Dormant Bank and Building Society Accounts Bill [HL]

moved Amendment No. 2: 2: Clause 1, page 1, line 5, leave out from ““applies”” to end of line 8 and insert ““— (a) to all banks which are required to transfer to an authorised reclaim fund the balance of a dormant account that a person (““the customer””) holds with it, and”” The noble Lord said: The purpose of the amendment is to make the scheme compulsory rather than voluntary. The key words in the amendment are that the scheme applies to all banks. We should probably have put a comma after the word ““banks””; there is a slight Eats, Shoots and Leaves issue there but I am sure that, if the Minister is minded to accept the amendment, we can deal with that on Report. However, as I said, the purpose of the amendment is to require the scheme to apply to all banks and building societies. It seems strange to us that a programme which is deemed to be so important and on which the Government put so much store should be completely voluntary. Why should some banks hang on to these assets and keep them on their balance sheets? Under the scheme as it stands, there is no sanction for doing so. We were very interested to see how this issue is already being dealt with and debated in the context of the Treasury Select Committee in another place, which considered this matter. The Government helpfully anticipated the noble Lord’s speech this afternoon by making a number of objections to the proposal, which I should like to go through. The Treasury Select Committee said: "““A compulsory scheme has the overwhelming advantage of guaranteeing fairness and consistency between institutions””." That seems to us to be an overwhelming case. However, in their response, the Government came up with a number of reasons why that overwhelming case was not adequate. Essentially, they came up with four objections, all of which, in my view, are to a greater or lesser extent spurious. The first was that a voluntary approach, "““enables the use of private sector expertise to manage and invest the money paid to the reclaim fund by banks and building societies””." Why does a compulsory scheme not allow that possibility? The second objection was that a voluntary approach means that, "““it will be the private sector that takes responsibility for managing liabilities to account holders, which will remain on the private sector’s balance sheet””." Why is that affected by whether it is a compulsory or a voluntary approach? The third objection was that a voluntary approach, "““brings added flexibility. It will allow individual institutions to determine whether an account is genuinely dormant””." Why does that have anything to do with whether it is a voluntary or compulsory approach? The fourth was that: "““A voluntary scheme””—" I like this— "““also takes account of better regulation principles, building on existing regulatory arrangements, helping to maximise the money available for reinvestment in the community””." Why does a voluntary approach help to maximise the money available for reinvesting in the community when banks can simply opt out of it if they want, thereby reducing the amount of money available for investing in the community? Those seem to be almost completely spurious arguments, and I suspect that the real reason for the Government going forward in the way that they have is as follows. A throw-away line in the next paragraph says: "““In light of the sector’s ongoing support for a voluntary scheme, the Government””," and so on. I can see that the sector might like a voluntary scheme but banks and other institutions of all sorts like voluntary schemes across a whole raft of areas where we now make things compulsory. Therefore, that is a poor argument. The Treasury Select Committee, in a spirit of extraordinary generosity, then said that if the Government cannot bring themselves to make the scheme compulsory from the start, they ought to have reserve powers—to which the Government gave the following terrific response: "““Including these powers in legislation would not be a good use of Parliament’s time””." There may be compelling arguments why it is a bad idea to make this scheme compulsory, but I think that there are very strong arguments for making it compulsory. The Government have so far failed to make their case. I beg to move.