Dormant Bank and Building Society Accounts Bill [HL]

My Lords, I am grateful to all noble Lords who have spoken in this extremely interesting debate and to the noble Baroness, Lady Finlay, for moving her amendment. It will be appreciated from the debate how much there is agreement on all sides about the Bill’s central purposes, which are to ensure that dormant accounts are reunited with their rightful owners and, where they are not, that after a 15-year period, the resources will be devoted to public advantage. There is not a single noble Lord who has spoken in this debate who has not subscribed to those objectives; all noble Lords have added a great deal of colour and emotion and emphasised the fact that some of the good from the development of this work will involve advantage to charities. The Government recognise the powerful statements made by the noble Lords, Lord Low and Lord Walton, and the right reverend Prelate the Bishop of Exeter on the advantages of charities—the roles that they play in our society. I make it absolutely clear that nothing that I say about the amendment is in any way critical of the objective that charities, which do so much good for the public, should have opportunities for the enhancement of their resources. The first objective is how we ensure that account holders are reunited with their property so that only genuinely dormant accounts are transferred to the scheme. That is right and fair to customers; after all, it is their money which is the subject of this debate. Of course, a result of the reunification of accounts with customers will ultimately mean a reduction in the administrative costs of the reclaim fund, otherwise the reclaim fund, in certain cases, will be obliged to repay customer reclaims at a later date. That is bound to involve administrative costs, which will, therefore, reduce the amount of money available to benefit the public. What is the effective and proportionate response? The noble Lord, Lord Hamilton, may be thought to be a lone voice on these issues today, but he was concerned in Committee about proportionate response; he is also concerned about confidentiality and the administration of the scheme. Those are also the proper concerns of Government. We have emphasised throughout the debate, today and in the earlier proceedings on the Bill, that the banking and building society sector and National Savings and Investments should take the lead in reuniting customers with their accounts prior to the launch of the scheme. The industry should put in place extensive and robust arrangements for continuing that work after the scheme is up and running. We are very encouraged by the work that has been done over this period. We welcome the bank and building society sector's ongoing commitment, as set out in the Statement of 8 November, to a major reuniting exercise ahead of the scheme’s launch. The launch of www.mylostaccount.org.uk by National Savings and Investments, the British Bankers’ Association and the Building Societies Association is a central part of that work. It is a free, cross-industry, one-stop shop for customers attempting to locate their lost accounts. In less than a month since its launch on 30 January, it has received more than 140,000 hits and, importantly, has led to more than 72,000 submitted claims for lost accounts. That facility allows not just account holders but also executors and nominated representatives to initiate a search for a lost account. Executors and personal representatives will be able to search for lost accounts using the one-stop shop website which should help those entitled to legacy income to receive it because the executors will be working under the instructions of the person making the bequests. The advantage from this process is bound to accrue to charities where the intention was that bequests should be made to them. The Government also welcome the public announcement on 8 November confirming, additionally, the commitment to proactive searching by individual institutions. The public progress made by such significant institutions as Halifax and Nationwide is to be welcomed. The Government look forward to other substantial financial institutions meeting the commitment through proactive reuniting activity soon. Of course, we welcome all constructive suggestions about how reuniting arrangements might be improved. Is the central register, mandated through regulation, necessary or proportionate now or in the future? I note that the noble Lord, Lord Newby, welcomed it on the grounds that it was a sword of Damocles, but as I recall, that was an ever-present and continuing threat to people holding positions of power. That may be a salutary thing to look forward to, but on this particular sword of Damocles being backed by the noble Lord, it is expected to come into action. That is different from a threat. We are concerned to ensure that the industry makes the greatest efforts for the reunification of accounts. The noble Lord, Lord Newby, is entitled to carry the threat one stage further if it does not. I may have responded in a slightly jocular way, but it raises the central issue of the Bill that it is essentially a voluntary arrangement by the banks and building societies. They are expected to make an enormous contribution to this initiative through their activity. It is not an exercise in government regulation. Of course the Government have a role to play in this Bill, as we have previously discussed. That is different from saying that whenever it can be detected that matters in the Bill might be advanced with greater efficiency, that should be done through the strong arm of government. That is not the nature of the Bill. I do not agree that the central register mandated through regulation is either necessary or proportionate. It would involve extensive legislation to set it up. The register would need to be run, which would place an administrative burden on the resources that we are always talking about. They are resources related to the scheme that would otherwise go towards the benign purposes that have been identified by all sides of the House as the objectives of the scheme. There is a further difficulty. It would give the Government power to require data to be provided to a central source. That would not deal with how it would be enforced on the institutions, nor would the fact that banks and building societies—again I turn to the noble Lord, Lord Hamilton, who has expressed a view that is also held in other parts of the House—are subject to confidentiality requirements on customer information. A bank account is a private contract and confidentiality issues are raised by the concept that banks can be compelled to breach them—the sword of Damocles being translated into action, if the amendment were accepted. Transferring such information to a central source would mean that banks and building societies had to breach that confidentiality. It is difficult to see how that is compatible with the framework of law on confidential information and data protection that applies in the United Kingdom. It might also raise human rights issues. Although the Government considered every angle with regard to the proposed legislation, the issue of human rights was not raised, but the House will be all too well aware of the fact that Ministers are obliged to sign a document indicating that human rights are not contravened by legislation. We may have had trouble signing that if we had introduced a Bill carrying this concept. That is a difficulty for us. As a result of the amendment passed last time, the Bill now includes a clause requiring regular reports to Parliament on a range of issues, including banks’ and building societies’ arrangements to trace accounts and repay customers. The same clause asks the Government to consider improvements to the scheme at a later date. The Government intend to carry out a post-implementation review of the scheme, as I have made clear all along. We always appreciated that we would have to form an evaluation of the success of the scheme after it had been launched. However, I have real concerns about the review proposed in the amended Bill, requiring the Government to report on the scheme every three years in perpetuity. Every three years for 10, 20 or 50 years hence seems somewhat unnecessary. I cannot think of a precedent, nor has any noble Lord suggested one since this concept was introduced. I am also concerned about the detail and scope of the review as set out in the Bill and the implications for the scheme. So the Government will be seriously looking at these issues when the Bill moves from this place. However, I ask the House to appreciate that an underpinning principle of the Bill is voluntarism. It is not a government Bill in that respect, which would actually involve government direction in every element. A great deal of the Bill involves the willing participation—in fact, the instigation of action, which they have already done—of the banks and building societies. That this why we have taken care to move forward with respect for that element of voluntarism in the Bill. There are real problems with confidentiality and the extent to which power is handed to government in circumstances in which it may be looked upon as excessive in the context of the banks’ and building societies’ work in this area. Not that I would want to reduce the just flow of resources to the benign institutions that have been the subject of so many representations from all sides of the House in any way, shape or form. Of course the Government want the scheme to work well. Without the slightest doubt, this will mean that where individuals have sought to make bequests to charity but their accounts have become dormant, this level of activity—the work under the Bill and the voluntary work of the banks and building societies—will benefit charities. But that is different from introducing a compulsory element, which raises issues of confidentiality and possibly human rights. In the Government’s view, it is therefore a step too far. That is the basis of the Government’s argument for asking the noble Baroness to withdraw her amendment.