Dormant Bank and Building Society Accounts Bill [HL]

moved Amendment No. 44: 44: Clause 10, page 6, line 38, at end insert— ““(4) The Treasury may by order reduce the period of 15 years referred to in subsection (1)(a). (5) An order made under subsection (4) may not be made unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.”” The noble Baroness said: Amendment No. 44 seeks to add another power for the Treasury in relation to the Clause 10 definitions of ““dormancy””. It would allow the Treasury to reduce the period of inactivity, if I can use that shorthand, before which an account can be treated as dormant, which is currently set at 15 years in Clause 10(1). The order referred to in the amendment would be subject to the affirmative procedure because it would represent a significant change to the scheme set out in the Bill and would need to be given proper scrutiny in Parliament. The Treasury Select Committee in another place considered this issue in some detail and concluded that the period should be 10 years. It is difficult to be sure whether 15 years or 10 years is the right period, but a period of operating the scheme would allow more information to be gathered about the impact of time on dormancy. Of the other countries that have a dormant account scheme, only Ireland uses a period as long as 15 years. The Select Committee pointed out that that is an incomplete comparator because of the narrow definition used in Ireland. Switzerland uses 10 years; Australia, 7 years; New Zealand, 6 years; and US states use between 3 and 5 years. So there is clearly no magic in 15 years. The UK evidence to the Select Committee was mixed. The Building Societies Association regards accounts as ““lost”” after three years and for internal purposes the Select Committee was told that banks use around six years. But the British Bankers’ Association said in its evidence to the committee that 15 years should be used because at that point, "““it can be concluded with reasonable certainty that we have passed an 80/20 threshold in terms of lost monies expected to be reclaimed””." It continued: "““As you move down the maturity scale, you rapidly reach the point at which transfers from the balance sheet would be accompanied by a shift in the lost/reclaim ratio towards 50/50% and beyond””." I believe this means that, at present, after 15 years only 20 per cent of accounts are likely to be reclaimed, while at 10 years the likelihood is that 50 per cent will be. I have no reason to doubt the BBA’s analysis at present, but there is no reason to believe that those relationships would hold true over time. Indeed, as greater efforts are made to make customers aware of the existence of their accounts in accordance with the Banking Code, it may be that the 80:20 ratio is reached earlier. Greater opportunities for reuniting, via the facilities that are now available and still being developed, will also tend to shift the curve. I am not seeking to determine that issue now—I do not think anyone can say with absolute certainty what the ratio is or could be—but it is important to leave flexibility in the Bill to deal with the facts as they emerge in due course. The reclaim fund will start to accumulate data on repayment probabilities, which may or may not support the 15-year threshold in 80:20 terms. The scheme is based on assumptions which, I hope, are an accurate description of today’s circumstances, but they may or may not hold true in the longer term. I want to ensure that the Government have the power to make the scheme robustly based over time and not simply fit for purpose for a particular point in time when it is introduced. I hope that the Government will welcome this additional flexibility. I beg to move.