Saving Gateway Accounts Bill

The amendment seeks to add a new subsection to Clause 16, which deals with the transfer of funds when an account ceases to be a saving gateway account. Clause 16 sets out a rather narrow regulation-making power which will, in effect, allow a saving gateway account to be transferred into an ISA. It is welcome to that extent but the Government need to go beyond this. When a saving gateway account reaches maturity after two years, there could be as much as £900 in the account, or possibly more if any interest is paid on it, and something has to be done with the account at that stage. Our strong preference is for the account to be transferred into a savings-type account, for which the obvious choice is a cash ISA. We recognise that not all providers may offer cash ISAs and, hence, it would not be right to specify a cash ISA as a default option. Our concern is that banks may well default a matured saving gateway account into a deposit account which pays little or no interest. This is what happened in the pilot scheme. We all know that banks and building societies rely on their customers not taking the trouble to seek maximum returns. I have rarely encountered a bank which proactively ensured that savings earned the best possible interest return. Banks may even set up a default of transferring the saving gateway money to a current account, which would clearly be the least desirable outcome. In another place, the Minister argued that the Government want competition and a marketplace. That was a rather naïve view because it seemed to assume that not only would there be competition between providers as to the terms of a saving gateway package, which would include the competitiveness or otherwise of a default option, but that potential saving gateway customers would be capable of differentiating between the competing offers. I put it to the Minister that both of those propositions are unlikely. My honourable friend Mr Mark Hoban in another place sought to require in the Bill that the default option had to be a cash ISA or the provider’s best instant-access savings account. My amendment does not seek to be prescriptive about where the money should go; it merely creates a regulation-making power to allow the Government to set default rules if the need arises. If the Minister in another place is right about there being a competitive marketplace in which saving gateway customers genuinely exercise choice, no regulations would be needed; but if my fears are correct, there will be a need to act. It is not clear that the suite of regulation-making powers in this Bill is up to the task of providing what should happen to money after it leaves a saving gateway account at maturity. My amendment is, therefore, offered as an improvement to the Bill to provide reserve powers should they be necessary. On that basis, I hope the Government will welcome my amendment. I beg to move.