Dormant Bank and Building Society Accounts Bill [HL]

As the noble Baroness said, she promised to return to this and I knew that she would fulfil her promise. I hope that I am better equipped today to respond to the points that she made. Perhaps a little refreshment on the issues after the new year is appropriate. This is a voluntary scheme; the product of the Government working with the bank and building society sector to produce a scheme based on dormant bank and building society accounts. The noble Baroness asked on a previous occasion in Committee, and has done so again today, why the Bill defines ““account”” as it does. There is no formal definition of ““account”” in common use. The Bill is therefore obliged to define eligible accounts and does so by insisting that they must consist of cash and must relate to the bank or building society’s activity of accepting deposits. The noble Baroness asked why the ““accounts”” must consist only of cash. She is well qualified to recognise that a whole range of assets and financial products is held in accounts with banks and building societies. ISAs, for example, consist of stocks and shares, as well as cash. The Government’s intention is for the dormant accounts scheme to be based only on accounts containing cash, because it is a voluntary scheme and we want to make the demands on bank and building societies as simple as possible so that we can achieve the goal that they share with us. The Bill facilitates a scheme which addresses the relevant legal and accounting issues for cash deposits. We would be obliged to make different provisions if other types of investment, such as shares, were to be transferred into the proposed reclaim fund. Subsection (2) restricts the scheme to accounts relating to an institution’s activity of accepting deposits. This focuses the proposed scheme on ordinary current or savings accounts and excludes those from which payments are made in relation, for example, to insurance policies or mortgages obtained through the bank or the building society. The provision would include any current account opened by a bank or building society as part of its deposit-taking activities where those accounts facilitate another financial approach; for example, a self-invested personal pension scheme. If we were to open more widely the definition of ““account””, we might need to take account of a whole range of fresh definitions. The Bill must define the assets caught by the scheme, because the scheme will not function unless people are clear about it. Simply removing the provisions from the Bill would not protect consumers—very far from it. A definition of ““dormant”” based on customer-initiated transactions makes sense for current or savings accounts, but may not make sense for accounts opened in relation to the provision of other products such as insurance policies. We would therefore be obliged to address that problem. Similarly, the definition of ““balance”” would scarcely be appropriate for describing the customer’s entitlement in relation to other financial products involving investments. I recognise that the noble Baroness has a point: the Bill looks narrowly defined and with a certain degree of crudity. We are all aware of the much more sophisticated financial transactions in which ordinary members of the public are so frequently involved in these changing times. However, the scheme has to be clear. The banks and building societies must know what their operations involve. That is why we talk in terms of cash and money, and do not seek to open up the wider assets which customers might deposit with banks and which raise challenging issues. The essence of the Bill is to launch a scheme with a maximum amount of clarity and simplicity.