Dormant Bank and Building Society Accounts Bill [Lords]

I shall come to that and suggest some other problems that undoubtedly arise. The Committee struggled to see what incentives a bank will have to participate fully in the scheme. Another speaker also questioned what incentives might be in place. There is, to some extent, an incentive in the disclosure mechanisms that lie within the proposals in that the reclaim fund will publish the details of contributions made to it. Therefore, by definition, those who have been less enthusiastic participants will be exposed, although there may be reasons why their contribution might be lesser. They might be more effective in tracing links to unclaimed funds, for example. Such information will probably not be a particularly strong enforcer of participation. A refusal might also, particularly in current circumstances, be considered by shareholders in the institution one of the lesser faults of that institution, if I may put it that way. This matter will not be a high priority among most shareholders or, for that matter, among the executive management team. We can be pretty sure that it will not be a bonusable objective in banking to distribute unclaimed assets as rapidly as possible to a reclaim fund. Other means than something of this kind will be sought to motivate senior executive teams, so there clearly is an issue of how to ensure that the proposal delivers something like the objectives that we all have for it. I do not think that there is a risk of banks and building societies refusing to participate because, once people have become aware of these matters, that represents open defiance of the genuine public will and of Parliament. Nevertheless, we should consider the commitment of resources to the task that participation involves. This is not a trivial activity. From what I can tell, the average size of such accounts is between £100 and £200, and in many cases the costs involved in tracking down individuals to reunite them with those accounts will probably exceed the sum involved. Therefore, one can hardly say that a financial institution will be unwise to think carefully about how to prioritise its resources to achieve the objectives of the Bill. Without a compulsory framework, one can see considerable difficulties. For that reason, the correct balance is probably struck here in terms of facilitating a voluntary approach first and then reviewing the mechanism established by the Bill to see how it is working. We will then be able to see whether rather firmer statutory enforcement is required. I am sure that we will discuss that further in Committee, although I would wish that it were not necessary. I hope that this would be a task committed to by the financial sector with some enthusiasm, but one has to say that that is a counter-intuitive thought in current circumstances and in relation to the mechanisms in place to reward bank staff for achievement of particular goals. I note, for example, that my noble Friend Lord Bach said in the other place that"““prestige is likely to be attached to participation””.—[Official Report, House of Lords, 29 January 2008; Vol. 698, c. 568.]" I have a lot of respect for his opinion and I know him well, but I must admit that I am not sure that that will be a substantial motivation for people to press ahead with the scheme. I hope that the Minister will suggest some more powerful mechanisms to prevent lip-service participation by businesses that are committed to taking part in the scheme. It is fair to say that at the margins—much of banking is a low-margin activity—there will be a temptation for companies to exercise some competitive advantage in this area by the efforts that they put in, because the steps that are taken will undoubtedly and obviously have some effect on removing cash from the institution concerned. There is an argument about how much the balance sheet will be weakened. After all, both sides of the balance sheet—assets and liabilities—are involved. These proposals will certainly remove a cash resource from institutions and, as I have said, there is a cost attached to the activity itself. Some institutions might decide to spend less money and time on it and observe with some enthusiasm how others spend rather more time and effort on it. The competitive nature of the industry might persuade some to put in fewer resources than they should. Let me turn to the issue of data, about which most people in the House care pretty strongly. One must presume that at least some details of individual assets and their presumed owners will be transferred to the reclaim fund for ongoing pursuit, so it is worth the Minister setting out some reassurances on the transfer of what we must recognise are data about individuals and their financial circumstances, whether they are still alive or not, and whether, for some reason or other, they have no wish to be identified with their assets. These matters might be very personal to them, so we need to be sure of the security of the transfer of personal data. I also presume that, should a bank or building society cease to be active, tracing an individual's account back to him will become an obligation of the reclaim fund. Therefore, the data that are transferred must be sufficiently full to make it possible to establish such linkage at some future stage. We must always recognise that, however old some of these accounts are, someone may indeed have some claim on them, and they have every right to that claim. We have also touched on the participation of National Savings & Investments, and here I firmly side with the Select Committee. I felt that the Government's answer on the reason for the exclusion of NS&I from the scheme was rather thin and that it implied that if they gave this money away they would have to find the same amount somewhere else. Yes indeed, but this is someone else's money. In some ways, it could be argued that that is true of everything that the Government have, but that is an over-philosophical argument to have at this time of night. However, we are talking about savings which, by an individual deliberate act, have been placed in the care of the Government to bring some return. That is different from the receipt of money from all of us as taxpayers. My personal view is that NS&I ought to participate in the scheme on the same basis as banks and building societies. I hope that the Minister will be able to explain with more rigour than the Government mustered in their response to the Select Committee report why that should not be true. My anxiety about the disbursement mechanism in no way reflects any ill-will towards the good causes identified by the Government. They are all sensible and we can debate the precise balance of the spending between them this evening and in Committee. However, I am concerned that we are dealing with other people's money, held by private institutions. I would have preferred a more inclusive mechanism for deciding how the resources should be distributed than simply saying that we will give them to the Big Lottery Fund and setting out the broad objectives that we have in mind. To go back to my earlier remarks, that takes us a little further into the state's role in the matter than I would optimally have preferred. Even at this late stage, I would prefer more consultation so that stakeholders can have a greater say. A good example of that is the role of charities. It is undoubtedly true that a significant proportion of the money may well be attributable to charities on the basis that they are the beneficiaries of a will. Although the voluntary sector should not have the exclusive say, I would have welcomed some participation by it in the process to decide whether the priorities are right and perhaps to answer some of the questions on proportionality as it relates to the good causes named so far.