Dormant Assets Bill [HL]

Lord Bellingham Excerpts

2nd reading
Wednesday 26th May 2021 Lords Chamber

[Lord Bellingham (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Davies, and it was a particular pleasure to hear the quite superb maiden speech of my noble friend Lady Fleet, which was well worth waiting for. I congratulate the Minister on how she presented the arguments and made the case that, although the Dormant Bank and Building Society Accounts Act 2008, which I strongly supported in my role as an Opposition spokesman at the time, unlocked very substantial assets—so far about £750 million—and has been more successful than expected, now is the time to extend the scheme. I support the consultation process that took place and its recommendations, and the Government’s extending the scheme to those other asset classes.

Obviously the potential is huge, and the figure of about £800 million has been mentioned. However, I was looking at some work by Bruce Cane of Monimine, an organisation which tries to reunite individuals with their unclaimed assets. It pointed out that the UK’s insurance and long-term savings industry manages investments of £1.9 trillion. I then looked at the FCA’s thematic review of 2017, which pointed out that up to 10% of customers in the life and pensions market have gone away, meaning that all contact with them has been lost. That is an incredible number, and 10% of £1.9 trillion comes to about £200 billion. Even if that figure is fanciful, at 1% that figure goes up to £2 billion, compared with the £750 million that it has been suggested this could raise, so we are talking about a very large amount of money indeed.

It is obviously very important that this is channelled in the right way, and that the Reclaim Fund works effectively. I am troubled to some extent that there are a lot of people out there who have gone away and are not claiming their money; other noble Lords have raised that point. I certainly expect extra efforts to be made to find them. As my noble friend Lord Vaizey pointed out, perhaps there will be more scope for tracking them down as we move into the digital world. I do not know, but one certainly is left thinking that the banks would be going after them if they were overdrawn. That reminds me of a story of a Norfolk farmer who got calls from his bank manager—in the days when we had bank managers managing local banks—about his £2,000 overdraft every day for a number of weeks. On about the sixth occasion, the farmer asked the bank manager to tell him the exact state of his account on 1 May last year. The manager said that it was £2,000 in credit, and the farmer said, “Well, did I ring you every five minutes?” When the boot is on the other foot, the bank will go after people, but there is a lot of money out there and it is quite right that a significant amount of it will now be captured by this new scheme and by the Bill, which we hope will become an Act of Parliament.

Maybe the Minister can respond to my concern that the Reclaim Fund must keep the vast majority of its money in cash. I understand that when it was set up in 2008, interest rates were 4.5% and there would have been a lot more money accumulated during the course of a year, but now, when you practically have to pay banks to keep money there, why can the funds not be invested in bonds or government-backed instruments of some kind, and bring in a reasonable income? Even it were a very conservative blue-chip portfolio with 80% invested in tracker funds, you would still bring in a very substantial income indeed, and there would still be enough money in the fund to pay out quickly to people who came forward to reclaim those assets.

I would also like to ask the Minister about the fund only being able to hold cash. It cannot hold assets such as shares and bonds; they have to be liquidated. I am slightly troubled by the example of somebody who goes away and does not come back for many years but then comes back to try and reclaim their share portfolio—which they are entitled to do—which would then be in cash. Would it not make sense to keep some of these assets—shares and bonds—in the original format? It is obviously more difficult with products such as insurance products. That would be welcomed by the small number of people—we gather it is only about 5%—who come back to reclaim those assets.

The Minister was very eloquent in explaining how the funds are dispensed, and she spoke warmly of the main bodies doing this. This is a point echoed by the noble Lord, Lord Triesman, who spoke in support of Big Society Capital and the Youth Futures Foundation. Other noble Lords have touched on the work done by these organisations that come under the banner of the National Lottery. I do not doubt that many of them have been doing a really good job but, as a former constituency MP dealing with a lot of small charities and organisations, I can tell the House that trying to access lottery funds is often incredibly bureaucratic. It is intimidating for small charities; it is sometimes a labour of love to achieve what you set out to.

This may not be a popular point, but the Minister could take it away and have a look at it: this could be an opportunity to reset the dial and set up a completely new organisation, because many of these charities have suffered horrendously during the Covid outbreak. Many of them are on their knees; many are small, innovative charities of exactly the sort my noble friend Lord Patten was talking about a moment ago—tiny charities operating below the radar screen, many of which are going to go out of business unless they get urgent help. Can we not use this opportunity to set up a new organisation separate from the lottery and have in place a form of governance to leverage the new guidelines that have been put in place, in terms of the organisations and causes that can be helped? A number of noble Lords have mentioned to me that it would be a good idea to do this, although during the debate other noble Lords have spoken highly of existing arrangements.

The other point I would like the Minister to examine is whether the Bill could be extended on a voluntary basis to the Crown dependencies. Obviously you have the Isle of Man, Jersey, Guernsey and all the major offshore banking centres. It would perhaps be a step too far to take it to overseas territories—places such as the Cayman Islands, the Turks and Caicos Islands or Bermuda—but these competencies are devolved to the Crown dependencies. On the other hand, by a voluntary initiative, I would have thought there would be quite a lot of appetite within them to enter a scheme that could benefit a lot of more vulnerable people. It would be done on a completely voluntary basis and would not in any way compromise their integrity as banking centres. Maybe the Minister could take that away as well and have a look at it in her closing remarks.

This is a phenomenal opportunity for the charitable sector, and I hope we can look forward to the UK being an absolute world leader and setting an example to many other countries.