Saving Gateway Accounts Bill

My Lords, Amendment 13 would add a new subsection to Clause 16. Clause 16 in effect allows saving gateway accounts to be transferred to an ISA on maturity, which is a fine and sensible home for the product of a saving gateway account. But there is nothing else in the Bill about what will happen to a saving gateway account post-maturity. It ceases to be a saving gateway account at that stage and therefore has to be transferred to another account. It is not unduly cynical to say that banks do not routinely help their customers to hold their funds in the most suitable accounts or in the ones which offer the highest yield for the customers’ preferred notice period. Anyone who has cash on deposit has to be vigilant in watching how banks vary their rates and terms. I do not know about building societies, but I have no reason to think that they are any different. If banks do not help their regular customers to maximise their returns from cash held on deposit, it is hardly likely that they will do so for saving gateway accounts with their rather marginal economics. In Grand Committee, the Minister said that the Government expected that account providers would, ""want to help their customers access the option most suitable to their needs".—[Official Report, 21/4/09; col. GC 371.]" That represents the triumph of hope over experience. The Minister in the other place also talked about wanting to establish a competitive marketplace which would include rollover arrangements. We are far from convinced that there will be any real competition in the saving gateway market. But even if we are wrong on that, it is unlikely that account holders, with their lack of financial sophistication, will be able to differentiate at the outset between those account providers which offer a good default account at the end of the maturity period and those which do not. In any event, the banks are rather good at changing their terms and conditions when it suits them, and so what looks good when a saving gateway account is opened may be pretty unattractive two years later. A likely scenario is that the money will be transferred to a low-interest account or, even worse, to a current account which does not pay interest. The Government should have some responsibility to protect account holders when the saving gateway period comes to an end. As far as I am aware, there is no provision in the Bill which would allow the Government to specify a default rollover provision, such as into the provider’s highest-rate instant-access deposit account. There appears to be no relevant regulation-making power. I do not advocate that the initial regulations should include requirements for funds at the end of the maturity period. It may well be that account providers behave impeccably. But I advocate the Government having the regulation-making power in reserve to use if it transpires that account holders need some protection. That is all that my amendment does and I hope that the Minister will agree that it would be desirable for the Bill to contain this reserve power. I beg to move.