started to become difficult for people of Jewish origin in their part of the world. One suspects there must be hundreds—perhaps thousands—of similar cases where members of potentially vulnerable political, ethnic or religious groups have transferred funds to the supposed safety of United Kingdom institutions as a contingency fund to keep their families afloat should things go wrong. If, therefore, it is accepted that some people have subjectively valid reasons—even if sometimes cranky reasons—for keeping money undisturbed in banks or building societies for decades, how will the Government protect their interests? It is claimed that Clause 2(2)(a) will do the trick: provided the account holder instructs the bank or building society not to communicate with him or her concerning the account, it will not be reclaimed. But most sane account holders will positively want to be communicated with once or twice a year with statements showing the opening and closing balances and any interest credited or bank charges debited, if only to reassure themselves that some fraud or computer glitch has not transferred their funds wholesale to someone else with a vaguely similar name living hundreds of miles away. Surely it should instead be made incumbent on banks or building societies to make every effort to ascertain from the account holder every three, four or five years that he or she wishes to maintain the account in force. What about interest? A small current account will earn no interest; a larger one a fairly derisory rate. But a well-chosen building society account could earn on average 5 per cent gross or 4 per cent after 20 per cent tax. Compounded, that would increase a £5,000 deposit to £7,400 after 10 years. Will an individual whose £5,000 in a dormant building society account has been switched into a ““reclaim fund”” in 2008 be able to claim back £7,400 in 2018 when he suddenly reappears from some distant part of the world? If not, this surely constitutes partial confiscation of his or her assets. Will the Minister assure the House that under no circumstances will there be attempts to extend the provisions of this legislation to the Channel Islands or the Isle of Man? If one or more of the legislatures of those territories decides to do so of their own free will, all well and good, but there should be no arm twisting.