There are five matters to which I will refer, two of which are of current interest, two of which could be called banking bees in my bonnet and the fifth relates to the general provisions of the Bill. There are a number of issues in the news relating to the Central Bank which might necessitate the Minister changing the provisions of the Bill. It is obvious from the evidence the Governor of the Central Bank gave to a committee of the Oireachtas yesterday and from a headline in today's Irish Independent that the bank will not name cheats to the tax tribunal. It is obvious from his evidence that the bank does not believe it should have any involvement in tax evasion matters. While I understand that, the Minister should clarify the bank's role when it discovers tax evasion. He should also clarify its position in relation to the Moriarty tribunal. I accept the need for independence and confidentiality and the need for other European banks and outside investors to be assured of the safety and confidentiality of their deposits. However, this sovereign assembly set up a tribunal to investigate certain matters and in so far as possible it should not be impeded from getting at the facts it has been asked to ascertain by the Dáil. The Minister should outline the Central Bank's role in terms of that tribunal. The Governor believes that if he discovers tax evasion in a bank under his supervision he has a duty to report it to the Garda, but not to the Revenue Commissioners. He also believes he should not give such evidence to the Moriarty tribunal or any other tribunal set up by the House. He believes he should pass on information on breaches of exchange control to the Minister who I assume would give it to the Moriarty tribunal. In the light of the concern that that tribunal does its job properly, fully and effectively, the Minister should deal with this matter today. He may deem it necessary to introduce an amendment to the Bill.
The Minister should also deal with the inflation forecast which is somewhat alarming. We are operating on the basis of a prospective inflation rate of 2.5 per cent. Using a model recommended by the Central Bank, Dr. Leddin of the University of Limerick predicts an inflation rate of 5 per cent. That would have alarming effects. Even taking the worst case scenario predicted by Dr. Leddin, I accept that inflation will not increase to 5 per cent this year, but I am concerned about the 1999 figure. Because of competition, hedging arrangements and other factors, we have escaped the dangers of inflation so far, but there are worrying signs particularly when one considers the measures introduced in the budget, rising house prices and so on. We cannot ignore the 18 per cent price increase on imports from the UK. They are bound to feed into our figures at some stage. The Minister should also refer to this matter today.
There are two issues about the Central Bank to which I want to refer before dealing with the broader issue of the Bill, which I support. I want to deal with the responsibility of the Central Bank and the powers we give to it to ensure the safety and security of money deposited in banks. We all think banks are as safe as houses and, fortunately, that has been the case here for some time. However, some of the financial houses in Japan are experiencing major difficulties and I am told that in South Korea, which is buffeted by the winds of misfortune at present, ten of the 30 merchant banks will close this year. We should consider the security of money on deposit in banks in the calmness of our current fiscal climate. People who invest in risky ventures accept that things might go wrong, but people want to be assured about the security of their money in banks.
The Legislature sets out the limited number of areas where trustee funds can be deposited, including banks. What is the position regarding the safety and security of such money? When I looked into this matter I was concerned that under the Central Bank Act, 1989, the maximum compensation for a deposit is £10,000. Under the 1989 Act, as confirmed in a recent letter from the bank, depositors are protected under the Central Bank deposit guarantee scheme for 80 per cent of the first £5,000; 70 per cent of the next £5,000 and 50 per cent of the next £5,000. If the amount exceeds £15,000 there is no compensation; that is unacceptable. Will the Minister use this opportunity to amend the 1989 Act to update these figures? I am particularly concerned about the position of trustee funds.
The House will be aware I am a solicitor. If trustee funds or client funds are lodged with a solicitor and a problem arises with those funds the solicitors' compensation fund is liable to the extent of 100 per cent to cover any default. The solicitor may then lodge the money in an authorised trustee bank ranging from Ansbacher to Woodchester but there is no State guarantee for those funds. The maximum guarantee for such deposits is £10,000. That is unacceptable. The Minister should use the opportunity of this Bill to amend the complicated fractions set out in section 59 of the 1989 Act to increase the deposit protection guarantee scheme to a minimum of £25,000 and in respect of trustee funds the amount should be unlimited.
I wish to raise the question of dormant accounts. While I have raised this matter from time to time by means of parliamentary questions I am still not satisfied with the response. An examination of the issue was carried out by representatives of the Department of Finance, the banks and the building societies, following which a report was prepared. Those involved in that examination should have been far outside that circle. Apart from tabling parliamentary questions I have been in touch with the Irish Bankers' Federation, who have been courteous and helpful in their responses, but I am still not satisfied. There is a problem although many people suggest there is not.
I have come across individual problems and I know accounts lay dormant for many years. I have had the experience, through my law firm and otherwise, of inquiries being made with banks about accounts, particularly of deceased persons, and details of individual accounts coming back. However, other accounts either in the same bank or in other branches of the bank were not reported. I am aware that a second account in a joint name may not turn up on a search. In the event of an inquiry being made about an account for John Browne which happens to be in the name of Séan de Brún the details could not be got.
I had a personal experience when looking after a person's affairs of making three inquiries of a bank. On the first two occasions I was told the account could not be found. When I persisted with my inquiries a special savings account was discovered.
In relation to other aspects of funding, a headline in the Sunday Business Post of 4 January 1998, read: “Over £20 million assurance funds unclaimed”. The article referred to major efforts by Standard Life to trace policy holders who should be drawing down policies that had matured. Despite its efforts a substantial sum of money was unclaimed. A headline in The Sunday Times of 15 February 1998 on the situation in the UK, which cannot be that different from here, read: “unclaimed savings hit £45 billion”. The article stated that bank deposits which account for the bulk of unclaimed money are more difficult to trace, that many accounts have been dormant for years and passbooks lost.
I am convinced there is a problem and on that score I am not satisfied by the replies I have received to Dáil questions and otherwise. In the last reply I was informed there were potential legal and constitutional issues. If there are such problems let us confront them. We are legislators and that is what we were elected for. If there is a difficulty let us deal with it and find a solution.
I have made the suggestion that there should be an obligation, via the Central Bank, on all banking institutions and others that take deposits, to issue an annual notification to the account holder. If there is no notification and the person dies and the passbook is lost in many instances, there is no record of the account. In that event the money remains in the bank. Technically this money is owned by the heirs and descendants of the deceased person but it is no good to them if they do not know about it and cannot trace it. A way around the problem would be a requirement for a notification procedure. When I made this suggestion previously I was informed that due to secrecy obligations it could not disclose information. That is humbug. Of course the bank can disclose information to the person who lodged the money. That is not a breach of secrecy or confidentiality. The person who takes in the money should be obliged by law to issue a notification, in relation to any amounts over a certain sum — obviously accounts of £1 or £10 do not arise — unless, at the making of the deposit, different arrangements were made.
I accept there may be circumstances where a person may not want notification of a bank lodgement of £5,000 sent home in case another person in the household might see it. To take account of that a procedure could be followed whereby the person who owns the deposit could sign a note to absolve the bank from the notification procedure. Otherwise there should be a rule that notification should issue at least once a year. The day of the personal bank is gone and often bank staff may not know a customer has died. In those circumstances the notification would be sent to the deceased's house and then the necessary steps could be taken to regularise the matter. I give strong notice on that issue that the campaign I have been conducting for quite some time is not over. I am convinced it will become more important to deal with this matter. There was an old advertisement for a whiskey, "Tullamore Dew, give every man his Dew". It is important to ensure every man is given his due in relation to those accounts.
I am in favour of the Bill. I am pro-Europe and pro-EMU and I am delighted the Bill is being put into law. I am interested in the rather convoluted manner in which the Minister dealt with the proposed exchange rate with the euro. Apparently it will meet the needs of our economy in the full sense of the word and the decision cannot be finalised until the end of July. We are still somewhat confused as to what that figure will be and what the UK will do. However, I will not look into a crystal ball and decide on that at this stage because essentially that is what everybody is doing. Everybody has to take a chance on this. If one had sterling to convert to punts or punts to convert to sterling, one has to take the best advice on whether and when to convert and the same applies to the other currencies. I support the Bill in general and I would like a positive response from the Minister to the issues I raised.
