Dormant Accounts Bill, 2001: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister for Finance (Mr. McCreevy)

For about a decade, the issue of dormant accounts has attracted sporadic attention from Deputies on all sides of this House, as well as media interest in the potential there might be for the State to put these funds to good use. Investigation into the matter raised complex constitutional, legal, operational, prudential and investment considerations – the right to private property, rights on foot of the Succession Act, 1965 and the State Property Act, 1954, the bank-customer implied contract of confidentiality, and the implication for banks' solvency and liquidity. I also had to consider the public perception impact of introducing such a scheme, and what effect this would have on potential investors both domestically and overseas.

However, my main concern was that there was not an onus on credit institutions to trace the owners of deposits lodged with them. It was up to clients or their next-of-kin to come looking for their money. The days of personal banking, in which banks' staff knew their clients and notified their dependants in circumstances where the account-holder had died, for instance, have long passed, and no system was in place which guaranteed next-of-kin their rightful inheritance. In addition, there are many instances where people have chosen to remain secretive about their financial affairs, in which cases dependants or next-of-kin have found it impossible to trace the relevant accounts.

This failure to trace account holders has long been a matter of public conjecture and concern. Demutualisation of the Irish Permanent and First National Building Societies in recent years indicated the extent of the problem. In the Irish Permanent flotation, in 1994, almost half of those people entitled to free shares did not initially take up that offer. However, by the time the process was completed in 1997, and following the extensive advertising campaign, that percentage of non-claimants had fallen to 8% of customers. Nevertheless, this still numbered about 12,000 accounts.

Another factor which gave impetus to this reform was that in its Report "Parliamentary Inquiry into DIRT", published in 1999, the Committee of Public Accounts (PAC) Sub-Committee on Certain Revenue Matters recommended that, as soon as was feasible, legislation should be prepared by me so that funds in dormant accounts could be used for specified purposes to benefit society. The sub-committee considered that the money in these accounts represented "free capital" for financial institutions in that deposit-takers had free use of these funds – in effect, that the moneys had become part of the capital base of these institutions. The sub-committee was anxious that the benefit of these funds, which seemed to lie unclaimed for long periods, should accrue to society as a whole, and not just to the financial institutions.

Having regard to the various factors already mentioned, last November I proposed the outline of a scheme to deal with these dormant accounts. The Government accepted these proposals and gave permission for the legislation to be formally drafted. This proved to be a long and challenging task, as many issues came to light in the drafting process that had not previously been considered. I was aware that the successful development and implementation of the proposed scheme would require the full co-operation of the financial institutions and their representatives, as well as the advice and co-operation of the Central Bank of Ireland and the National Treasury Management Agency. I am pleased that assistance from all these parties was always forthcoming and was of enormous benefit.

The proposed legislation ventures into uncharted waters. We had no other statutory scheme we could examine for possible pitfalls or which might steer us in the right direction, given the route we wished to take. Nevertheless, what we have provided for in this legislation gives the best and most equitable balance between the rights of account-holders and the desire that neither the credit institutions nor the State should be burdened with an unduly bureaucratic scheme.

The Bill fully addresses the Public Accounts Committee recommendation for the use of the moneys in dormant accounts, in that charities and the community at large will benefit from these moneys once the scheme is operational.

My Department has attempted to build up an estimate of the amount of dormant funds held in accounts with the credit institutions on the basis of information supplied by the banks, building societies and An Post. After much discussion of the parameters, the institutions agreed to supply information relating to the number and value of deposit accounts which had been "dormant" for various periods of time, including those dormant for 15 years. An Post also supplied relevant information relating to savings bonds, savings certificates and instalment savings schemes.

In the end, a period of 15 years dormancy, that is, where there has been no customer-initiated transaction on an account for at least 15 years, was decided upon. This was mainly in consideration of the fact that a lesser period might cause disquiet among account holders and lead to an inordinately high level of reactivation of accounts with consequent and unnecessary administrative work for all parties concerned. I was also aware that 15 years is the shortest defined period for dormancy in the EU.

Given a period of dormancy of 15 years, I was advised that the number of such accounts could be in excess of 840,000 and their value could be of the order of £130 million. However, these figures are still only estimates of the amount of money involved. They do not take account of the likely level of reactivations once the institutions in question bring the proposed scheme to the attention of their customers. Nevertheless, they represent the institutions' best estimate to date, and provided enough of a reason for me to pursue my stated aim of bringing forward proposals to deal with these accounts.

Deputies will recall the Government's decision that the scheme, once in place, should also apply to mature, but unclaimed life assurance policies. I do not intend to talk about this today, except to say that I am still pursuing this matter with the insurance industry, and intend to bring forward proposals to deal with the matter later this year. What I propose in the current Bill is more modest than the Government originally envisaged, but more achievable. It makes for a good start on the issue of dealing with funds long neglected by owners, and will certainly help to establish the basic framework within which to deal with other dormant products.

The Government also agreed that officials from my Department should continue to hold talks with the Irish League of Credit Unions with a view to reaching agreement on a formal basis, for the treatment of dormant accounts in credit unions. Such discussions are ongoing. I hope we can provide for inclusion of dormant credit union accounts at a later date, possibly by way of extension of the current scheme by ministerial regulation.

The scheme I am now proposing, to come into effect on 1 April next year, will provide a legislative framework which will improve regulation with regard to handling and management funds in dormant accounts in credit institutions. It will require those institutions to actively take all reasonable steps to identify the beneficial owners of such funds, with a view to at least alerting them to the existence of those funds, or even repayment if the customer so desires. In the event that the owner or owners cannot be traced, dormant funds will be taken into the care of the State, with a right being guaranteed to the beneficial owner to subsequently seek a refund. The moneys will be held in a separate fund to be established by the National Treasury Management Agency, whose remit will be to invest the moneys prudently, especially given the possibility of claimants seeking a return of their moneys at a later date.

I am also proposing the introduction of a scheme for the disbursement of surplus dormant funds for the benefit of charities and the community at large. The purposes for which this money may be disbursed are set out in section 41. Broadly speaking, the projects or programmes to benefit will be those designed to alleviate poverty or social deprivation, or to assist those who are physically disadvantaged. The legislation also provides that moneys currently vesting in the intestate estates fund deposit account may be transferred, henceforth, to the dormant accounts fund, on foot of an amendment to the State Property Act, 1954.

I now turn to the key principles I have enshrined in the legislation establishing the dormant accounts scheme. While I am bringing forward the framework legislation, the Minister for Social, Community and Family Affairs will have the primary ministerial responsibility for the scheme once it is up and running, especially for the disbursement aspects. I am very conscious that the moneys with which we are dealing derive, in the main, from private bank and building society accounts and that, as such, they must be handled and invested prudently, having regard to the constitutionally guaranteed right to private property and the confidential nature of the relationship the credit institutions enjoy with their customers. My concern that customers should be reunited with their moneys, including all interest due thereon, is reflected in four key features of the Bill.

First, the term "dormancy" will now be statutorily defined, and therefore be applied uniformly by all institutions which fall within the ambit of the scheme. This will provide clarity for customers, in that they can be certain that if they have not carried out any transaction on their accounts for 15 years or more, as and from 31 March next year, the money in the account is due to be dealt with in a defined manner. This should also encourage account holders to make contact with their bank or building society to ascertain whether they do have an account at that institution.

Second, the institutions in question will now be required to make best efforts to contact their customers. This may be done in one of two ways. For customers whose accounts are valued at or above 100, banks and building societies will be required to personally contact those account holders, making them aware of the scheme and their rights and obligations under it. For accounts valued below 100, as well as for so-called "non-correspondence" accounts, notification will be by way of advertisement in two or more national daily newspapers. Non-correspondence accounts are those in regard to which the account holder has requested that no correspondence be sent to his or her home address, or where correspondence sent to an address has been returned to the credit institution. These annual advertisements, the first of which is scheduled to take place in April next year, will generate public awareness of the scheme.

Third, the legislation provides that the National Treasury Management Agency will establish and manage a dormant accounts fund, into which moneys from dormant accounts will be transferred from April 2003. The agency will be required to invest these moneys prudently, based on guidelines which I will help to draw up, but having regard to the need to meet the costs of making repayments to valid claimants seeking a return of their moneys. The main issue here is that not only is a claimant entitled to a return of the principal transferred from his or her account, but also to any interest that he or she would have been due on that principal, had the account remained with the institution. The moneys in the fund will generate an investment income, some of which will be used to offset the costs of interest payments to claimants, and the rest of which will be reapplied to the fund. In that way, account holders are guaranteed the maintenance of their rights.

Fourth, the legislation will give the Minister for Social, Community and Family Affairs authority to appoint not only the members of the disbursements board, but also inspectors for the purposes of ensuring compliance with the scheme on the part of the institutions. These inspectors, who will essentially be professional accountants hired on contract, will be empowered to examine the systems and practices which an institution employs to see if the systems are adequate for the purposes of identifying and notifying the holders of dormant accounts. They will also ascertain whether all moneys due to be transferred to the dormant accounts fund have been transferred and properly recorded.

Turning to the main provisions of the Bill, in summary, it provides for identification of the types of accounts and institutions to be covered by the scheme; the period of dormancy applying; the obligations of the institutions in relation to notification of account holders that their accounts may be deemed dormant; the establishment of a dormant accounts fund to be managed by the National Treasury Management Agency and the procedure, including the timeframe, within which moneys are to be transferred to that fund; the rights of share account holders, in building societies, on foot of the legislation; a new recording procedure to be adopted by the credit institutions in relation to the holders of dormant accounts; the introduction of a scheme whereby institutions will be obliged to complete certificates of compliance with the provisions of the legislation, in order that any failure on the part of institutions can be quickly identified; a new role of inspector, whose remit will be to check compliance with the legislation on the part of the institutions; amendment of the State Property Act, 1954, in order that moneys from the intestate estates fund deposit account can, henceforth, be transferred to the dormant accounts fund; the appointment by the Minister for Social, Community and Family Affairs of the Dormant Accounts Fund Disbursements Board, whose remit will be to disburse moneys from the dormant accounts fund, for specified purposes, on receipt of successful applications for such; accountability of the chief executive of the National Treasury Management Agency, and the chairperson of the Dormant Accounts Fund Disbursement Board, to the Committee of Public Accounts, for the functions of the agency and the board respectively, including provision for annual reports from each of those bodies; maintenance of confidentiality in relation to ownership of the moneys in dormant accounts; and extension of the scheme to other classes of product and/or other classes of institution, at a later date, by ministerial regulation.

While the Bill does not purport to address all the issues or provide for a complete solution to the issue of dormant accounts, it make an ambitious start. It enables us to begin to provide for a systematic approach to the regulation of these accounts, in the strive for transparency of their treatment, as well as providing for an equitable and socially beneficial use of any surplus moneys identified. The Bill is innovative legislation and I commend it to the House.

Mr. J. Mitchell

I welcome the Bill which was proposed by the Committee of Public Accounts in its DIRT inquiry report, which I chaired. I am mystified at the song and dance the Minister is making about it. The Government is being much too reluctant to address this issue and I am astonished that it considers 15 years to be the appropriate period to wait before securing a dormant account. I favour a much shorter period, perhaps seven years.

In response to queries from the Committee of Public Accounts the Minister gave figures for different time spans. If a period of 20 years was allowed to elapse, a total of £53.6 million would be secured; a period of 15 years would yield £139.5 million; ten years would yield £402.6 million and five years would yield £1.75 billion. These are astonishing sums and they do not even include prize bonds.

The Minister is effectively saying that this legislation is good for the banks but not for the prize bond funds. I speculate that there is approximately £100 million of dormant prize bonds. It is an act of partisanship on behalf of the Government and the Minister not to include them. I will also press him to treat dormant Government funds equally with other funds in building societies etc. The Bill does not cover dormant or unclaimed insurance policies which I hope will be included.

The financial institutions take great advantage of the inertia of their customers. This applies not only to long forgotten bank accounts but also to current funds. In a submission to the Committee of Public Accounts the chief executive of the National Treasury Management Agency said that while he looked after the national finances, he was very poor at looking after his own. I well identify with this. Many others are in a similar position. The banks make a killing on a daily and annual basis because of the inertia of their customers. The dormant accounts represent an advanced form of inertia, yet this legislation proposes to allow the financial institutions to have free use of them for a period of 15 years. While I accept that this is the shortest period in similar EU legislation – France has provision for a similar period – it is far too long. If there has been no activity involving the owner of an account for seven years, why should it not be taken into the dormant accounts fund given that any owner or legal heir can reclaim the funds with interest?

I am also puzzled by the Minister's view that a disbursement board should be established. This is overkill because there is a precedent for the fund in the Funds of Suitors Acts under which unclaimed money that had been lodged in the courts was used for specific purposes in the past. A board was not set up to disburse that money, although the amounts involved were much smaller. I recall one case where £2 million to £3 million of suitors' funds was dedicated to the refurbishment of the Kings Inns building. The disbursement fund suggested by the Minister has all the hallmarks of another slush fund to be used like the national lottery.

Mr. McCreevy

It will not be like that.

Mr. J. Mitchell

I look forward to the Minister's assurances—

Mr. McCreevy

That is one of the reasons for setting it up like that.

Mr. J. Mitchell

The board will be appointed by the Minister. If it is anything like the Aer Lingus board, it will be like a Fianna Fáil cumann. Aer Lingus is in a mess and it is effectively presided over by a Fianna Fáil cumann. When I was the Minister in the Departments of Posts and Telegraphs and Transport and Communications, I tried to move away from the party politicisation of boards because it was ruining the State sector. However, under the Bill, most of the board members will be appointed by the Minister with one nominee from outside. It is an unnecessary board.

In making its proposals in this area, the Committee of Public Accounts wanted the money spent on social needs and the Minister referred to that aspect. It should be narrowed down to two areas; the money should be spent on primary education and on the elderly. The number of young people who leave primary school with learning difficulties is alarmingly high. It is four times the level in Finland and it means that three quarters of the children who leave primary school with learning difficulties are embarking on a life of disadvantage that could be avoided.

Primary education should be the first priority. Resources are now available and they should be poured into providing extra remedial teachers, psychologists, home school liaison arrangements and family back up services. It need not be the case that three out of every four children leave primary school with learning difficulties and embark on lives of disadvantage. This problem has gone on for too long and this fund could be specifically targeted at this area. This would prevent the money being used as a slush fund. It would also be a great service to those individuals, their families and society as a whole. Many of those children end up in prison; 80% of people in prison left school with learning difficulties and they are semi-literate or illiterate. Half the fund should be used in this area.

The other half of the fund should be dedicated to the elderly, many of whom may be unaware that they own dormant accounts. People are living longer and there is a need for a dramatically enhanced provision for the care of the elderly. Many people end up living lonely lives in over-large houses that are in poor repair and which they cannot afford to keep. Such people are cold, worried and insecure while many others end up in nursing homes when they need not. The country now has the resources to match the vision in this area. Villages for elderly people should be built in every community. They would include a nursing home as well as private bungalows or apartments. This would ensure that elderly people could remain in their communities and have security.

Local authorities, particularly in Dublin, have done a great job with regard to accommodation for the elderly. However, my concept is wider and involves a village where a nursing home is located beside private accommodation for the elderly. People could use the common facilities, such as washing machines and the chiropodist and hairdressing services, but also maintain their independence. This process would ensure that extra housing became available. Many individuals occupy over-large houses and, in the right circumstances, they might be prepared to move a smaller bungalow in their own community.

We have an opportunity to address these two specific areas, but a board is unnecessary. There would be bureaucracy and overhanging costs if a board was involved. However, if my proposals were adopted, there would be tangible gains from dormant accounts. The Bill proposes a board that will invest the funds. It will allocate £100,000 to one project and £10,000 to another proposal. The money will be mixed up with lottery and departmental funds and nobody will know the difference. I recognise that my proposal is radically different from the Bill and would lead to a significant restructuring of the legislation, but I plead with the Minister, who is an innovative thinker, to consider making major changes between now and Committee Stage.

The Bill does not appear to address the duty of financial institutions to try to locate owners of accounts. I raised the issue of dormant accounts a couple of years ago and made a song and dance about it. Later, I walked into a branch of a bank to lodge a cheque – my account was in another branch – and the sprightly bank manager came out to tell me with glee that I had a dormant account in that branch. I had forgotten about the account which contained a few hundred pounds. I had been in and out of the bank on many occasions previously and they knew where I lived, but no attempt had ever been made to contact me.

The banks are being deliberately inert in relation to dormant accounts. They have used the money and their approach is to allow sleeping dogs lie. It is another example of their bad corporate citizenship. We saw in the DIRT inquiry how poor they are as corporate citizens and, regrettably, the spots have not changed. They still have huge offshore tax saving accounts, particularly in the Isle of Man, which, to a significant extent, are used to assist tax evasion. This is another sign of bad corporate citizenship. Banks make no attempt to track down the owners of accounts.

The Bill should include a provision that would require financial institutions to make contact with an account owner if there has been no activity on an account for a year to find out if it should be continued. There is not an onus or requirement on the banks or the financial institutions to do so. There are many organisations such as political parties, sports organisations or those such as St. Vincent de Paul or the Legion of Mary that have a wide network of branches. These branches come and go and some lapse, so the ownership of the account is really the national organisation. Where a local branch of an organisation has become defunct but the national organisation is still up and running, permission should be given for the remission of those accounts to the organisation headquarters. Fianna Fáil headquarters might get an unexpected bonus from this suggestion. I suspect that all our parties would get a few bob out of it.

I have no doubt that over the years election accounts have been opened and left with a few bob and cumann are set up and then lapse or somebody dies and the account is forgotten about. I ask that on Committee Stage provision be made that where a local account holder ceases to be active, and the parent body of an account holder is known to exist that it should be entitled to the proceeds of the account. There should be some safeguards for remittance back to headquarters should the local account be resurrected, rather than to a dormant fund. I am sure a great many church organisations are in this category also.

Deputy McGrath made an interesting point, regarding what the Minister said. It is stated that for 15 years there are 380,000 accounts totalling some £130 million.

Mr. McGrath

There are 840,000 accounts.

Mr. J. Mitchell

Where did the Deputy get that figure?

Mr. McGrath

In the Minister's speech.

Mr. J. Mitchell

What the Minister said in his speech is different to the figure given to the Committee of Public Accounts. There are 840,000 dormant bank accounts of 15 years or more with about £130 million in them. That works out at a relatively small amount of money, £150 on average. I am sure that is an accurate figure. I would like the Minister to take on board that where the account holder is affiliated to a larger organisation, the larger organisation would be entitled to have the funds transferred to it and that provision be included in the Bill to that effect on Committee Stage.

I do not wish to harp on too much about the banks, but as Chairman of the DIRT inquiry I was taken aback at their indifferent approach to ethics and their duty to the public. For years I did not check my bank account – not that I have much in it. Occasionally, if one sits down in August, for example, when there is less pressure, one does find that charges have been made which should not have been. I have always operated on the basis that one can trust the banks as they depend on public confidence, but my view has been completely changed. This is not just because of the DIRT inquiry but also because of their inactivity and inertia with regard to dormant accounts. They have known about them for many years and have let them lie so they can use the money.

Another factor is the astonishing number of funds on deposit in Irish banks in the Isle of Man alone. From reading the newspapers we know how many of those before the tribunals have accounts in the Isle of Man. We also know from the DIRT inquiry that people were referred by the managers of these banks, up to quite a recent date, to the Isle of Man. We know that the Isle of Man accounts are still there. I know that there may be good and legitimate reasons for the accounts being in the Isle of Man, but does that mean they should also have this facility whereby the financial institutions are inert about observing tax evasion to say the least? I make no apologies for still being very sceptical about the banks having changed their spots. There is enough evidence to suggest that they have not, that there is still a culture that needs to be addressed.

If we confine ourselves to the 15 years proposal, we have £130 million to invest by the disbursement board fund. Overheads will have to be taken from the proceeds of that investment and by the time we get any money to invest in the needy it will be a very small amount. I am very disappointed with the proposals in the Bill for that reason. I would prefer to see the Exchequer take on this responsibility. It gives two defined purposes and is additional to what is already provided for. The principle of additionality is important and that there is a guarantee as in the funds of suitors case, that the money will be returned by the Exchequer should the true owners be found. I urge the Minister to think about this substantial change to the Bill for Committee Stage. If he is willing to go down that road he will find that on this side of the House we will facilitate the speedy passage of the Bill.

If the seven years proposal were accepted we would be talking about £1 billion being available. That would do a great deal for the elderly and for primary education. We do not have precise figures for seven years, but for four years it is £402 million, and for five years it is £1,739 million.

Mr. McDowell

Listening to Deputy Jim Mitchell I could not help reflecting that in bygone years people on these benches might have welcomed this Bill as a first stage toward the nationalisation of the banks. I suppose we are not in that sort of game anymore.

I welcome the Bill. It is overdue and broadly speaking it hits the right spot in terms of what we are seeking to do. Some Deputies in this House have talked about this issue for years. I note that Deputy O'Keeffe of Fine Gael has talked about it for years. It came to prominence in the context of the Public Accounts Committee report last year. I looked at the Public Accounts Committee report and am aware of some of the discussions to which Deputy Jim Mitchell refers. There is a significant discordance between the various figures that have been given. Some figures have been given to the Committee of Public Accounts, others by the Minister here today and yet further figures have been given by the Irish Bankers' Federation.

One thing is clear from all those different figures which are quite different. It is that there is a significant amount of money on deposit after 15 years and a significant amount of money on deposit for the various time frames that they pick. The principle has to be, at what point do we decide that somebody has effectively forgotten about an account or is not aware of an account? I am not sure that we should look at a time span of the order of seven years – my preference would be to go for a longer period.

All of the figures that have been given to the Public Accounts Committee by the Minister today and by the Irish Bankers' Federation, suggest that there is still a significant degree of reactivation between ten and 15 years. On balance, the 15 year period may be about right. I wish to enter an important caveat, that the information is uncertain and in some ways actually contradictory. If it transpires that in fact those figures are wrong, then this is something that may need to be looked at again.

I am aware that the Bill does allow the Minister at some point in the future, without coming back to the House, to redefine the dormancy period. I am not sure that it is a positive development. I would like to have seen the power to define the dormancy period kept in this House. Nonetheless, I acknowledge that part of the Bill.

The Bill is about two things. First it is about putting an obligation on banks to maintain contact with customers and to re-establish contact with customers with whom they have lost contact. Second, it is about providing what happens in circumstances where we can be reasonably satisfied that somebody has irrevocably forgotten about an account or where there is a lesser likelihood or a diminished likelihood that they will ever look to reclaim it. I agree entirely with Deputy Mitchell that the emphasis should really be on the first point, that is, the duty of the bank to maintain contact with customers. Once upon a time if you had a deposit account you invariably got a deposit book and that at least provided some evidence, for example in the case of death, which allowed people to establish that you had an account. It also provided the customer with evidence that an account existed. Nowadays that is not the norm. Most people work on a statements only basis and some banks do not even provide statements on a regular basis. It is perfectly possible for years to elapse without the bank corresponding in any way with customers. This is not acceptable. We should treat this as being the base point and establish in the Bill a duty on the banks to correspond with or notify customers formally on a regular basis to inform them of the state of their accounts. It would not be unreasonable to expect a bank to notify customers on a yearly or two yearly basis that they have an account and what the balance of the account is.

I am not sure that the structure for notification in the Bill is exactly the right one. The Minister has chosen a cut-off point of 100, below which it will not be necessary for banks to correspond directly or individually with customers. Since this is new legislation and we are setting up a new framework, it would not be unreasonable to ask the banks or to insist that banks should communicate with virtually all of their customers and I would certainly have picked a significantly lower cut-off point for correspondence than the 100 which is contained in the Bill.

I would have picked a relatively nominal figure such as 20 or 30, at least in the first instance. Banks would then be required to effectively communicate with most of the customers on their database. Much of this could be avoided by having a significant advertising campaign in advance of notification. The advertising campaign would bring a certain number of queries and it could be taken from there. The Bill should contain a positive duty on banks to correspond on a regular basis with their customers and to notify them that the accounts exist.

Deputy Mitchell spoke at some length about the disbursement board. I have read the Bill and the explanatory memorandum and listened to the Minister, and I am still very confused as to how exactly this will work. I am confused about the division between the disbursement and investment fund and the reserve fund and how the money in the disbursement and the investment fund is to be divided as between investments and disbursements. There is an obligation on the NTMA to invest money in a method that is defined in the Bill. There is a duty and a facility given to the disbursement board to spend money. At no point in the Bill is it set out just exactly what is to be invested and what is to be spent nor, that I can see, is there a mechanism set out how this is to be determined at any stage in the future. I am frankly confused how it is intended that it should happen. The only provision I can see is that which allows that if a reserve fund is depleted, it can be topped up from the disbursement fund. That is the only provision I see which relates to the balances between the various funds and the ways in which the fund is to be used.

Perhaps of more importance in terms of the deliberations in this House is how the moneys are to be used when they are disbursed. Section 41 of the Bill is very loose in its definition. It says in two or three sentences that it is to be used for reasons of social inclusion. I agree with Deputy Mitchell that we need to go a little further in defining that. My view is that now and for the foreseeable future, any additional funds that become directly or indirectly available to the Exchequer should be spent on health related matters. An area of health care which has been largely neglected and under-funded, such as disabilities, mental handicap and special needs, should be targeted rather than the money used in the general health fund. The money needs to be ringfenced in a much more clear-cut fashion so that people know that the money is being used in a particular way.

The Bill is a little confused and confusing as to the mechanism for deciding how the money is to be spent. The board will be there to make the decisions but, on the other hand, the Minister can effectively direct the board on how to use its discretion. The Minister's consent is required if more than 300,000 is spent on a particular project. I am not convinced that the balance between the Minister making the decision and giving the board discretion is correct. It is not very clear in the Bill where exactly the balance falls.

I wonder if the banks have the capacity to undertake the notification as required. The IBF position is that if I as a customer were to telephone my local bank branch in the morning and say that I had an account at some point in the past, the bank would be able to tell me relatively quickly whether I had or not and what the balance was in the account. I am sceptical about that. For instance, I think I may have an account in the Bank of Ireland branch in Belfield, with very little money in it, which dates back about 20 years. I may be incorrect but I am not altogether persuaded that if I telephone the Belfield branch that its paper records from 20 years ago are going to be sufficiently good to tell me that I have a balance in that account. I ask the Minister for some reassurance, and I assume his officials have dealt with the banks on an individual basis, that the banks' information technology is good enough to go back over 15 years and more to be able to give the information that is required. The IBF says that it operates a system whereby, for example, if solicitors acting on behalf of the estate of a deceased person wish, a trawl of records can be instituted and details of accounts held in the name of the deceased person can be provided. I wonder how well that procedure works and how much it is used and whether the Minister or his officials have inquired from the banks as to how often there are requests of that kind and to what extent the banks can respond positively to those requests. From experience, I am not sure it works as well as it might.

It may not be entirely palatable to many people, but there is a means to ensure that all of this edifice was not necessary and that it is to provide people with a personal identity number, as is the case in other European countries. Members will recall that a few weeks ago this House passed the Finance Bill which has provisions that require people when opening a special savings scheme account to supply their public service number. This allows the Revenue Commissioners to ensure that each individual has only one account. The principle and the precedent is set in terms of providing a public service number when opening a bank account. We should encourage the provision of the number as a voluntary act. I suspect there would not be a general welcome in this country if people were compulsorily required to give the RSI number when opening an account. It would be reasonable to suggest that banks should invite people to give their number. The reason is that generally speaking people will be within the State system in some form, either they will be drawing a pension or will be within the tax system, and the State will be in a position to contact them or will know if they are deceased.

However, it is not unknown for people to continue to draw a pension on their behalf after they die but it is unusual and the State would have a good record and the capacity to get in contact with people. Perhaps in time to come that is the way we need to proceed. I am conscious of the reluctance here to go down what is seen to be the Big Brother road but, nonetheless, it is a way of avoiding the particular difficulty in which we find ourselves and which we are trying to deal with in the Bill.

Another issue which inevitably arises in the context of dealing with the banks and the way banks deal with their customers is the whole business of consumer rights. This matter was dealt with in the McDowell report which recommended the setting up of the single financial regulator. I believe there should be a branch of the Director of Consumer Affairs which will be transferred within the regulator which deals with complaints against financial institutions. I am conscious of the fact that there is already a voluntary ombudsman system within the financial institutions. My view is that self-regulation is not ultimately desirable. Given the importance of banks and the importance of each of our relationships with our banks there should be an independent system. Clearly the way in which to work in an independent system would be within the single regulator and the consumer arm of the single regulator. That is an issue on which we need to move.

The Bill provides for the transfer of the intestacy fund to the new dormant accounts fund. This is an issue about which I know very little. I am aware that where there is no next of kin that money escheats to the State. I am interested to know how much money is within this fund, the rules and regulations for dealing with it, whether that money is dealt with and how much it is expected to take into the dormant accounts fund from the intestacy fund.

I welcome the fact that we have found it possible to deal with this matter. There was doubt for a number of years whether it could be dealt with appropriately. Clearly the political will to deal with it has been found, no doubt given a spur by the Committee of Public Accounts. While there are issues that need to be dealt with on Committee Stage I welcome the principle of the Bill.

Mr. J. O'Keeffe

I wish to share time with my colleagues.

Acting Chairman (Mr. Briscoe)

The Chair has to point out that under Standing Orders Deputy McGrath who has been here for some time would have priority but if he is happy to concede, that is fine. I understand the Deputy wishes to share time.

Mr. J. O'Keeffe

Yes, with my colleagues. I shall be brief. I wish to contribute because dormant accounts is an issue in which I have been interested for the past ten years. At one stage I ran a one man campaign to get a dormant accounts Bill. I am delighted to see the culmination of that campaign. I appreciate that in the meantime others have been involved and the influence of the Committee of Public Accounts was hugely important in stimulating the Bill. I acknowledge that the Minister, Deputy McCreevy, with whom I had a number of jousts on this issue in the past, confirmed at all stages his interest in finding a solution to this problem. Undoubtedly there was a problem. The problem began for me when a number of my professional colleagues in the legal world pointed out the difficulties they had in tracing accounts particularly on the death of some of their clients. This was especially difficult when there were no close relations. It was highlighted to me on a number of occasions that they had enormous difficulty getting in the assets and tracing them and in many instances inquiries to financial institutions did not bring a comprehensive response. The result was that in some of those instances moneys were left in the banks unaccounted for and not included in the response to solicitors' inquires about those estates. That is what originally stimulated my interest.

I have just one major point to make on the Bill. I always took the view that the moneys involved belonged to the depositors or the investors and at all times that has to be the central approach in dealing with this issue. I note there is much debate about what is to be done with the moneys when taken over by the State. I hold a firm view that first and foremost any such moneys should be returned to the depositor or the next kin of the depositor or the next of kin of those entitled to it. I was not happy with the steps being taken by most of the financial institutions in this regard. Over the years I have had discussions with the Irish Bankers' Federation on the issue. It was suggested to me at the time that the amounts involved were of nominal proportions, a couple of million pounds was mentioned at one stage. It was also pointed out that there were difficulties about confidentiality from the point of view of notifications, etc. I am convinced those difficulties can be overcome.

I hope what will be followed through thereafter is an acceptance that an account, be it dormant or otherwise, is owned by a person or persons and that the primary obligation must be to try to ensure that that account is returned to the person rightfully entitled thereto or their next of kin. Every reasonable effort must be made to ensure that happens. I accept that thereafter if the account is classified as dormant and is escheated to the State as a consequence, there must be the right of refund later, as provided for in the Bill. I am satisfied with that. I am pleased that at long last the Dormant Accounts Bill is before the House. I hope the emphasis I have put on giving every man his due and returning to depositors, as far as possible or the person entitled, their moneys will be the central approach in the operation of the Bill.

Acting Chairman (Mr. Kirk)

Just to clarify the position. Deputy O'Keeffe is sharing time with Deputies McGrath and Timmins.

Mr. McGrath

The bringing forward of the Dormant Accounts Bill is important. It is a subject which has been discussed at various times. The inclusion of a statement from the Committee of Public Accounts that these accounts should be looked into provoked some controversy and discussion around the country. To an extent I am disappointed to hear that dormant accounts, which are more than 15 years old, represent only £130 million. It seems a relatively small amount. In his contribution the Minister said there are 840,000 dormant accounts. This means that the average amount in those accounts is £150, which is relatively small. It is easy to understand that people put aside a few pounds, moved bank or went to a different institution or opened another account and forgot about the few pounds in the other account. It is possible they assumed interest was accruing on it but the institutions have not added interest to it to any great extent. Given that the average amount is £150, to put into the Bill that an account shall only be deemed a dormant account if it is more than 100 is wrong, because 100 is equal to about £80. That is more than 50% of the average size of accounts. If that is done many of the dormant accounts will be excluded. If they are not touched and taken into account by this board, they will lie there and be of use to the banks and financial institutions ad infinitum.The 100 cut-off point has to be drastically reduced. I know the institutions will claim that it will cost them too much money. However, they have all done reasonably well in recent times and they will just have to bear the cost because they have been gaining the value from them. I propose that the 100 cut-off point be reduced; I do not know what a reasonable figure is but it certainly should be in the bottom quadrant of the average account. In a graph of average accounts it should be in the bottom 10%. This would give a cut-off point of 25 to 30.

There is another item missing from this Bill. There should be an obligation on financial institutions to communicate with account holders on a regular basis. They do not do so because it costs them money. Only quite recently, it was brought to my attention that I had a small account that I had forgotten about. I think there was only £60 in it. It was lying there for 12 or 14 years and would probably fall into this category of being a dormant account. I had totally forgotten and had not been getting annual statements to say that it was there. I was checking something else and, by chance, I discovered it. There should be an obligation on financial institutions to send out annual or bi-annual statements to people in relation to all accounts held in their names. Now is the ideal time to put that obligation on them.

With the publication of this Bill and the far-reaching effects it will have, there must also be an obligation on the financial institutions to launch an advertising campaign to inform people that this legislation is coming through and dormant accounts that are there for 15 years or more may well be taken over and given to the State. This may well jog people's memories and they can root in the drawer to find an account book they might have forgotten about.

In many cases, people know they have these small accounts and are leaving them for a rainy day. When this was first mooted, a lady approached me saying that she hoped we would not take the money that her mother and she had in the post office for a long time gathering interest. She said that she had not done anything with it because it was put aside for a rainy day. The institutions must advertise and they have an onus to find the owner of the account.

I have reservations about establishing a board to disburse these moneys. I am concerned about how much of the money they will use up and how they will assess projects. We have a Civil Service that is well able to do that. It is possible that this can be done without establishing a new level of bureaucracy. Let us identify a small number of projects that should benefit from it and leave it at that.

Deputy McDowell mentioned health services and I can see a great need for additional funding in the health services. However, I have severe res ervations about any of these funds being used in substitution for Government obligations. This has happened with lottery funds already, which in one case were used to build a primary school. It is outrageous that lottery funds should be used in substitution for mainline Government spending. These funds should be additional. The suggestions made by Deputy Mitchell that these funds be used for the elderly and perhaps in primary education are good. Primary education is the one level of education that everybody in the State gets and unfortunately it is grossly under-funded. I am sure the Minister and Deputy Byrne, go into primary schools in their constituency and sometimes it is not such a pleasant experience to see the condition of the buildings. Many of them are in need of painting and small things to make the building more pleasant for people to learn in and work in.

I commend this Bill to the house and I share my time with Deputies Timmins and Finucane.

Mr. Timmins

How much time do I have left?

Acting Chairman

The Deputy has seven minutes 46 seconds.

Mr. Finucane

In that case, may I have the subsequent slot?

Acting Chairman

That is fine.

Mr. Timmins

I generally welcome this Bill. It has been a long time coming. However, I regret that the scope of it is very limited and I see for example that the Minister talks about pursuing certain aspects of it with the insurance industry. It would appear that the Department has found that it is not legally correct to include that aspect of it in this Bill. Deputy O'Keeffe referred to the fact that he was a lone campaigner on this for ten years and perhaps he was. I had a primary school teacher and his great quotation was:

Full many a flower is born to blush unseen,

And waste its sweetness on the desert air.

I feel a bit like that. There is one aspect that is not covered in this Bill and it is something I have raised before. I am glad the Minister is back and he is probably thinking that he is tired of hearing this from Deputy Timmins. However, it is very important to reiterate it because I seem to be the only one concerned about the significance of it. It is the issue of the bank drafts. In his discussion with the insurance industry, I hope the Minister will go back to the banks and try to tease out this issue of bank drafts.

A man or woman who puts cash in a biscuit tin under the bed has a more sophisticated counterpart who got a bank draft for his biscuit tin. Often the bank draft will be made payable to cash. Banks claim that they do not issue such drafts but one or two of them have surfaced at the tribunals. He would place the bank draft under his bed and as time passed he might die or just forget about it. In the bank, there is a record of the bank draft, let us call it X117, marked out to Mr. Pat McCreevy of Sallins or wherever. The bank will make a return of that bank draft over a long period of time. I am given to understand there are uncashed bank drafts going back 50 or 60 years that have not ever been claimed. I ask the Minister to write to the banks asking for a breakdown of the uncashed bank drafts.

In addition to the person with cash under the bed, there are people who may have obtained money by not wholly legal means. They may also use the bank draft as a means of hiding money. I imagine there is a significant amount of this money there. Deputy O'Keeffe mentioned that his profession was trying to establish what accounts were held in banks and Deputy McDowell is probably familiar with this.

A solicitor may be doing the probate of a will or, if there is no will, trying to determine what assets a person had. I am given to understand that when a solicitor contacts the bank, it will send back information on deposit accounts, current accounts etc., but it never sends back information on the bank draft accounts. Almost a year ago I spoke about this on a radio programme and unfortunately I had not anticipated that the presenter would not be as enlightened as I was. That presenter – he shall remain nameless – had some difficulty getting around the issue. He put it to me that the onus was on the person who had the bank draft to go in; the bank cannot go chasing them. He equated a bank draft to having a gold bar, but this is not so. If a person gives in a gold bar he will get money, so there are two items of value, the cash and the gold bar. When a person has a banker's draft there is only one item of value, the cash that is in the bank and the draft just gives someone the right to go in and claim the money. Following that programme I was approached by several people.

The Minister referred to a time when banks had a good relationship with their customers and would inform the next-of-kin of a deceased person how much money was in the account. One bank employee told me of a situation in a rural community where the holder of a very large bank draft had passed on and the bank manager was concerned to avoid drawing the attention of his head office to his action in facilitating the next-of-kin. I suggest that the Minister should write to the banks and ask them how much they have in uncashed bank drafts and if they are aware of deceased holders of such drafts. They may well say "No", but I suggest that in some cases they are aware.

I also draw attention to the issue of items being deposited for safe keeping. For example, if the McGrath family from Mullingar are going away for the weekend, they may be concerned that their house might be broken into. They collect up the family silver and the gold watch commemorating 20 years in politics, or whatever, and deposit them in the bank. On their return, they may decide to leave the items in the bank for safe keeping. Such items are of no benefit to the bank but I understand that, in one instance, a Dublin bank which is changing location has two or three rooms full of items for safe keeping. A former bank employee has told me that one bank where she worked in the mid-1980s had an item owned by Charles Stewart Parnell still lying unclaimed.

Mr. McDowell

We will not ask what it was.

Mr. Timmins

Possibly love letters. Items which are of no benefit to the bank could be of great historical significance. Coincidentally, another former bank employee informed me that he had worked in a bank which had been a branch of the former Hibernian Bank, in which Charles Stewart Parnell once had an account. My informant had seen letters from Parnell to his agent about his business with the bank at the time. There are undoubtedly many such items of historical interest lying in bank vaults around the country. While they are of no monetary value to the banks, an effort should be made to address this issue from a purely historical point of view.

The Minister mentioned that where there is money lying in a bank, it will be put into a fund and the family of the deceased owner can make a case and, if they establish their legal claim, they will get the money. Undeniably, there have been certain sharp practices in banks. Anybody who has been surprised by this in recent years has been rather naive. It has been happening quite widely and almost seems to have been socially acceptable.

Acting Chairman

The Chair has been somewhat negligent on time-keeping we were so interested in what the Deputy was saying. He is borrowing some time from the next speaker.

Mr. Timmins

In cases where individuals may have opened accounts in a name other than their own, to disguise the identity of the account holder, I do not know what is the legality of ownership of the money in such situations. If it is regarded as a contract between the individual and the bank but is actually an illegal transaction, then there may be no contract and I do not know how the family of such a person may be able to establish a claim.

With regard to Deputy Mitchell's point on the possible allocation of funds towards educational purposes, a report is currently being compiled by the Minister for Education and Science on people suffering from dyslexia. That is a serious problem which results in people ending up in prison and experiencing major social difficulties. I share Deputy McGrath's view that those funds should not be given to the Minister for Social, Community and Family Affairs to dish out in a thousand different directions. Perhaps the funds should be channelled to the education system, including in particular people who suffer from dyslexia. I look forward to the Minister writing to the banks on the issues to which I have referred.

Mr. Finucane

I am pleased to have the opportunity to speak on this Bill. I have asked about this legislation many times on the Order of Business. This issue was referred to in a recommendation from a sub-committee of the Public Accounts Committee and a newspaper report mentioned a possible figure of over £170 million lying in dormant accounts. The Minister mentioned an estimated figure of £130 million and I can appreciate the difficulty of trying to gauge how much money is in dormant accounts. It is right to focus on this issue because, over a period of years, the banking institutions have been using this as a capital base. I understand that, in anticipation of this legislation, those institutions have been instructed to try and establish the level of dormant accounts and to identify the next-of-kin if possible. I am aware of constituents who got letters from banks after many years. In one case, a person was told he had less than £1 in his account which had been dormant for some years. At least, it seems that some effort is being made to establish if there are next-of-kin to claim these dormant accounts.

I welcome the fact that the Bill provides for the introduction of the relevant changes early in 2002 and that if the institutions have not established the identity of the bona fide next-of-kin, the State would claim the funds and disburse it appropriately. There may be various suggestions on how it should be disbursed and I have no doubt there are many meritorious projects. With appropriate rules and regulations and proper earmarking of the funds, I believe there can be a meaningful benefit to many communities and associations around the country. A very comprehensive White Paper on rural renewal was produced recently. Many rural communities have been very actively working to improve their situation and even to attract people into their areas. When the document was launched, the Taoiseach said he was very committed to this concept and that a rural proofing committee would be established. I am not sure if any meetings of that committee ever took place.

Many people are concerned about decisions by the banking institutions, notably AIB in recent times, to close down many of their rural branches. For example, the rural community of Kilfinnan in west Limerick includes the headquarters of Ballyhoura Fáilte, a very successful Leader project. I have watched the area progress over a period of years. Much urban decay in that community has been replaced by modern buildings and a degree of commercial vitality has developed. Overnight, as part of their rationalisation programme and according to their own criteria which are not necessarily to do with losing money, the bank decided to close the local branch which had operated for the past 75 years. People were notified by letter that their accounts would be handled by the Kilmallock office of the bank. There was no consideration of other options, such as a reduction to three opening days per week, the establishment of a sub-office or some review per iod. There was just a bald statement on the closure. People turned to their local public representatives to try to have something done about the matter. Deputations were formed and people were very emotional about the issue. Rural communities are striving to generate commercial activity and get people to live in the area. We try to make progress but suddenly a banking institution which makes billions of pounds makes a decision which rips the heart out of the local community and undoes much of the good people are trying to do.

We may talk in this House about rural renewal. In the past we have talked about the importance of the local post office or the creamery and whether they have gone out of existence. There is now another deterrent to rural renewal, that is, when financial institutions decide to close a bank. The bank may say people are using the Internet or the telephone to do their banking but how many are using and have access to that type of facility? Are we saying somebody with a large sum of money must bring it by road to a neighbouring bank a few miles away? Are we contradicting what we are trying to do in stopping people keeping money in the biscuit tin or under the bed? People must now drive a few miles to a bank. Are we encouraging people to start hoarding again?

I make these points in the context of this Dormant Accounts Bill because it relates, in particular, to the financial institutions. One rarely gets a chance to talk about a situation such as this in the House because one would be ruled out of order straight away. I have met people at a public meeting, and have seen 200 people galvanised into action. They say to a banking institution that even though people have left the bank in the past, they will guarantee further business if it decides to revoke its decision and stay in the area and that they will work extremely hard to advance the progress of the bank. However, I am afraid it all falls on deaf ears. If a decision is made at local level and is recommended to those at national level, will those who decided at local level go back to their superiors and say they made a mistake in the first place?

Recently, banks have closed even in Dublin city – in the inner city areas. It is a phenomenon that is happening throughout the country and which will happen more often. It may not impact as much if there is another bank within a community but if a leading financial institution leaves a town, we are saying to potential industrialists and commercial businesses coming in that there is a lack of confidence in that community. That is the inherent danger of such a decision.

I know the Minister cannot ask Mr. Buckley and the people in charge in AIB to look again at situations such as this because they look at things in a cold and clinical way. They look at demographic trends, whether industry is locating in the area and at the commercial vitality of the area. Yet a thriving community has had this facility ripped from beneath it and a decision will be made at the end of the month.

In the coming election, politicians like me will go to Kilfinnan as we have done many times in the past and we will be told by the local community how it feels about us as public representatives, yet the most crucial and pivotal decision will have been made by what they would consider a heartless financial institution. I am sure the people in AIB will retreat into their office – they will be faceless people to the local community. Politicians, however, will have to face these people.

I have heard a great deal of rhetoric and noticed a great deal of lip service being paid to the idea of rural renewal and so on. It is all hollow rhetoric when decisions such as this are made. Many of our communities have been upgraded and improved because of community employment initiatives and FÁS schemes, yet suddenly the rug is pulled from under them. I make this point because the Kifinnan of today could be in the Minister's area tomorrow, or Deputy McGrath's area. Looking at the projections made by the Central Statistics of Office during the week, one will see the huge growth pattern projected for the Dublin area for the next 30 years, which is in sharp contrast to Deputy McGrath's area, the midlands. We try to encourage people to live in rural Ireland, yet we take the incentives away. I am saddened for local communities when I see these things happen.

Most people make a decision to close a shop if it is not commercially viable. The banks do not make this decision because they are losing money. They are doing their projections for the next few years and are encouraging the closure of various offices so as to have a few banks dealing with finances in the future. I am pleased the Acting Chairman allowed me latitude.

Acting Chairman

"Latitude" is the word.

Mr. Finucane

You could have ruled me out of order. It is important that somebody says "stop" and asks the banks to look again given the importance of the banking institutions.

Minister for Finance (Mr. McCreevy)

I thank Deputies for their general welcome for the Bill. Some specific points were made by Deputies and I will endeavour to deal with them. Deputy Jim Mitchell said the dormancy period of 15 years, as defined in the Bill, is too long. This was arrived at in discussions with the banks. Given the large overhang of dormant accounts, we had to settle on a dormancy period that would be manageable for the banks. There is provision in the Bill to reduce the 15 year benchmark by way of ministerial regulation. When the backlog of dormant accounts has been reduced, I will consider whether to reduce the 15 year threshold but it would be premature at this stage when we are trying to get the scheme off the ground.

Deputies will appreciate how big the workload will be when this is done for the first time. Next April the institutions will have to place advertisements in newspapers and they will be obliged to try to contact all the account holders concerned. That will take some time. The money will start to come in in 2003. Each year they will have to do a review but it will be a shortened review as they will have a database which will allow them to deal with one year. When that is up and running, I can consider reducing the dormancy period.

Deputies must remember that to make this scheme effective, it is very important to get the financial institutions to administer it. If one looks at the whole scheme, one will see that I have transferred the responsibility of doing this to the financial institutions. If I was to say that there would be a very short dormancy period, the financial institutions would have to obey the law but they would say we would have to administer it ourselves. That would cause enormous difficulties. The financial institutions will administer the scheme and the moneys will be transferred to the NTMA and to this special fund. There are powers under the Act to appoint inspectors who will be allowed to visit the financial institution to see whether they are doing this work correctly. This is an enormous task and no one is under any illusions about it. It is very important that it is administered and worked effectively by the financial institutions with the powers of the inspectors to police it. When it is up and running, I am sure this matter can be revisited in the years to come. I pointed out that 15 years was the lowest period of dormancy of any of the countries at which we looked.

For as long as I have been Minister for Finance, Deputy Jim O'Keeffe and I have been conducting a correspondence course on this. Before I became Minister for Finance, I raised the issue of dormant accounts. Deputy Jim O'Keeffe had raised it previously as well. Luckily, before the Committee of Public Accounts reported, due to the efforts of Deputy Jim O'Keeffe and my efforts in the Department – I inspired it to look at this matter – a great deal of work had been done in this area. My predecessor had looked at it as well and concluded that it was not worth doing anything. However, when the Committee of Public Accounts reported, much of this work had been done and, therefore, it was possible to bring forward this Bill within quite a short period. Even though over several years a great deal of work had been done – much of it in the last four years since I became Minister for Finance – issues came up which we had not envisaged. Bringing in a Dormant Accounts Bill might seem to be a very simple thing, but it has proven to be one of the most complex pieces of legislation ever brought before the House. There were legal issues which no one had thought of. When money is left in a bank account the banks have control of it. The issue of private property was also raised. It has been a enormous task. It is usually left to Final Stage to compli ment officials, but I want to take this opportunity to compliment and thank the officials of my Department for the work that they have done on this Bill. The Bill has come on very quickly.

Deputy Jim Mitchell asked why prize bonds are not included in this Bill. These products are bought to be held for long periods, often until the holder dies. The capital of the prize bond fund is used to generate the prize fund. If a large part of that capital were removed it would greatly reduce the prize fund and undermine the viability of the whole scheme. Moreover, prize bond holders whose bonds were removed from draws would be rightly aggrieved. I made the decision to leave prize bonds out of the Bill for the present.

The question of dormant insurance policies was raised and I have decided to put this into the Bill. Complex as trying to include dormant accounts in the Bill, dormant insurance policies proved to be a nightmare and it was decided to have two Bills. This is the Dormant Accounts Bill relating to financial institutions and it is hoped a Dormant Accounts Bill relating to insurance products will be published later in the year. It was too complex to facilitate in this Bill and I was anxious to have this functioning quickly. Had I waited until all issues about insurance policies were decided it would have taken a long time.

The question of why account holders with less than 100 in their accounts will not be personally notified was asked. It was agreed that contacting all account holders would place a substantial additional administrative burden on the financial institutions on whom the bulk of the administration in this scheme is already falling. That is how the operational details of this Bill will be conducted. The scheme will be brought to the attention of the general public by annual advertisements in national newspapers and notices in each public branch of financial institutions. There is a section of this Bill which allows me to increase the sum from 100 and I will check, before Committee and Final Stages, that it will allow me, or future Ministers for Finance, to decrease that sum.

I am glad Deputy McDowell welcomed the Bill and that he thought a period of 15 years to be about right. He asked how much is in the intestate estates account. I can tell him that there is a balance of about £2.7 million. Deputies Jim O'Keefe and McDowell also referred to the need for an advertising campaign to alert holders of dormant funds. The first advertisements will be published by the banks in April 2002, a full year before any of the funds will pass on to the NTMA. Deputy Timmins has once again raised the question of bank drafts. It was decided that the scheme would initially be confined to those products that could be readily brought within its ambit, that is, products similar to accounts in financial institutions. Other reasons for excluding bank drafts at this stage are difficulties in estimating the extent of dormant fund drafts and problems that would be encountered in attempting to trace holders of drafts. With no details of addresses this would be a major problem. Section 9 of the Bill allows the scheme to be extended to other products by ministerial regulations. Further consideration may be given to bank drafts in the future.

Deputy Timmins raised the question of safekeeping that banks undertake on behalf of customers. This is something I have often wondered about myself. Like many other people I use the bank to keep documents such as life assurance policies. I have applied my mind as to how to go about tracing these people, maybe some of them did not want to be traced. It is interesting from an historical viewpoint but I do not have the answer.

Deputy Jim Mitchell and others asked what will be done with this money. I had considered how money from this fund will be distributed. The Public Accounts Committee recommended that it be used for good societal and community purposes. To get away from the problem of having the Government blamed of having a slush fund, it has been decided to establish a board of trustees. The board will distribute the money, subject to guidelines and without direction from the Government. This will get away from the problems of having Ministers accused of favouring pet projects, having the fund as part of general Estimates processes of Departments or having it as part of policy initiatives of Departments. I think this is the best approach. I thought that if this money, which belongs not to the State but to individuals, should be escheated to the State – subject to safeguards that people who look for it can be given it back – that the best approach was to give the power to distribute it to a disbursals board and not the Minister. I am not in a position to change the Bill at this stage. It was a decision I took and I think it is the safest one in the circumstances.

Deputy Finucane raised the question of branch closures. I get a lot of representations from Deputies and Senators regarding such closures and the standard line is that I do not have any say in the matter.

Dáil Éireann debate -
Wednesday, 20 Jun 2001