Mr.
Hoban: I confess to being disappointed with the Economic
Secretary’s remarks. I understand the Government’s
objection to the requirement to have a triennial review in perpetuity.
The Chief Secretary made that objection clear on Second Reading, and
she admitted, as indeed did the hon. Gentleman,
that “we
must ensure that the scheme is working simply and fairly, and we think
it right to review it once it is up and
running”.—[Official Report, 6 October 2008; Vol.
480, c.
45.] Having
heard those words on Second Reading, I rather assumed that, rather than
debating whether to reject the clause completely, we would be
considering whether to amend it so that there was still a statutory
requirement to undertake a review three years after setting up the
scheme. We could have argued with the Minister whether one triennial
review was enough or whether we should have more than one, but I did
expect the principle of having a triennial review to remain in the
Bill.
It is worth
the Committee remembering that when the Bill was first discussed in the
House of Lords, there was no reference whatever to a review, so we have
got the Government to shift their position. The Economic Secretary made
a statement about what the review will entail. Lord Davies of Oldham
had said that he would
make a statement to that effect on Third Reading in the Lords, but he
did not do so. At least now we have a little more clarification about
what the review may take into
account. The
Economic Secretary says again for the record that this is a voluntary
scheme run by a private company, but it is being set up under an Act of
Parliament, and given the public interest in the matter it is important
to have continued scrutiny of the scheme. In the debate on clause 11 he
said that the dormancy period in the clause is a minimum and that banks
will be required to publish in the banking code how they are defining
and implementing that. The triennial review set out in the Bill would
have required a careful look at those arrangements in the hope that
shining a spotlight on them would encourage the banks to move to best
practice. That would have been an important outcome of the triennial
review. 3.30
pm There
are other important aspects to the clause on which the Minister has
given no assurances. Dormant bank accounts are a very narrow set of
assets, but we know from the Young report on the financial assistance
scheme, from the report of the Select Committee on the Treasury and
from the lobbying of the charitable sector that a huge range of other
unclaimed assets could be subject to the same type of
procedure. Clause
12(2)(f) refers to those types of asset and whether a similar scheme
should be established. Experience suggests that National Savings &
Investments is a glaring omission involving significant unclaimed
assets. It is part of the reunification scheme, for which we should be
grateful, but not part of the process of transferring money from
NS&I to good causes. We touched on that, and on the flimsiness of
the Government’s arguments against it, on Second
Reading. The
statutory requirement strengthens Parliament’s role in
scrutinising the scheme and requires those involved in it to recognise
that, once it is up and running, there will be a statutory review
rather than just an expression of the intention to hold a
review. What
will happen at the triennial review? The Government are saying that
there will be one review. While I accept that there is a good argument
for not having a review every three years until the end of time, what
will be the mechanism for taking forward any significant issues that
arise during the triennial review? At least our proposals provide for
such a mechanism, because there would be another review in three years.
It would be a rolling
process. The
best amendment for the Government to introduce would be an order-making
power to enable them to terminate the three-yearly reviews when they
were satisfied that the scheme was working efficiently and in the
interests of consumers and the bodies that are to receive the money.
That would be far more acceptable than deleting clause 12 entirely,
which would mean losing an opportunity to keep the scheme under review
until Parliament was comfortable that it was operating properly and in
the best interests of all the stakeholders. The Minister put us on
notice on Second Reading that we would come back to the matter, but the
way that has been done is unsatisfactory. I would rather that
clause 12 remained.
Mr.
Jones: I am happy that the Minister intends to review the
Bill’s proposals in three years and that he agrees that the
adequate functioning of the voluntary scheme requires transparency.
Will he therefore explain whether all the information that would be
collated in the triennial report will be available from other sources?
What information requirements will fall on banks and building societies
when they make dormant bank account contributions? How much information
will they be required to give to the public or to the BBA or the
BSA?
Mr.
Browne: I concur with everything that the Conservative
spokesman said, so I shall not repeat it. He laid out the case for the
continuation of clause 12 very well and made a valid criticism of the
Minister when he said that the Government could have been more
imaginative in their approach to the clause rather than ordering their
troops to vote it down without coming up with a more satisfactory
compromise. Both Opposition parties understand that a commitment to
review the legislation every three years for the rest of time, as the
hon. Member for Fareham put it, would be unduly onerous, but some
recognition of the concerns raised in the Lords beyond the commitment
to the initial review would have been more
constructive. I
must make one further point, which I raised on Second Reading but have
yet to hear a satisfactory answer on. There will inevitably be a hit at
the beginning, when all the money in accounts that have been dormant
for 15 years or more will accrue to the central fund, and there will
need to be some sort of review of how efficiently that is being done.
Some of the money may not shake out of the system as quickly as it
might. However, after that initial hit, in the second year we shall be
talking only about bank accounts that have currently been dormant for
14 years, so there will be far less money in the second
year. With
the initial hit of publicity in the media and elsewhere for the 15
years and more, quite a few people whose accounts have lain dormant for
14 years may wake up to the concept of the dormant account and suddenly
remember a deposit that they put in the bank 14 years ago. The
following year, there will be only those whose accounts have currently
been dormant for 13 years—when that feeds through two years down
the
line. We
are talking about legislation whose effects will evolve, may change
quite substantially—not just in the first three years, but as
they work through the system—and might have an impact on
customer behaviour and awareness. Nine or 10 years down the line, the
people involved will be people whose bank accounts had been dormant for
only five or six years when the legislation was enacted. A case can be
made, which the Government could engage with a bit more constructively,
that there is benefit to having more than an initial review, just to
ensure that the legislation is up, running and functioning—its
effect will change over time. Periodic reviews at different points down
the line might reach different conclusions and find out different
information from just one
review.
Tom
Levitt: It is a pleasure to serve under your chairmanship,
Dr. McCrea. I share the bemusement of the hon. Member for Fareham that
the Government have chosen to delete the clause rather than to amend
it.
My hon. Friend the Minister gave a speech a moment ago that he would
have given had he been moving amendment No. 18, which has not been
selected but which would have deleted the whole clause. I have some
sympathy with his argument, but not for removing the question of a
review from the legislation
completely. For
example, in subsection (1), the
words “and
not more than every three years
thereafter” could
have been deleted. That would have allowed one review three years after
implementation, without a commitment to such a thorough review later
on, thereby meeting one of his major
objections. I
also accept that clause 12 is incredibly detailed—probably more
than is necessary for carrying out the review—but it is an awful
lot less detailed and convoluted than it would have been had we
accepted amendment No. 7. Therefore, it is not as bad as it might have
been. The clause could be amended to improve it, but the Bill not
providing for a review would be a
mistake. I
hope I deduce from the Minister that we shall be able to put things
right, in the sense of being able to make changes to such a scheme,
when we come to new clause 2, which stands in the name of my hon.
Friend the Member for Clwyd,
South. What
would be the purpose of a review if it was not specified in the Bill?
If banks and building societies joined the scheme only on a voluntary
basis, they could opt out if they did not like what a review came up
with. If the detailed rules of the scheme were those that banks and
building societies had drawn up, what would the review be able to
achieve? If the review was not carried out by those who were
implementing the scheme, the point of the review would not be very
strong. In
addition, could the banks and building societies taking part in the
scheme not carry out their own reviews and change the scheme rules
without referring back to the Government? All those issues will become
real questions once the need to have a review of some kind is taken out
of the
Bill. I
take the Minister’s word that a review will happen, but if we
take this approach and if the review cannot make a fundamental decision
three years down the line—that decision might be, “This
voluntary approach is not working and we need a mandatory
approach,” and I feel that a review not specified in the Bill
could not say such a thing—I think we are missing a
trick. I
am happy to take the Minister’s word that such a review will
take place, and I understand why he wants to delete the clause, but we
need something stronger from him at some point on what his review will
be capable of doing, especially if it concludes that the scheme is not
working as well as it
might. Mr.
Mark Field (Cities of London and Westminster) (Con): I
hope that the Minister, in justifying his stance on the matter, will be
spouting only his own rubbish rather than anything presented by his
civil servants. I entirely agree with the comments made by my hon.
Friend the Member for Fareham and with many of those made by the hon.
Member for High Peak.
I have one
other consideration to offer. Given that the Government are now, in
large proportion, the owner of two of the big four
banks—presumably there will be many dormant accounts in HBOS,
Lloyds TSB and
RBS—it is incumbent upon them to give stronger justification as
to why a triennial review going some way into the future should be
struck out in this
way. I
appreciate that the Minister has some concerns with elements of the
clause, but simply to do away with all the safeguards
here—safeguards for Parliament, on behalf of all our
constituents, but also to ensure that the system works correctly in the
years ahead, not least when the Government are such an important bank
owner—would be entirely
undesirable.
Ian
Pearson: I have listened carefully to the debate and a
number of perfectly valid points have been made. When we came to the
clause as a team, we had a closer look at it and felt that it would be
difficult to produce effective amendments that enabled us to have a
review, but not the onerous requirement to review for all time, as the
hon. Member for Fareham says and which I think is accepted on all
sides.
On the amount
of information that will be available for the review—a point
raised by my hon. Friend the Member for Clwyd, South—there are
already, elsewhere in the Bill, quite substantial requirements to
produce information. When we debated previous clauses and amendments,
we considered the fact that the private company that operates the
reclaim fund must produce accounts on a timely basis. I am therefore
confident that there is sufficient information there for a review to be
conducted and for it to be an effective
one. Issues
were raised about the scope of the review by my hon. Friend the Member
for High Peak and the hon. Member for Fareham. When conducting the
review, we would want to look at the overall operational effectiveness
of the scheme. The issue of whether it should transfer from voluntary
to mandatory is different. Similarly, the point made by the hon. Member
for Fareham about whether we should consider other assets, such as
insurance assets and so forth, raises a range of issues that are not
legitimately within the scope of this legislation. Both the mandatory
elements and looking to extend the scope of the scheme would require
additional primary legislation. It would not be appropriate in a review
of effectiveness to include areas that were completely outside the
scope of the
Bill. 3.45
pm
Mr.
Hoban: The subsection in clause 12 that relates to other
assets does not talk about using this legislation to set up a fresh
scheme. It just ensures that the issue of other categories of assets
does not drop off the radar screen. It says that the report should look
at “the
desirability and practicality of establishing similar
schemes”. It
does not say anything about creating a framework for setting up such
schemes. It just says that we should keep our eye on the ball and make
sure that we do not forget that there are other classes of assets that
people might want to look at
carefully.
Ian
Pearson: I do not want things to drop off the radar screen
either. Of course, as a Government we want to keep legislation under
review, but we have no current plans to extend the scope of the scheme,
and we think it premature to commit to a specific review of other
assets. It might be appropriate in the future.
I commented on
how we propose to conduct a review of the effectiveness of the scheme
after three years. I do not think that one should doubt the word of
Government when they say they will conduct a review after three years
but, if it is helpful, I am prepared to reflect on that and produce an
amendment on Report which would commit to a review being held after
three
years.
Mr.
Hoban: It may be helpful to the Minister and officials to
look at the Financial Services and Markets Act 2000 because that
includes provision for a statutory review of the FSA and the financial
ombudsman service two years after they were set up. The framework for
an amendment might be found there. One of the issues that arose from
those statutory reviews was that once they had taken place there was no
formal mechanism to go back and review either the FSA or the FOS, and
they were just kept under review. That has led in the case of FOS to
quite a lot of discontent among industry members. That legislation is
helpful in so far as it says that there is a mechanism to do this, but
it also suggests that saying once is enough may not be
appropriate.
Ian
Pearson: As I have said, I am happy to talk to officials
and to commit to introducing on Report an amendment that we will
conduct a review. We need to be clear about the scope of the review
that I am considering. As I said, I do not think that, when we have no
current plans, we should be committing to a review of other specific
assets at a particular time, but I agree that we should scan the
horizon. Nor do I think that we should commit in three years’
time to review whether the scheme should be mandatory because, again,
we have no plans to do so and we have no reason to doubt that the
voluntary scheme will be successful. However, we will continue to
monitor policy developments.
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