Unclaimed Life Assurance Policies Bill, 2002: Second Stage.

Minister for Finance (Mr. McCreevy)

I move: "That the Bill be now read a Second Time."

For about a decade or so, the issue of dormant assets 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. Failure, on the part of financial institutions to trace the owners of these moneys has long been a matter of public conjecture and concern.

Following on from the recommendations made by the Committee of Public Accounts Sub-Committee on Certain Revenue Matters, in its Report "Parliamentary Inquiry into DIRT" in 1999, I instructed my officials to set to work considering the complex constitutional, legal, operational, prudential and investment issues involved. This exercise led directly to the legislation which I brought forward last year, the Dormant Accounts Act, 2001. This dealt with dormant assets held by banks, building societies and An Post.

When drafting that legislation, it became apparent that application of the scheme to insurance products would prove more complex than was the case with accounts in banks or building societies. Therefore, for the sake of considering the matter further and to allow time to gain expert advice, it was decided to provide for unclaimed life assurance policies in a separate Bill. This Unclaimed Life Assurance Policies Bill is the result of considered and detailed analysis of the issues peculiar to policies of life assurance – not least, the analysis of EU law in the insurance sector.

I was aware that the successful development and implementation of the proposed scheme would require the full co-operation of the insurance undertakings and their representatives, as well as the advice and co-operation of the Department of Enterprise, Trade and Employment and the Revenue Commissioners. I am pleased to say that assistance from all these parties was always forthcoming and of enormous benefit.

This Bill builds on the Dormant Accounts Act. As is the case with that Act, this Bill achieves what I consider to be the best and most equitable balance between the rights of policyholders, and the desire that neither the insurance undertakings nor the State should be burdened with an unduly bureaucratic scheme.

The first purpose of this legislation is to ensure that proper steps are taken by financial institutions to identify and contact the owners of dormant funds. In that regard, this Bill is essentially a consumer protection measure, designed to protect the property rights of individuals.

If, however, the owners of funds cannot be traced, the institutions will be required to transfer those funds into a special fund established for the purpose, the Dormant Accounts Fund, to be established next year by the National Treasury Management Agency. However, no individual loses his or her right of access to these funds. The rightful owner will have a guaranteed right to reclaim funds at any time.

In the Dormant Accounts Act, 2001, I introduced a scheme for the disbursement for charitable purposes, or purposes of societal and community benefit, of funds which are not likely to be reclaimed. Moneys transferred to the fund under this new legislation will also be subject to that scheme, and therefore subject to disbursement. However, sufficient funds will always be held back to meet any potential claims from persons with an interest in these funds.

As Deputies will appreciate, there are any number of different types of life assurance policy on the market, as these products are often tailor-made to suit an individual's needs. This has a significant bearing on two important aspects of the Bill – the amount that an insurance undertaking will be required to transfer to the Dormant Accounts Fund in respect of an unclaimed policy and the criteria for dormancy.

There are a number of issues to consider in relation to what is owed to an individual under any particular life assurance policy. Unlike a bank account, the money is not there up front in a way that the customer and the insurance undertaking know exactly what is owed on any given day. First, the majority of policies provide risk cover as well as having an investment element designed to secure a lump sum for the policyholder at some future date. In practice, the weighting of these two elements varies widely depending on the needs of the policy holder and therefore, the type of policy in question. Second, the investment element may be underpinned by a company's asset-managed funds, as in the case of unit-linked policies. If the policy is a with-profits type, it will have other conditions attaching to it. Third, a life assurance policy is a contract that sets out the conditions under which a claim can be made, and by whom, be that when the policy has matured or, for example, by a beneficiary on the death of the policy holder. The amount to be paid out by an insurance undertaking is affected by all these factors.

Given the complexities of the issues surrounding the measurement of the encashment value of a life assurance policy, it has been impossible for my Department to build up an estimate of the amount of dormant funds held by the life assurance undertakings. Nevertheless, the amount is likely to be significant. Of course, the total value of any such policies is not the reason for moving forward with this legislation. Of primary importance is the need to make people aware that these policies exist and remain unclaimed.

As regards the amount to be transferred from any given policy, the insurance undertakings concerned will be required to calculate the net encashment value of the policy on the date of transfer. This will be the total amount that would be payable by the insurance undertaking if the policy holder were to realise the proceeds of the policy on that date. This is to be calculated net of any insurance considerations. A similar calculation will apply to the payments from the fund to the insurance undertaking in the event of a claim being made under the policy subsequent to the moneys having been transferred to the fund. Thus, the fund will only receive the assets which represent the investment portion of unclaimed policies. The amount required to provide insurance cover for the policy holder will remain the responsibility of the life company.

In relation to the relevant period of dormancy, following consultation with industry this will depend upon which of the two main policy types is being considered – those with a specified term which mature on a specified date, or those with no specified term. For the specified term policies, dormancy will occur where there has been no customer initiated communication with the insurance undertaking for a period of at least five years from the later of the date the policy matured or the date the policy holder last made contact with the undertaking. For policies with no specified term, dormancy will occur where there has been no customer initiated communication with the undertaking for at least 15 years. Deputies will recall that 15 years is the dormancy period applicable to banks, building societies and An Post under the Dormant Accounts Act, 2001.

The scheme which I am now proposing will provide a legislative framework which will improve regulation in relation to the handling and management of funds in mature but unclaimed life policies. Further, it will mirror and harmonise with the scheme which has already been put in place under the 2001 Act for banks, building societies and An Post.

The scheme will require all insurance undertakings operating in the State to actively take all reasonable steps to identify the beneficial owners of dormant life assurance policies with a view to at least alerting them to the existence of those policies. In the event that the owner or owners cannot be traced, the net encashment value of those policies will be taken into the care of the State, while guaranteeing the right of the ben eficial owners to subsequently seek a refund. The moneys will be held in the dormant accounts fund, to be established next year by the National Treasury Management Agency. The remit of the agency will be to prudently invest the moneys received from all the institutions, having regard to the possibility of claimants seeking a return of their moneys at a later date.

As the Deputies are aware, the 2001 Act already encompasses a scheme for the disbursement of surplus dormant funds for the benefit of charities and the community at large. 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 or educationally disadvantaged. The current Bill provides that any moneys transferred from insurance undertakings to the fund will also be included in any disbursement scheme.

I would now like to set out a few of the key principles enshrined in the legislation which will be applicable to unclaimed life assurance policies. I should, perhaps, remind Deputies that while I am bringing forward the framework legislation it is my colleague, the Minister for Community, Rural and Gaeltacht Affairs, who will have primary ministerial responsibility for the scheme once it is up and running, especially for the disbursement aspects. This mirrors the existing position with regard to dormant accounts in credit institutions. The definition of Minister in section 2 provides for this to be the case.

I am very conscious that the moneys we are dealing with derive from the private property of individuals and that as such, they must be handled and invested extremely prudently, having regard to the constitutionally guaranteed right to private property and to the confidential nature of the relationship between the insurance undertakings and their customers.

The proposed scheme will apply to all insurance undertakings in the State and to all policies for life assurance which have been taken out by Irish residents, other than policies which form part of the assets of occupational pensions schemes, group health insurance or disability benefit schemes and sponsored superannuation schemes. The application of the provisions of the Bill is set out in section 6.

The fundamental basis for the scheme lies in how dormancy is assessed. As I have already indicated, under the proposed scheme, a non-specified term policy will be deemed unclaimed where the insurance undertaking has received no customer-initiated communication with respect to the policy for at least 15 years prior to commencement of the scheme. A specified term policy will be deemed unclaimed where the policy holder has made no contact with his or her insurance company in relation to the policy for at least five years from the later of the date the policy matured and the date the policy holder last contacted the company. These definitions, which are set out in section 6 of the Bill, will be applied uniformly by all insurance undertakings.

Insurance undertakings will be obliged to personally notify customers whose policies are valued at €500 or above that they have an unclaimed policy with that undertaking and notify them of what steps to take to reactivate that policy or make a claim under it. For the sake of all other customers affected by the scheme, that is policies valued at less than €500 and non-correspondence policies, the insurance undertakings must place annual notices in two or more national newspapers. These annual advertisements, the first of which is scheduled to take place next January, will generate public awareness of the scheme. My hope is that this will encourage policy holders, or their heirs or executors, to make contact with the insurance companies to see whether they stand to gain under the terms of a policy held at that institution. Notification procedures are provided for in sections 8 and 9.

The framework provides that the net encashment value of unclaimed life assurance policies, where the policies remain unclaimed by March each year, must be transferred by the insurance undertakings to the dormant accounts fund to be established early next year. The first transfers will take place by April 2004. These matters are provided for in sections 10 and 11.

The National Treasury Management 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 moneys transferred to the fund, but also to any interest and any investment return that he or she would have been due on those moneys, had they remained with the insurance undertaking. The moneys in the fund will generate an investment income, some of which will be used to offset the costs of accruals payments to claimants, and the rest of which will be re-applied to the fund. In that way, as set out in sections 14 to 16, policyholders are guaranteed the maintenance of their rights.

The Bill also provides that the regulatory authority, currently the Minister for Enterprise, Trade and Employment but at some point the proposed Irish financial services regulatory authority, is entitled to appoint inspectors for the purpose of ensuring compliance by the undertakings with the provisions of the legislation. The inspectors will be authorised to check that an insurance undertaking has the necessary systems and procedures in place that will ensure undertakings are attempting to make contact with the policy holders, and that all relevant moneys are being transferred to the dormant accounts fund. Inspectors will be entitled to inspect the undertaking's records for these purposes and will have access to any relevant records held by the National Treasury Management Agency in respect of transfers to the fund. The provisions with regard to inspections are contained in sections 18 to 25 inclusive.

Having highlighted these main features, I would now like to recap. In summary, the Bill provides for identification of the types of policies and undertakings to be covered by the scheme and those policies which will not be captured; the period of dormancy applying; the obligations of the insurance undertakings in relation to notification of policy holders that their policies may be deemed unclaimed; the procedure, including the timeframe, within which moneys which remain unclaimed are to be transferred to the dormant accounts fund to be managed by the National Treasury Management Agency; and the obligation on each undertaking to maintain a register of unclaimed policies which will contain the name and particulars of each policy holder whose policy has been deemed unclaimed. It will also contain details of the class of policy, the amount transferred to the dormant accounts fund and the date of transfer to that fund; each undertaking to be obliged to complete a certificate of compliance with the provisions of the legislation, in order that any failure on the part of undertakings can be quickly identified; the role of inspectors, whose remit will be to check compliance with the legislation on the part of the insurance undertakings; the maintenance of confidentiality in relation to ownership of the moneys in unclaimed policies; and amendments to the Dormant Accounts Act, 2001 to ensure the entitlement of the NTMA to manage and invest moneys realised from unclaimed life assurance policies and to entitle the board to disburse surplus of such moneys.

The scheme established under the Dormant Accounts Act, 2001, enabled us to begin providing for a systematic approach to the regulation of dormant and unclaimed assets. It allowed for greater transparency in their treatment, as well as providing for an equitable and socially beneficial use of any surplus moneys identified. The current Bill, which is the result of lengthy and productive negotiations, represents a significant extension of that process and provides for a harmonised treatment of dormant assets throughout the financial services sector. It reflects the fact that the insurance sector is, for the most part, regulated by way of EU directives, but it goes further in focusing on the particular concerns we all have with regard to consumer protection when policies have long remained unclaimed. The Bill is an innovative piece of legislation and I commend it to the House.

Mr. P. McGrath

The Fine Gael Party will be broadly supporting the thrust of this Bill and will be facilitating its passage through the House. This Bill is a mirror image of the Dormant Accounts Act, 2001, which arose from the hearings of the DIRT tribunal and the hearings carried out by my former colleague, Jim Mitchell, when he was Chairman of the Committee of Public Accounts. It was identified that, within the banking structure, there were a lot of dormant accounts which were held, in effect, to the benefit of the banks in question. Arising from that the Minister brought forward the Dormant Accounts Bill, which became the Dormant Accounts Act, 2001. This Bill is a follow-on into the insurance sector and it is a good move which we welcome on this side of the House.

The controls in the insurance industry are complex and the Minister alluded in his speech to the difficulties in providing legislation that will capture all the dormant policies that might lie within insurance companies and having the moneys transferred into this dormant accounts fund. The insurance industry, by its nature, is complex in that many policies are tailor-made to suit the individual. It will be difficult to police the insurance industry and ensure that dormant policies are transferred into the dormant accounts fund.

The Minister, towards the end of his speech, made reference to having inspectors to police the structure or the possibility of having inspectors to do this work. When he is replying to this debate, will he indicate if he intends to take on staff to do this on a full-time basis or will he be doing it by way of bringing in consultants to review the matter from time to time? It would be quite an expensive business if people had to be brought in with the kind of expertise needed to examine various insurance policies and companies, to look at what they are doing and to come up with returns at the end of the day. Perhaps the way forward might be to bring in consultants occasionally to do that work.

I expect that the Minister will indicate to us in his reply the positive effects arising from the Dormant Accounts Act in respect of bank accounts. What kind of money has come forward?

Mr. McCreevy

We will not know until March or April next year because that is when it will be transferred over.

Mr. P. McGrath

Therefore, there is nothing in the account as yet. I wondered what the position was and I am glad to have had the Minister's clarification. It will be interesting to see what moneys come forward and I have no doubt the insurance industry, in due course, will prove to have a lot of money and can come forward as well.

I am a little concerned about how this money will be spent. Will it become a slush fund for the relevant Minister to disperse to Fianna Fáil organisations across the country—

Mr. McCreevy

No.

Mr. P. McGrath

—or will there be strict controls over how this money is given out? Sometimes, for example, we are concerned about the way in which national lottery funds are used and the fact that Ministers may be giving out their largesse to various clubs and organisations in their constituencies purely on the basis of a Fianna Fáil Minister delivering to a Fianna Fáil-dominated organisation. Will that happen—

Mr. McCreevy

It is quite unheard of for politicians to do that.

Mr. P. McGrath

—or will we have greater control over how the money is to be dispersed? I know the Minister laughs at what I am saying but there is concern that that kind of thing happens. It happens not just with regard to discretionary funds, but with regard to mainstream funding as well.

For example, in my constituency in the run-up to the last general election, a certain politician with the help of the Minister announced that moneys had been set aside for a certain school. It appeared on a website that this school had been approved to go to tender, but I was told yesterday by way of a parliamentary reply that this is not the case. We had announcements by a person who is now a Deputy in this House and a photograph with the Minister and the parents' council saying that moneys had been approved. This has not happened. That example is in respect of mainstream funding for school buildings, and I am concerned by how funding that would be more loosely established in the dormant accounts fund, will be used. What are the criteria by which it will be dispersed? Maybe the Minister will answer this when summing up.

I am also concerned about the contact that has to be made to establish if a policy is dormant. The legislation proposes that the people in question should be contacted by ordinary post. I am not sure that is rigorous enough in respect of trying to find somebody. It should at least be registered post and there should be a further stipulation on the follow-up criteria that should be used.

This was brought home to me forcibly in recent weeks when a young man in his thirties, who was a client of mine for a while, approached me. He was taken into care with his brother as a young man and, subsequently, both his parents died. They had a house in Mullingar which they had vested from the local authority. They were still in care and the house was reacquired by the local authority by way of compulsory purchase order. It transpires that the local authority went through the rigours of the law in terms of establishing who was the owner of this property. The rigours of the law in that case, as the Minister probably remembers, involve pinning a notice to the door of the property. Apart from that, what one would do is quite scant.

The young man was actually in the care of the State and if there had been a scrutiny of the full documentation in respect of this family, this would have emerged quite clearly. Nothing happened and he is now looking for his share of the cake on the grounds that this property was taken from him unfairly, unjustifiably and immorally, and that he is morally entitled to reasonable compensation. It will be a major job to establish that and to get the local authority to do that. It may have to go to court, but I hope not. When the procedure was put in place for a compulsory purchase, pinning a notice on the door of the prop erty probably seemed a reasonable thing to do. Surely if people have an interest in property they will see a notice pinned on the door.

In terms of insurance policies, if one is simply writing to Mr. and Mrs. Jones of Trim Road, Naas, or wherever it is, and that road has been demolished, there is a greater need to make the insurance company try harder to establish if those persons still exist and where they might be.

Perhaps one could find them by looking at records of brokers who sold the policies or by looking to see if the people in question had legal advisers at the time. If people have an interest in a property they will see the notice. A greater onus should be placed on insurance companies to try to establish if policy holders or their heirs still exist. This could be done by examining the records of brokers or legal advisers.

The dormant accounts legislation has imposed provisions on An Post regarding savings bonds and savings schemes. Usually these are long-term investments and account holders are now required to periodically reinvest their accounts to ensure they do not fall within the remit of the dormant accounts legislation. While it is good that account holders should be advised of the position regarding their accounts from time to time, there is a need to carefully consider how this aspect is implemented.

The insurance industry is intensive and competitive. Insurance companies often recruit young people who make their livelihoods on the commission from the sales they make, both of new policies and in having existing ones upgraded. It is a cut throat business. In the past couple of weeks I was visited by a young agent who persuaded me to upgrade a policy. I was flabbergasted at the raft of documentation I was required to fill, including a two page document seeking information on the most personal information regarding my insurance policies, property and so on. When I refused to provide it he told me it was a mandatory requirement under Central Bank regulations. I still refused and sought clarification from the Central Bank. If the bank requires the return of such information there is a need for much greater regulation on the control of its dissemination.

Many borrowers were left in serious trouble while financial companies were able to write off their liabilities. Companies are covered by the small print of the policies they sell, which advise customers of changing investment values and returns. Tight controls must be maintained on the way the insurance industry conducts its business. For example, the Minister said the first purpose of the legislation is to ensure that proper steps are taken by financial institutions to identify and contact the owners of dormant accounts. I ask him to accept my concerns and attempt to strengthen the criteria by which efforts are made to contact policy holders.

It is important to ensure that the National Treasury Management Agency wisely invests the proceeds from the dormant accounts fund. The Minister said the remit of the agency will be to prudently invest the moneys received from all the institutions. The agency will shortly issue its report on the management of funds under its control over the past 12 months. It will be interesting to note the size of the returns. In this regard it is worth noting that the pension reserve fund has sustained some major losses because of investment in equities. In terms of individual companies, some such investments were substantial.

Mr. McCreevy

On a point of clarification, they would be unrealised losses. There is a difference.

Mr. P. McGrath

I ask the Minister to explain that technical point.

Mr. McCreevy

When shares go down in value the shareholder does not lose money until the shares are sold. If they are not sold the value will rise again and the shareholder will not be at a loss.

Mr. P. McGrath

I understand the pension reserve fund made a large investment in one company, at a time when its share value was high. Given that the share value fell to 5% of its original value, it is unlikely that a recovery will be made in that instance. In response to a parliamentary question I submitted to the Minister, he indi cated that there was a negative equity value of approximately 3.4%.

An Ceann Comhairle

Perhaps a more detailed discussion of this aspect could be held on Committee Stage.

Mr. P. McGrath

I am concerned with the need to invest these funds prudently. Given what has happened to equity shares over the past 12 months, perhaps the Minister will review the best type of investment for public funds. He is ultimately responsible for ensuring that such funds are used wisely and he will be required to account to the public for what has happened. Perhaps he should question the investment in equities and consider other types of investment, such as property. My party argues that given the infrastructure shortage, the pension reserve fund should be invested in that area.

I welcome the Bill. It is a follow-on from the dormant accounts legislation and we will support its passage through the House. There is a need to strengthen the provisions of the legislation to ensure that a greater effort is made to contact policy holders or their heirs to ensure that property is returned to those who rightfully own it.

Mr. Broughan

I wish to share time with Deputy Joan Burton. The Labour Party warmly welcomes the Unclaimed Life Assurance Policies Bill, 2002. It obviously follows from the DIRT report and from the dormant bank accounts procedures which we put in place recently.

Life assurance policies are a vital form of saving, widely used throughout society. Many people who never get the chance of having realisable investments have some sort of life insurance particularly in relation to the purchase of a first house. It is important that we put in place some measure to put dormant accounts to use for the community.

The leader of the Labour Party recently called the Minister for Finance, Charlie Mandrake. It is a very appropriate title for the Minister.

I welcome the Bill. Insurance plays a key role in the well-being of every family and household. Following the developments we made on dormant bank accounts, this seems to be another step towards clarifying, developing and protecting consumer rights. It is valuable to that extent. There are areas in sections 8 and 9 in particular that we might consider further on Committee Stage.

Mr. Boyle

I wish to share time with Deputies Ó Caoláin and Breen. On the surface, this legislation is difficult for us to adopt a negative position on. It is Robin Hood legislation and that is an innovation for the Minister who is used to giving and taking in a different direction. We should question whether the bona fides of this and the earlier Bill are from where the Government is coming. It is legislation that is not without difficulties. I hope that many of these difficulties can be ironed out.

The Government seems to be engaged in doublethink in terms of how the national accounts are presented. The National Development Finance Agency Bill will be debated soon. It will put forward the pretence that finance will be borrowed but it will not affect the national borrowing figures. However, we have legislation like this which gives the effect that assets are being acquired by the State and will be used as part of its expenditure programmes, even though the State has not acquired them through traditional and logical means. The Government cannot have it both ways. It cannot pretend that it is not borrowing, nor can it pretend that it is not acquiring money in less than effective ways.

The Minister should be aware of difficulties in the Dormant Accounts Act, 2001. This Bill should be used to put the necessary amendments in place. I received a letter about a dormant account that I was administering. I was a community development officer for Muintir na Tíre and the account was over 12 years old but I did not have any signing authority on it. Contact was lost because it was an account for a voluntary organisation and the people working with it changed on a regular basis. The sum involved was €230. It is ironic that under the Dormant Accounts Act, 2001, this account, if not properly accounted for, would be subsumed into a larger fund that is supposed to allocate moneys to other voluntary bodies. An amendment must be made so that the funds used, whether they are generated by bank accounts or life assurance policies, are specified and greater effort should be made to locate accounts which have a more corporate structure and will benefit certain groupings because of the circumstances in which they find themselves. I hope that scenario will not be repeated under this legislation.

Will the Minister clarify the nature of future Robin Hood Bills he may bring before the House to deal with lottery winnings, prize funds, prize bond funds and possibly the special savings investment scheme? Will people avail of the benefits that accrue from those savings? Will legislation be introduced so that funds acquired through the scheme will be apportioned similar to those under this Bill?

The mindset behind the legislation needs to be challenged whereby the moneys for the Department concerned and the organisations that benefit from it must derive from such funds. Voluntary and community groups are always added on extras. They receive money from the national lottery and the dormant accounts fund and are set to benefit from unclaimed life assurance policies. The Government has not been willing to allocate Exchequer funds to voluntary and community groups. The Minister needs to be challenged on this because there has never been an acceptance of the value added contribution of volunteerism which provides social services that are not provided in other countries where the state plays a more direct role in funding such services. The Minister is prepared to assist the work of such organisations only through mechanisms such as the dormant accounts fund and that is not the type of funding model that should be promoted or the type of society that should be encouraged.

The definition of regulations relating to life assurance policies in terms of dormancy and the power of inspectors to seek information and how to use such information to ensure money is made available under the dormant accounts fund are necessary. However, in terms of imposing additional administrative work on financial institutions, should this be a role for the inspectors or, given the other problems there have been with such institutions throughout the years, could the inspectors have a more direct role in procuring all the information the Central Bank and other regulatory authorities need in regard to the conduct of businesses in the financial services sector?

If there are unrealised assets within the insurance industry, should the level of premiums for life assurance policies be reduced and should reforms be promoted with the industry in general? I appreciate this is the responsibility of another Minister but there is a great deal of consumer disquiet about these aspects of the industry and the Government has not displayed much intent to bring about the necessary reforms wanted by consumers.

Certain aspects of the legislation need to be amended, particularly those relating to the Dormant Accounts Act, 2001, to take account of irregularities that have arisen since it was passed. I look forward to tabling amendments on Committee Stage, having them considered and, hopefully, accepted by the Minister.

Caoimhghín Ó Caoláin

I bid the Minister for Finance adieu and I am sorry he did not have the opportunity to hear me record that I welcome the Bill. I have no doubt the Minister for Community, Rural and Gaeltacht Affairs will convey that to him.

Éamon Ó Cuív

The Minister for Finance gets to collect the money and I get to spend it.

Caoimhghín Ó Caoláin

I thought the Minister said "suspended" and I hope that would never happen.

Like the Act which gave rise to it, the Dormant Accounts Act, 2001, the legislation is a long overdue measure which could and should have been enacted long ago. The moneys identified under the Dormant Accounts Act, 2001, and those it is proposed to target under this legislation, were accumulating in the coffers of the hugely wealthy financial institutions. The DIRT inquiry in 1999 found that money in dormant accounts represented what was described as "free capital" for the financial institutions and they were able to use it as part of their capital base, further enhancing their ability to make vast profits. It is far better that these dormant moneys should benefit society than be used to swell the coffers of banks, insurance companies and other financial institutions.

Given the record of the Government, I am pleasantly surprised that it has acted on the DIRT report recommendations at all, especially when it comes to delving into the vaults of the financial institutions. It is not something for which the Minister for Finance is noted. It is a start, which I will accept in that spirit, but there is long way to go before the banks and insurance companies, in particular, are truly called to account.

In his speech on Second Stage of the Dormant Accounts Bill in June of last year, the Minister for Finance stated, rightly, that he was concerned there was no onus on credit institutions to trace the owners of deposits lodged with them and it was up to clients or next of kin to come looking for their money. He stated: "The days of personal banking, in which bank staff knew their clients and notified their dependants in circumstances where the account holder died for instance, have long passed." I have some personal experience of that relationship.

However, the Minister was not correct to say the days of personal banking are over. Now more than ever first class personal service is offered by the financial institutions but, regrettably, only to those with the largest sums on deposit or who offer the greatest profit incentive. New financial institutions are thriving on such exclusive business. The wealthy clients of these private banks do not need to worry about dormant accounts or insurance policies. Their finances are managed for them to the nth degree to ensure the maximum return.

On the other hand – this is something on which the Minister for Community, Rural and Gaeltacht Affairs agrees – the banks are closing branches throughout rural Ireland, showing open contempt for customers who have been doing business with them for decades, very often older citizens whose money these financial institutions were glad to have when the economic climate was much less favourable. No amount of public relations spinning by the financial institutions can disguise this strategy to deliberately turn their back completely on the smaller depositor and the smaller community and concentrate all their activities in the most lucrative urban markets and in the international money market.

This Bill, and the previous Bill, place new obligations on the financial institutions. These obligations are made necessary by the change in practice over the years whereby customers are no longer given the courtesy of an annual statement of account or any reminder of their business with the institutions. I am glad some degree of accountability is being imposed. It is sad such accountability must always be imposed by legislation. The institutions will not be accountable willingly. Why can we not go further with the principle of making the financial institutions accountable? I hope the Minister will be enthusiastic to the task.

In his speech on the Dormant Accounts Bill, 2001, the Minister for Finance, Deputy McCreevy, said we were entering uncharted waters and that it raised complex constitutional, legal, operational, prudential and investment considerations and matters including the right to private property and the implied contract of confidentiality between financial institutions and their customers. It now seems those complex difficulties have been overcome. The lesson is that where there is a political will, there is a legal way. I ask the Minister to follow that logic and extend the principle to other areas of financial activity.

Irish banks and insurance companies are some of the most exploitative in the world. The banks enjoy a return on their equity which is double the EU average. We have banks which are among the most profitable in Europe. We should examine the reality of how they deal with their customers in this jurisdiction. They charge customers for a range of services for which their directly comparable counterparts in Britain do not. Their sister financial institutions on the neighbouring island and in the North apply a completely different set of criteria in relation to charges vis-à-vis customers. Why are we being treated punitively and differently in this jurisdiction? These services include the setting up of an overdraft or a direct debit, account maintenance charges and ATM withdrawals and lodgements.

The country is rightly convulsed at present over the insurance issue. It is scandalous the Government and the EU are allowing the insurance industry to ruthlessly exploit customers through gross overcharging and profiteering. This is having a huge knock-on effect in terms of employment and the cost of living. If the principle is accepted, even in this relatively modest Bill, that these institutions should be more strictly regulated, it should apply to all their activities. That must include price control and strict regulation of charges and costs. I would like that reflected in the thinking of the Minister for Finance and the Department of Finance.

The financial institutions must also be called to account for their role in assisting people to evade and avoid tax. If we can target dormant accounts, we should be able to target active ones, including offshore accounts which are used by the super rich to avoid their social obligations in this country. Only yesterday the Minister of State at the Department of the Taoiseach, Deputy Hanafin, told the Dáil that Clancy Barracks, which should have been sold to Dublin City Council for social housing, had been sold to a property company based in Jersey. I do not believe that property company is based in Jersey for the good of its health.

The Bill needs to be more clear about the use to be made of the funds accruing to the Exchequer as a result of the legislation. I concur with Deputy Boyle that the funding accruing from the legislation must be ring-fenced and taken on board by the Government. The beneficiaries should include those who assist citizens who cannot afford expensive financial and legal advice in the State. The Minister and his colleagues in the Cabinet should consider public and community service bodies, such as the money advice bureaux and the free legal advice centres. These are only two examples of deserving areas where the money accruing from the implementation of the Bill could be directed. That would bring an improved service to the people who need it most and it would help to bridge the ever-widening gap between rich and poor.

Mr. J. Breen

I have some reservations about the Bill because there are major omissions from it. I ask the Minister to take my points of view on board. A weakness in the Bill, as outlined by the Minister, is that if an insurance company does not have communication with a policyholder in the previous five years, it is insufficient for it to write to the last known address. I am sure the Minister is aware of the amount of mail which arrives at apartments and flats for tenants who no longer live there. The mail is often thrown in the bin. The same happens in rural Ireland. I am sure the Minister is aware from his recent canvass of the number of empty houses where mail is thrown inside the doors and not opened. If a reply is not received from the correspondents, the insurance company should check the original application forms for an address for the parents of the person concerned or his or her next of kin. Letters should then be sent to those addresses.

As regards the nomination of a third party as the beneficiary of money from a policy, if an address is not available, it is not sufficient to put a notice in two national newspapers. That was all right when there were only two national newspapers, but there are many more now. Advertisements should be placed in the local newspaper and in the Sunday newspapers. Many people only get the local newspaper and one national newspaper on a Sunday. They would not know that an insurance company had advertised about dormant accounts. Many policies were taken out when people were young and had left home to live in flats. The amount of money accruing from those policies is low. That is a weakness in the Bill.

The State is not obliged to establish the beneficiaries of such money. However, the State is in a stronger position than insurance companies to do so. The application forms should include a person's date and place of birth and that should make it easier to find his or her records, including PRSI and old age pension records. That should also facilitate the State to advertise their existence in a relevant local newspaper and on local radio. I do not have a problem with the Minister seeking reimbursement from the State for costs incurred in trying to find the owners of such funds. If there are dormant policies and there is insufficient money to pay the costs, the funds should go directly to the dormant account fund. If policies were set up but people did not subscribe to them and only a small amount of money matured after a number of years, it should go to the fund. Where policies have matured but have not been claimed, the insurance companies and the State must make a better attempt to take stronger measures than are outlined in the Bill to establish the beneficiaries or true owners of such funds.

The Bill, as framed, establishes a system by which the State will take over from insurance companies in grabbing these moneys and will have no duty towards their true owners. The reason the Government is interested in these moneys is undoubtedly connected with the current state of the public finances. We were told during the election campaign there would be no cuts, secret or otherwise. What has happened since the election?

Last night a Government backbencher voiced opposition to the introduction of higher education fees, only to return five minutes later and vote with the Government on the matter. Is this the type of policy the Government proposes to pursue? It is not good enough that the State should acquire a policy from its holder without taking all reasonable efforts to locate the person in question. For this reason, I ask the Minister to incorporate in the Bill measures giving effect to my concerns.

Minister for Community, Rural and Gaeltacht Affairs (Éamon Ó Cuív)

Deputies have raised a number of highly interesting questions. While it will be a matter for the Minister for Finance, Deputy McCreevy, to answer them, I wish to correct one major misunderstanding. Contrary to what has been said here, both dormant account Bills stipulate that the money will always belong to the person with legal title to it. Every effort must be made to locate the owners of accounts and return to them their money. Appropriation of money, which would be a very serious matter, will not happen. The reality, however, is that the funds in a number of accounts will never be claimed. Therefore, rather than leaving them dormant, it is proposed to put them to good purposes.

Deputy Ó Caoláin, to whom I listened with great interest, missed a great line. When he started waxing lyrical about people receiving excellent personal service from financial institutions, I expected him to name the credit unions as the providers of such service to the small people on the ground. Instead, he seems to believe the only people who receive personal attention from financial institutions are the very rich. As a longstanding proponent of the credit union system, it is my understanding that the credit unions and, to be fair, some of the branches of the banks, provide a very personal service to their customers.

I ask Deputies to be reasonable. We live in a commercial world. If those of us who are committed to rural Ireland want it to develop, the best way to proceed, for instance, in the event of the commercial banks pulling out of a town, is to work towards getting a credit union established in the town in question. There were no financial institutions where I lived. During my period as chairman of the local co-operative we managed to persuade the credit union to set up a branch office in our village co-operative and because this facility had not been available prior to that, we moved forwards rather than backwards.

Similarly, arrangements have been made with An Post to make available banking services at post offices across the country. I have never believed one cannot open a better window when someone closes a door. My attitude to the development of rural Ireland has always been that if one person is unwilling to do something, one finds another who is willing to do it. By adopting that attitude, we do not become prisoners of other people. Instead, we become creative inventors of new and better ways of doing things and providing improved services. In the coming years those who succeed will not be those who see the end of the world and insoluble difficulties in every problem, but those who regard every problem as an opportunity. Some of the best things I have done in my life have been about turning unwelcome problems to my advantage and creating opportunities from them.

The Bill is a major step forward and I congratulate the Minister for Finance and his officials on the speed with which it has been brought before us. Deputy Ó Caoláin expressed surprise that the Minister introduced the Bill so quickly. The reason he is surprised is he does not understand the Minister who, while not a person who wears his heart on his sleeve, is genuinely concerned for ordinary people. Where other people talk, he acts. Having dealt with him for years, both as a Minister of State and now as a Minister, I have never found anyone more willing to take action when approached with reasonable proposals aimed at benefiting ordinary people. He does not make a great song and dance about it, but gets on with the job at hand.

This Bill is a companion of the Dormant Accounts Act, 2001. Members will recall that it was originally envisaged that the Dormant Accounts Act would also deal with unclaimed funds in life insurance undertakings. The Minister decided, quite rightly, that because of the complexity of dealing with the life insurance issue, the best approach would be to proceed with dormant accounts as they related to the banks. His decision has been vindicated by the fact that we will now be able to begin operating the provisions regarding dormant accounts in banks in the summer of 2003.

The Bill will create another source of funds for the dormant accounts scheme. However, I emphasise that the main purpose of the legislation is to reunite account holders, policyholders or their beneficiaries with moneys which lie dormant and unclaimed in various institutions. In other words, the primary purpose is to try to return the money to its rightful owners. The secondary purpose is to ensure the money is not left lying dormant if for some reason one cannot identify the owners.

I commend the very successful public awareness campaign last spring which was run jointly by the Department of Finance and the then Department of Social, Community and Family Affairs. The campaign sought to draw to public attention the new arrangements for handling dormant accounts through a week long series of advertisements on radio and in the national newspapers. Members may have read or heard the advertisements in the media or noticed the litera ture now on display in the offices of banks, building societies and An Post.

While my colleague, the Minister for Finance, has introduced the Bill and has responsibility for legislating in this area, I will have primary ministerial responsibility for implementing the Bill once it has been passed, particularly in terms of its disbursement aspects. My Department, therefore, has ministerial responsibility for the nice part of the legislation, namely, disbursing the money in the fund. For obvious legal reasons this will be done at arm's length. My responsibilities are to implement the legislation, appoint the members of the dormant accounts fund disbursements board, whose remit is to oversee the scheme of disbursement, and ensure the appropriate administrative support is provided to the board to enable it to carry out its important functions.

Building an inclusive society is a priority for the Government. In creating the new Department of Community, Rural and Gaeltacht Affairs, it demonstrated its commitment to ensure a more cohesive and co-ordinated structure is established to support work in this area. We all agree a co-ordinated approach is badly needed to ensure the money we spend gets to the people we want to get it and is not lost in a maze of schemes and bodies. As a person who has worked on the ground for years, it is clear this is one of the most urgent tasks facing the country.

Responsibility for a large number of projects and programmes in the community and voluntary sectors which were previously administered by various Departments is now under one roof. The Leader programmes, ADM, the community programme aspects of the old Department of Social, Community and Family Affairs, all gaeltacht and island schemes, CLÁR and RAPID are now dealt with by one Department and I will do my best to make them much more accessible and user friendly to those they are meant to serve, particularly the disadvantaged.

It is logical in that context for responsibility to disburse the dormant accounts fund should come under this new structure. One of the key principles of the 2001 Act was the decision to establish a National Treasury Management Agency to regulate and manage the dormant accounts fund. A truly modern society must be distinguished by its care for the disadvantaged and excluded and by its commitment to constantly update that care. In bringing forward this legislation, the Government is continuing where the last one left off. It sees the dormant accounts scheme as an integral part of the strategy of tackling exclusion. I remember the great cross-party interest and the high standard of debate which characterised the passing of the Dormant Accounts Act, 2001, and I am sure that will be replicated on this occasion.

The legislative system that has been put in place to deal with dormant accounts and unclaimed funds is original, which is great. We are not simply aping legislation from some other jurisdiction, we are leading the field and there has been huge international interest in what has been done. I hope we can continue to set such standards and that through the operation of this scheme by the board we will dovetail this fund with existing Government expenditure to ensure that comprehensive systems are available in the areas on which the fund is focused.

Mar Aire, sílim gur céim mhór chun cinn í go bhfuil an Bille seo faoi bhráid na Dála. Tá mé ag tnúth leis an airgead a bheith sa chiste agus a bheith á roinnt agam an bhliain seo chugainn. Tá an-iarracht déanta é seo a bhrú chun cinn agus anois beidh foinse eile airgid againn.

Luíonn sé le réasún go mbeidh an chuid is mó den airgead ag teacht ar aghaidh ins na céad blianta mar táimid ag caint ar chuntais atá ag luí ar feadh na mblianta fada. Amach anseo beidh an sruth airgid ag maolú beagán ach níl aon amhras ann ach go mbeidh airgead ag teacht isteach i gcistí an phobail agus a bheidh le caitheamh. Is deas an rud gur mar sin a bheidh. Nach fearr i bhfad go mbeidh sé á úsáid ag daoine bochta ná go mbeidh sé ag luí i gcúntais bainc, díomhaoin agus gan a bheith ag déanamh tairbhe do dhuine ar bith ach do na hinstitiúidí airgid?

Reachtaíocht an-mhaith é seo agus beidh mé ag tnúth go dtiocfaidh sé tríd an Dáil agus an tSeanad go scioptha, go mbeifear in ann é a achtú agus go gcuirfidh sé leis an obair atá déanta cheana féin leis na cúntais bainc agus, idir an dá rud, go ndéanfar an-leas don dream is mó in Éirinn go dteastaíonn an leas sin uathu.

Caoimhghín Ó Caoláin

In relation to the Minister's praise of the Minister, Deputy McCreevy's perceived penchant—

An Leas-Cheann Comhairle

That is not in order.

Caoimhghín Ó Caoláin

The Minister correctly lauded credit unions, but there is quite a difference of opinion between him and those unions over the Minister for Finance.

Mr. Crawford

I welcome the chance to say a few words on this important Bill. I supported the Dormant Accounts Act and I support this Bill in the same context, preferring to see dormant funds and unclaimed insurance in State hands rather than those of the banks or insurers. The only thing that worries me is a matter already commented on by my colleague Deputy McGrath, which is the danger of this becoming a slush fund. He mentioned Fianna Fáil, but I expect the Progressive Democrats also have a great interest in that. The last budget showed clearly that other structures were not safe when the Minister was desperate for money and he called on all sorts of outside funding groups, such as the Central Bank, to balance the books. We do not want to see that again. I am aware on a personal level that there is a great need for health services and disability funds, and in my local area Monaghan hospital lacks money. Those funds are sought from whatever source possible and I would not mind if money from dormant accounts or unclaimed insurance was spent in that positive direction.

There are a number of problems in the insurance industry and there are funds which cannot be traced, as was the case with banks. Some companies make an effort every second or third year to discuss customers' policies and update them or force them to buy more insurance. By doing so they have an opportunity to update the next of kin because people die at all ages and nobody ever knows where a person has a private account. I hope through this or some other legislation insurance companies will be forced to call back regularly and to keep updated information on every customer's account to ensure that less of this money is untraceable. There is a need for insurance companies to make a genuine effort to keep in touch with their clients. With much of their money being paid by standing order they acquire it more easily than in the old days when they sent people around weekly or monthly to collect two shillings from their customers. Now they have access to simplified, low-cost methods of collection and the least they can do is ensure every two or three years that the information they have is valid. Anything they need can be traced easily.

I worry about a total reliance on An Post. My colleague, Deputy Ring, referred this morning to the matter of An Post perhaps sending letters to private houses for sorting and there is a need for the Minister to ensure that problem is solved as quickly as possible. Normally the service provided is good, but it is not realistic for insurance companies to rely on a registered or ordinary letter to trace next of kin. I urge proper, ongoing discussion and I thank the Minister for his speech.

Banks and building societies demand life assurance and it is only right for the sake of families left behind or the employees of a self-employed person that significant borrowings are insured in the event of death or long-term illness. It is up to the banks to ensure that they have records of the next of kin to minimise the amount that goes into any fund.

I cannot help but refer to the Minister's comment about credit unions. They have given an absolutely outstanding service in rural areas and they have now become more involved in cities. Banks that were very big in industry only a short few years ago have closed their offices and it is fantastic to see credit unions operating. I do not apologise for mentioning the branches in my home area. They include Clones, Emyvale, Monaghan, Castleblayney, Carrickmacross, Ballybay and Cootehill. They form a group and advertise as such to minimise costs so they can provide the best possible service to their clients. Their regulations provide that their customers' debts die with them. Their policy shows how this matter, in terms of insurance, can be dealt with, given that not only life assurance but other forms of insurance are of major interest.

I wish to raise a matter that may not seem relevant to the Bill but is important, namely, the sale of assurance policies by ruthless salespersons to people under pressure. People are often pushed into buying assurance policies that are not in their long-term interests. While the Oireachtas has addressed this area in the past, we need to update legislation in this area to ensure there is full transparency. It is not sufficient for policy holders to be asked to check the contents of their policies; they should be forced to have them independently checked to ensure they are worthwhile and make economic sense. I know of many people who paid large amounts of money in terms of their incomes for assurance policies only to find they were of little or no benefit. In some cases, they lost everything when they could not afford to make their repayments.

Some salespersons almost force policies down people's throats, a practice with which the Oireachtas must deal. To that end, investment in shares and the purchase of insurance are matters that should be covered in the education system so that students from transition year onwards are fully briefed on the benefits of all types of insurance. People who take out loans from banks or building societies are often forced to buy assurance policies with which they are not familiar and which, in many cases in recent years, have not covered even the benefits they were supposed to cover.

I wish to make a few comments on the distribution of funds. Community groups and others will benefit from the provisions of this Bill in a similar way as they will benefit from the provisions of the Dormant Accounts Act. The Minister of State, Deputy Ó Cúiv, referred to the need for simple structures. It is a bureaucratic nightmare for community and disability groups to obtain funding in that they have to apply for funds to many different organisations. I beg the Minister not to implement further structures for the disbursement of funds to such groups. The Government, county councils and other relevant structures should be used for this purpose. We do not want politically motivated or nominated organisations involved to ensure the money does not go to them. I make no apology for saying that.

We want this fund to be dealt with in an open and transparent way by civil servants and others who will make sure it is disbursed on an equal basis. Irrespective of how much money the Minister for Finance claims is available, there will never be enough to provide fully for the needs of those at the lower end of the scale. If this fund together with the fund under the dormant accounts legislation is used to benefit the disabled, the socially displaced and others, we will have done a good job. Irrespective of whether the fund is small or large, I hope it will go towards not only those in need but to service groups under threat because of the action of the Minister for Enterprise, Trade and Employment in removing personnel from community employment schemes. This House does not realise the tremen dous benefit of those schemes to those most in need. I hope the Minister for Enterprise, Trade and Employment will listen before it is too late and make sure the majority of those involved in CE schemes are allowed to continue to participate in them. Perhaps some of the funds accumulated as a result of this legislation could be channelled through community employment schemes to benefit those most in need.

Mr. Connolly

While I support the Bill, I have some misgivings about it in so far as it empowers the State to requisition or seize the encashment values of inactive life assurance policies and use them for charitable and social purposes. If our experience of Fianna Fáil's renowned largesse with national lottery funding is anything to go by, we can expect the hard saved fruits of people's prudence to be doled out and neatly timed to coincide with the next general election. In acts of blatant political expediency, no doubt determined by whether a constituency is marginal or otherwise, Fianna Fáil's favourite charitable and social purposes will be the beneficiaries of people's short memories. To quote former US President, Ronald Reagan, "We have done a lot, we'll do more". Fianna Fáil is nothing if not consistent when it says "A lot done, more to do".

I strongly advise people to check with every insurance company with which they may have done business to ascertain if an inactive insurance policy may exist. People should not let sleeping policies lie. A conservative estimate of the amount of money languishing in unclaimed policies is in the order of €45 million with sums upwards of €36,000 commonplace.

When the Minister for Finance cast his sights on dormant bank accounts some years ago arising from the report of the Committee of Public Accounts on DIRT evasion on deposits in bogus non-resident accounts, little did he realise the bonanza he was about to reap – upwards of €1.7 million. There were allegations arising from the DIRT inquiry that some financial institutions were profiting from dormant accounts and inactive insurance policies. Now the Minister proposes to supplement this pot of gold with another €35 million which he has filched from non-suspecting policy holders whose policies have been inactive for 15 years.

The principal redeeming feature of the Bill is the requirement for financial institutions to keep a register of such policies to facilitate policy holders in reclaiming their money. Insurance companies have not been exactly over-zealous in seeking to contact holders of inactive policies. Now the onus will be on the companies to make contact with the holders of accounts where there has been no transaction initiated by the customer for upwards of 15 years. Insurance companies will be required to make every effort to contact policy holders by writing to them and by annually placing advertisements in the national daily newspapers. When people took out home loans in the past invariably they also took out an assurance policy to cover the loan. When the loan was cleared, many people may have thought their interest in the policy lapsed with the final repayment. However, policies such as these often had "with profits" or savings features which could realise many thousands of euro today.

Confidentiality prevents life assurance companies from advertising the names of policyholders to whom money may be due. However, this should not prevent them from making strenuous efforts to contact their former clients. For the State to requisition or seize policyholders' cash and use it for charitable or social purposes seems to constitute a massive liberty on the part of the Government. Could such a proposal be open to constitutional challenge by people who feel they might have a valid claim on a policy? This is a question to which the redoubtable Mr. Denis Riordan will, I am sure, be applying his not inconsiderable expertise and constitutional knowledge in the foreseeable future.

I hope all life assurance policyholders will examine their memories to ascertain whether they may have inactive policies. In this way they can head off the Minister's seizure of their assets – an action reminiscent of the activities of the Criminal Assets Bureau – and ensure they are not subsidising his favourite charitable and social causes. I also hope the moneys discovered in these accounts will be applied in the areas in which they are found.

I share Deputy Breen's concerns about national daily newspapers. Everyone is aware that, in the past, when people wanted to hide planning applications they placed their notices in the national newspapers because they knew that people do not necessarily read them. In some instances, notices were translated into Irish so that people would not read them. Notices should be placed in local newspapers because people read them and insurance companies, if they want to be successful in their efforts, would have a better chance of locating clients.

I echo Deputy Crawford's comment that some of the money located through the provisions in the legislation should be invested in Monaghan General Hospital. I do not mind from where such money comes.

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Fahey)

I thank Deputies for their support for the Bill and their contributions to the debate. Before addressing the issues and concerns that have been raised, I wish to recall briefly the background to the Bill.

The question of dormant assets in financial institutions has been a matter of debate here and elsewhere. The 1999 report, Parliamentary Inquiry into DIRT, recommended that action be taken to put these funds to good use for the benefit of the community at large. Following a detailed examination of the issues involved, the Dormant Accounts Act, 2001 was introduced to deal with dormant assets held by banks, building societies and An Post. This Bill provides for the extension of that legislative framework to the more complex area of life assurance products.

The main features of the proposed legislation, as already outlined, are the obligation on life assurance undertakings to notify the holders of unclaimed policies of the existence of these policies; where the policy holder cannot be traced, to require the undertaking to transfer the net encashment value of the policy to the dormant accounts fund; the preservation of all the rights of the policy holder; and measures to ensure compliance with and, if necessary, the enforcement of these requirements. These features are similar to those contained in the Dormant Accounts Act, but the detailed provisions also take into account factors particular to life assurance policies.

The legislation provides that the amount to be transferred to the dormant accounts fund is only to be the investment of the unclaimed policy, such that matters relating to the continuation of insurance cover remain exclusively with the insurance undertaking. As persons such as the beneficiaries of the policy and heirs are more likely to be claimants in respect of life policies, they and others who may be entitled to payment are included in the definition of policy makers for the purpose of the Bill.

With regard to the issues raised by Deputies, to avoid the perception that the Government would use the moneys involved as some kind of slush fund it was always proposed and subsequently effected that an independent board would be established to distribute the surplus moneys from the fund. This board was appointed earlier this year and will distribute the surplus money, subject to guidelines in the 2001 Act, without direction from Government. In this way there can be no question of the Government having any involvement with the fund.

Deputies McGrath, Broughan and Crawford raised the question of how the fund will be operate and be managed. The fund will be established by next April under the auspices of the National Treasury Management Agency, which will control and manage the moneys therein. The moneys transferred to the fund will be split between two accounts – a reserve account and an investment and disbursement account. Moneys in the reserve account will be primarily for the purpose of meeting repayments to claimants. This account will also be used to meet the expenses of the disbursement board and any costs incurred by the agency. Moneys in the disbursement account can be disbursed by the board to successful applicants seeking funds for relevant programmes or projects.

To ensure the rights of claimants, a safety mechanism has been built into the legislation to ensure there is always enough money in the reserve account to meet the cost of repayments to claimants. Should there be a shortfall in that account, the NTMA is to move money into it from the disbursement account, thus curtailing any planned expenditure of that money by the board. As a further precaution, should it transpire that the moneys in the disbursement account are not adequate to meet the cost of reclaims, the agency will be permitted to borrow the shortfall from the central fund on the basis that this money is to be repaid to the Exchequer once moneys come into the fund again. The relevant programmes and projects that are to be designated will include, for example, projects involving the alleviation of poverty and social disadvantage, programmes to help children with learning disabilities, etc.

I again thank the Deputies who contributed to the debate.

Question put and agreed to.

Dáil Éireann debate - Thursday, 7 Nov 2002

Unclaimed Life Assurance Policies Bill, 2002: Second Stage.

Dáil Éireann debate -
Thursday, 7 Nov 2002