Dormant Bank and Building Society Accounts Bill [HL]

I am grateful to all noble Lords who have spoken in this important debate. I am sorry about the trouble the opposition Front Benches have had with the Public Bill Office. That is not an experience I have ever enjoyed. Generally it is the Government who wince a little at just what is acceptable in the Public Bill Office, but we do not normally bring any complaints before the Committee so that they are on the record. I appreciate the frustration of the noble Baroness and the noble Lord, Lord Shutt, but now and again the issues will rub against them and they must take that in their stride. The 2005 Pre-Budget Report and subsequent announcements set out the scheme, which is reflective of a clear government manifesto commitment. The scheme is restricted to retail banks and building societies’ bank accounts. The rather facile arguments that have come from the two main opposition Benches about how easy it is to extend the Bill to other areas merely betrays the fact that they are high in ambition and low on practicality with regard to such a scheme. The noble Lord, Lord Hamilton, indicated that the banks would not necessarily enthuse about a scheme of this kind because it represents a loss of the yielding of an asset, and the Government have had a difficult task in persuading the banks and building societies to participate in a voluntary scheme that will make substantial resources available to the good causes that my noble friend Lady Pitkeathley identified. It is asking a great deal to suggest that it is simple to extend the Bill to banks and building societies. The accounts we are dealing with are cash accounts, but the orphan assets to which the noble Lord, Lord Shutt, refers, otherwise known as the inherited estate, are held by insurance companies in with-profit funds. They represent assets in excess of those needed to meet the fund’s liabilities. Orphan assets are different from unclaimed assets. To take one obvious issue, if the assets are held by an insurance company, the policyholders have a right to share in any distribution according to the rules of the fund. What is suggested here, however, is that the fund should be contracted—without consultation with policyholders, from what I have seen so far—and that there should be a concentration of the fund to which policyholders would otherwise have the right of access. I am not saying that that cannot be done; I am merely saying that it is a pretty important issue to confront. All other forms of unclaimed assets—particularly pension assets, which often come within this framework—raise a whole different set of legal and procedural issues compared to banking assets. Both the legal ownership structure and the nature of the investment assets are very different from cash. For instance, if we removed assets from the majority of unclaimed pension funds managed by insurance companies, that might well require higher members’ and employers’ contributions. Again, I am not saying that that is totally impractical, but I am indicating that it is another hurdle to cross beyond the one which the noble Lord, Lord Hamilton, identified with regard to the banks and building societies. We have to be limited in our ambition with this scheme, but it represents a massive step forward. It is the fulfilment of a pledge that we made in 2005, and it will realise significant assets. The issues which have been raised are important but difficult ones. Getting this scheme off the ground will take probably until 2009. To undertake full consultation in seeking to overcome the difficulties with all the other assets that I have identified would mean, even if it proved practicable, that we would be a good deal more distant from effective legislation. The Government are proud of what is before the Committee; it is the fulfilment of a commitment and a significant step forward for banks and building societies whose co-operation we have achieved. There has been extensive consultation, as the noble Baroness, Lady Finlay, emphasised. We received 56 responses to the scheme’s first consultation, of which around 30 were from the charities which she identified as part of the Unclaimed Assets Charity Coalition. Those representations were more in the form of a campaign letter advocating how widely we should set our ambitions than practical solutions towards realising our objectives. As for the Bill’s limitations, one of the joys of opposition is to be expansive and ambitious beyond the wildest dreams of government. But Oppositions also have to temper those dreams with the hope that one day they may have to address themselves to the practicalities. The great danger is that they may be out of practice, and they may remain so for a considerable time. As has been identified on the noble Baroness’s own Back Benches, bringing the banks and building societies within this framework is an achievement, and we have had widespread consultation. I turn to the proposal about a report within a year. We will have to bring the Financial Services Agency into the scheme in order to make it viable and guarantee that matters are conducted properly and that will be done after Royal Assent. A report on such a scheme within a year could only indicate that we were making very limited progress indeed on meeting any ambition at all. It is not realistic to talk about a report in one year. It is important, as the noble Baroness identified, that the Government should be accountable for the scheme, but it is a scheme with a light regulatory touch. I warn noble Lords opposite that if they press us too far on certain aspects of regulation and enforcement I might be prone to use the argument that they have on other occasions been in favour of the lightest possible touch. The Bill is a product of consultation and agreement. That is why it is limited in its ambition. We have had an interesting debate, but it is not realistic for the Government to produce a report on an Act that contains a great deal of secondary legislation which will come into effect to guarantee that the Financial Services Authority plays its part effectively. To expect a report annually on this is asking a great deal. From the vast range of amendments which have been tabled already, it would appear that noble Lords opposite believe that the breadth of our ambition is limited. This project is difficult enough within its framework. I hate to think how many amendments the noble Baroness would have tabled had we sought to include those orphaned assets which raise so many other issues. She would rightly have advanced a critical analysis, as she usually does.