Banking Legislation: Discussion

Mr. Jim Connolly

I thank the Chairman for the opportunity to address the committee about an issue that has the potential to change our history. Today I am asking members to support an amendment to the Dormant Accounts Act to place an obligation on banks to give back property that is being held in safekeeping on behalf of deceased Irish citizens.

I first became aware of safekeeping in the 1990s when I worked in the Bank of Ireland group. I will start by recalibrating the committee's perception of safekeeping. If members are anything like me, when they think of the term safekeeping, they imagine a vault with rows of safety deposit boxes, each requiring two keys to open. That is not how it worked. In 1907, if one had an item that one wanted to lodge for safekeeping, one would package the item and give it to the bank manager. It is important to note that the bank manager did not know what was in the package. He or she would simply note the deposit in the safekeeping register, issue a receipt and place the envelope, package or box in the safe alongside all of the other items. That is what took me by surprise when I came to work in the Bank of Ireland in Rathmines in 1993 and started to ask questions about all of the envelopes, parcels and boxes in the safe there. One could tell by their shape what was in some packages, paintings for example, but one would have no idea what was in the majority.

Bank of Ireland in Rathmines opened its doors in 1907 and the bank is still holding hundreds of items from that time onwards. When I pointed out to the manager that it is entirely likely that the original customers are now deceased, his reaction was simply that his job was to keep the items safe and that they were safe. Therein lies the opportunity with safekeeping. At their height, Bank of Ireland and AIB had over 700 bank branches between them and every single one of those had a vault and every single vault held items for safekeeping. Every city, town and borough throughout Ireland has potential beneficiaries of this property. However, it is not only specific citizens who would benefit from a change in policy in this area. The historic and cultural richness of this property cannot be underestimated. Banks in Ireland have provided safekeeping services ever since they have operated as banks and much of the property they now hold is up to 200 years old. When one pauses to consider that any item that was deposited for safekeeping was of sufficiently significant monetary or sentimental value to warrant the protection afforded by a bank, one must assume that this property now represents a vast reservoir of our own culture and heritage.

Members are probably keen to understand what types of property are held in bank vaults and I can give them a first-hand account based on my own experience. I have seen paintings that are so large they are held on pallets. I have seen single envelopes inscribed with the words “to be opened on my death”, which could contain someone’s last will and testament, a deed, a confession or a share certificate. I have seen currency, antiques, weapons and war memorabilia. Even Charlie McCreevy speculated in the original debates on the dormant accounts legislation that banks could be holding the proceeds of bank robberies in their own safes. We must not lose sight of the fact that the majority of this property is unknown. The knowledge I possess comes from a small number of items that were opened in extremely concessionary circumstances or a result of damage to the container itself.

The question arises as to who owns this property now. The legal position is explicit. The property remains part of the estate of the original deposit maker. For those items that are supported by clear records, there undoubtedly would be a huge effort involved in locating current beneficiaries and I will comment later on how this effort can be curtailed. However in many cases, especially for older deposits, the bank records are at best, vague or at worst, non-existent. Legal advice would suggest that where there is no clear evidence of ownership outside of the item, it is appropriate to open it to see if ownership can be established from the contents. If it is not possible to establish ownership after this exercise, then the property would vest in the State under various statutory instruments, most notably the National Monuments Act and the Succession Act. All of this is irrelevant because at present, there is no active appetite from the banking fraternity to address or engage with this issue, which is understandable given some of the legal exposures it presents for banks. The elephant in the room with regard to this property rests in the fact that numerous estates have been settled after receiving erroneous confirmation from banks regarding the accounts they held. On the death of a client, it is routine practice for their legal representatives to establish the asset base and in a banking context, this would take the form of a request for detail of that client's bank accounts. In many cases the bank may not have captured the item in safekeeping and were it to now to reunite such an item with the beneficiaries of an estate, this would give rise to issues of underpayment of capital acquisitions tax, penalties and interest. It also raises questions of proper succession, given that we are in the realms of property being passed through numerous generations and numerous estates.

Despite the legal complexities, my own research has led me to form the view that there never has been any legal impediment to banks dealing with this property voluntarily. However, it is clear that there needs to be some form of legal impetus compelling banks to act and the most appropriate instrument to use is the Dormant Accounts Act. Careful consideration, however, must be given to the manner in which the legal obligations are introduced. I tentatively suggest that any amendment should aim to satisfy three specific criteria. First, we must acknowledge that although the banks own this problem, they did not intentionally create it. As such, some form of amnesty should be granted insulating them from action arising from their non-engagement. Second, the legal complexities are likely to be considerably more onerous for property deposited after the creation of the Irish State and as such I would propose that the dormancy period of 15 years set out in the current Act be extended to 100 years in any amendment pertaining to this property. Third, many of these deposits will be currency and other monetary chattels such as gold bullion, Krugerrands and so on, which is capable of being converted to currency and ultimately given back, should a claim ever be made. We also need to be cognisant of the fact that much of this property will be of cultural and historic value and should not be disposed of and in that context, the amendment should empower the State to take possession of these items. It is worth mentioning that although this property is largely safe, we are already at risk of losing some as there is evidence that Danske Bank has moved up to 2,000 safekeeping items out of the Irish State, potentially beyond the reach of any domestic legislation.

I will leave the committee with a description of one item. This item, a chest, is held in the vault in the Bank of Ireland branch in College Green. It sits on a shelf alongside thousands of other items. The chest is slightly smaller than the rectangular coal bucket most of us would have had in our family homes. It has a domed roof and a large cast iron lock, which secures a length of metal chain that wraps all sides of the chest.

Rope is woven through the links of the chain, intermittently knotted. There is candle wax on the knots. This item was deposited for safekeeping in the 1870s and nobody knows what it contains. Members can let their minds wander. They will find it hard to convince me that, whatever it contains, it will not change or perhaps mould our view of history. This is not Pandora’s box. This is our heritage, boxed off.

I thank Mr. Connolly. I call Mr. Kenneth Jordan, principal officer at the Department of Rural and Community Development, to make his opening statement.

Mr. Kenneth Jordan

I am grateful for the opportunity to present this opening statement on behalf of the Department of Rural and Community Development. I am joined by my colleague, Mr. Stephen Brady, who also works with the finance and evaluation unit in the Department. We have been invited here today on the topic of abandoned safety deposit boxes and the law, and we are here in the context of our role in the administration of the Dormant Accounts Fund.

The Dormant Account Acts cover accounts with banks, building societies and An Post, along with certain life assurance policies. Under the Acts, an account is defined as dormant when there have been no customer-initiated transactions for 15 years. If this has occurred, the institution must write to the customer giving them until 31 March of the following year to reactivate the account. If the account is not reactivated, the funds are transferred from the bank or other institution to the Dormant Accounts Fund, which is managed by the NTMA. However, the legislation guarantees the right of the account holders, or their next of kin, to reclaim the funds at any time in the future.

While the funds can be reclaimed at any time, the legislation also provides for the disbursement of funds that are not likely to be reclaimed. The funds can be utilised for measures aimed at addressing social, economic and educational disadvantage or supporting people with a disability. To achieve this, the legislation provides for the production of three-year disbursement schemes and subsequent annual action plans. The annual action plans identify the measures across Departments that are to be funded from the Dormant Accounts Fund. The responsibility for producing these disbursement schemes and annual actions plans currently rests with the Minister for Rural and Community Development and is delegated to the Minister of State, Deputy Canney.

With regard to the use of money in the Dormant Accounts Fund, last year €28 million was disbursed from the fund to support a range of measures. As previously noted, these are delivered across Departments and include, for example, investment in sports facilities and sport programmes, support for carers and investment in social enterprise and social innovation.

It is also worth noting that the Acts require a review to be carried out on a three-yearly basis. The Department completed and published such a review in July 2018. The focus of that review was very much on ensuring the efficient and effective use of moneys in the fund for the purposes provided for in the legislation. However, the review also commits to carrying out research on the potential to supplement the fund from additional sources, and we will be commissioning that research as part of the implementation of the review.

With regard to the total value of the Dormant Accounts Fund, at the end of 2018 there was a total of €290 million in the fund. Of this, the NTMA has set aside a reserve of €88 million to ensure the availability of funds for those seeking to reclaim their money from the fund. There are also outstanding commitments to support measures amounting to €56 million, that is, to support measures already approved by Ministers. There is, therefore, some €146 million remaining for use on projects and programmes under future action plans. However, as the money in the fund remains the property of account holders or their next of kin, the use of money from the Dormant Accounts Fund adds to Government debt and is, therefore, treated in exactly the same way as any other Government expenditure. Therefore, increasing the overall value of the fund does not necessarily mean that there can be additional expenditure in any given year.

To conclude on the matter of direct concern to the committee today, that is, abandoned safety deposit boxes, we have been forwarded two papers on the issue by this committee. The first was by Mr. Jim Connolly and the second was a legal opinion on the matter. The matters raised in both documents, in our view, relate mainly to issues such as ensuring the registration of safety deposit boxes, ensuring records are sufficient to be able to contact beneficial owners and ensuring some dating of access to these boxes. These matters relate mainly to the issue of how safety deposit boxes are regulated and how banks and other institutions should apply any such regulation. We plan to include this as an area for specific consideration in the forthcoming research into potential additional sources of funding, and today’s discussions will inform how we progress that work. However, as I noted, there are significant resources within the fund at the moment and the Department's immediate priority is to ensure the effective use of those resources within the fund. In this regard, the Department is continuing to address the recommendations made in the review of July 2018. I would be happy to assist the committee with any questions it may have.

I thank Mr. Jordan. I call Mr. Eoin Dorgan, principal officer at the Department of Finance, to make his opening statement.

Mr. Eoin Dorgan

I thank the committee for inviting the Department to address it in regard to the matter of abandoned safety deposit boxes and the law. I am accompanied by my colleague, Ms Fidelma Cotter, and we look forward to hearing the committee’s analysis of the issue. As per the committee’s correspondence, the lead Department in regard to the Dormant Accounts Act is the Department of Rural and Community Development, so that Department will lead on any amendments to the Act. The Department of Finance will feed into possible amendments as part of the normal Government decision making process.

The Department of Finance's analysis is that the provision of safety deposit boxes is not at this time a regulated activity and, as such, neither the Department nor the Central Bank have detailed information on these activities. Given the limited information available, the Department welcomes any analysis that the committee can make available. To be of assistance in advance of its analysis being provided, I will briefly set out the primary rationale for financial regulation and supervision under the Central Bank Acts, which has two overarching objectives. The first is to protect consumers, given the complexity of financial products and services and the significant informational advantages that financial service providers have compared with the average consumer. The second is to protect financial stability and the wider economy, given the substantial negative employment and economic impacts from financial instability events.

Based on these core principles of financial regulation and supervision, it is difficult to justify the regulation of safety deposit boxes from either a financial consumer protection or financial stability standpoint. This is because, first, safety deposit boxes are a very simple product that all customers can comprehend and, essentially, there are no significant information asymmetries in favour of the provider of the product. Second, safety deposit boxes do not provide a financial stability risk as there is no ability for the providers of the service to leverage the contents of the boxes. If they were doing so, they would fall within the definition of providing a banking service and, as such, would be regulated.

In the event of legislative proposals on this matter, it is likely there will be cost implications for either the State or the private sector and, as such, a cost-benefit analysis must be conducted. Obviously, given the multiple competing pressures on public funds, any costs to the Exchequer from proposals must be considered as part of the annual Estimates process in comparison with all Government social and economic programmes. If costs are to be imposed on the private sector, a clear policy and principles rationale will be required to justify legislative changes that have cost implications for that sector. It is vital that the benefit to the common good is clearly articulated and, preferably, quantified.

As set out in the Secretary General’s letter to the joint committee, there is a significant difference between dormant accounts - and similar assets such as unclaimed life assurance policies - and abandoned safety deposit boxes. The existence of dormant accounts in banks is generally of significant benefit to banks as these dormant accounts offer perpetual liquidity to the bank, which is a very significant benefit especially in periods of financial stress, whereas the maintenance of dormant safe deposit boxes is generally a cost to banks, as they must incur the cost of maintaining the deposits for no benefit, or a minimal cross-selling benefit.

The benefits arising to banks, as opposed to the State, from dormant accounts was a key rationale for the Dormant Accounts Act, which brought these accounts under the management of the State for use in community development projects but also ensured repayment of the accounts if the owner or the owner's successors were subsequently identified. However, the inverse of that policy rationale would apply for safety deposit boxes, which are a significant cost to the holder and would also be a cost for the State if they were to be taken into State ownership.

There are a number of additional interlinked factors that require careful consideration in regard to any proposal to bring assets in safety deposit boxes within the remit of the Dormant Accounts Fund or to make the assets subject to statutory reporting. One factor is insufficient information. There is no information available to the Department or the Central Bank on the possible contents of safety deposit boxes in existence throughout the banking sector, or possibly the wider storage sectors. This makes it very difficult to accurately quantify the number of assets that could be covered by the extension of the Dormant Accounts Fund and the likely cost implications for the State or private parties or both. A second factor is the protection of delicate contents. The National Archives and National Museum will be better positioned to advise on how best to open and review the contents of these boxes or the stores where they are held, given the passage of time will mean the majority of these assets may be in poor condition. In addition, the potential transfer or cataloguing or both of these assets on the basis of a State instruction could cause damage, thus potentially making the State liable for any compensation. The third factor is multiple asset classes. The contents of these deposit boxes could be a wide variety of assets, as opposed to solely “money-deposits”, which is currently the asset class covered by the Dormant Accounts Act in terms of deposits and life assurance policies. The variety of assets would dramatically increase the administration costs for any extension of the Act as the assets will likely be physical assets that must be carefully handled, valued and stored, as opposed to merely deposits or cash, which is a single asset class and a store of value. In addition, in the event of people coming forward to claim assets, the State can always pay out deposits.

If, however, the State was to sell unique assets to fund community development activities from the Dormant Accounts Fund, it is unlikely that it would be able to replace them subsequently or satisfy the person affected with adequate compensation. In addition to the cost of opening the boxes, there is an extensive transfer cost involved in taking control of the contents of safe-keeping deposit boxes, as opposed to a straightforward bank transfer of dormant accounts. With regard to the transfer of liabilities to the State, as mentioned previously, the private banks are liable for the safe keeping of deposit boxes, which at this point is most likely to be a loss-making activity. Any proposal that the State take ownership of them would involve the transfer to the State of the cost of keeping the assets.

There is also a significant number of complex legal and constitutional considerations on which others are best placed to advise such as the exact definition of storage that would apply; the risk of challenge as this effectively would amount to the confiscation of private property; adjudication on inheritance disputes and so on. If the committee seeks to further progress the matter, it may be worth its while considering alternative statutes that would allow the State to access safety deposits in order to identify and take control of assets that could be considered to be key historical artefacts. It is likely such an approach would provide a stronger public interest rationale and legal basis.

As I said, the relatively limited information available on safety deposit boxes makes it very difficult to conduct the necessary cost benefit analysis. A high level consideration of the issues mentioned indicates that it is difficult to see how a proposal to make safety deposit boxes subject to the Dormant Accounts Act or a statutory cataloguing requirement would pass a full ex-ante cost benefit analysis, given the existence of definite costs and risks compared to the very uncertain benefits.

I hope this analysis is of assistance to the committee. We will attempt to answer questions it may have.

I thank Mr. Dorgan. I thank all of the delegates for coming. It is a very interesting topic and an issue that was raised initially by Deputy Ó Cuív. We have included it in the committee's work programme. We have had a private meeting to discuss it and are trying to pull everything together. We are also getting all of the stakeholders around the table. We have received apologies from the Banking and Payments Federation Ireland. Unfortunately, its representatives were unable to make it today. This is an initial step in public session in dealing with the matter.

I thank Mr. Connolly for giving us an insight into the workings of the bank and what actually goes on. We are dealing with the unknown - all of the hidden artefacts, items of interest, paintings, possibly gold bullion, money and so on. All of this stuff is stored away in the banks. The issue would involve trying to identify who owned the items and should be the beneficiary. As Mr. Dorgan said in his statement, they have been there for so long and it is the banks' job to keep them safe. There is no obligation on them to actually do anything with them. That is where we come in because there is a window of opportunity under the dormant accounts legislation which falls within the remit of the Department of Rural and Community Development. That is why the committee is taking on the issue. I thank Mr. Dorgan for his insight and pointing the committee in a direction that might lead away from that legislation, but it is an area we need to explore. We have a legal adviser with us today who has also presented to the committee previously. She is taking note of what is being said. As it is our intention to possibly publish legislation, from the start we want to get it right. That is why we invited the delegates.

I want to tease out some of the detail. The 15-year rule for dormant accounts means that if there are no transactions, an account is looked at and absorbed into the fund. Mr. Connolly has suggested a 100-year rule. What would be regarded as a reasonable timeframe within which the State could possibly benefit from the proceeds, be they money or historical artefacts which could be sold and the value realised? The State and community development activities in various areas could benefit. What would Mr. Dorgan regard as a reasonable timeframe? In California the rule is that when safety deposit boxes are abandoned, the banks move within a three-year period. Perhaps that is a bit too quick, but what is Mr. Dorgan's view?

Cost is another big consideration. Mr. Dorgan has outlined the pitfalls in that regard in terms of who would pay. We need to get the banking representative group to the table to seek its views. There are significant cost and legal questions about ownership and title. The GDPR is a new consideration in the mix.

Perhaps Mr. Dorgan might address these questions.

Mr. Eoin Dorgan

Certainly. It is difficult to give a definitive view because currently there is no specific Government policy on the issue. Mr. Connolly's suggestion of a 100-year rule is quite sensible, given that a safety deposit box item could be put away for a considerable length of time. It is not like a dormant account. It might assist the committee to know that yesterday I spoke to an official who had worked on the Dormant Account Act in 2003. She informed me that at the time they had looked at the issue of safety deposit boxes and that it became such a legal and constitutional quagmire that they decided to omit it and progress the core legislation.

There is an important aspect to the cost issue - whether the cost would fall on the State or the banking sector. Even if it was to fall on the banking sector, the reality is that ordinary consumers would pay, be it through the basis points charged on their mortgage or in another way. They would pay for the cataloguing of assets and wealth. It is they who would pay the cost, as opposed to the private citizen who had come in to wealth and used the safety deposit box. From a public interest perspective, the real challenge is presented by Article 43 of the Constitution which provides for the protection of private property, which is allowed to be delimited for reasons to do with the common good. That is why we believe the common good logic would most likely apply to artefacts of historical and national importance. It would be very difficult to make the common good argument to do it in the interests of individual citizens who already have vast wealth and need to use safety deposit boxes. We highlight the cost to the Exchequer, but if there was to be a cost on the banking system, it would fall on ordinary consumers, as opposed to those who had wealth and assets. I hope this is of assistance to the committee.

Mr. Jim Connolly

There are countless ways to approach the matter. We could probably draw on some of the United Kingdom's experience on this front. It has built an entire private sector industry around heir hunters. When estates have nominated beneficiaries but nobody can find them, there are private sector firms that locate them. The companies involved cover the cost of the search and then charge individual beneficiaries for locating them. Therefore, there are ways to avoid either the State or the banks paying, if there is an appetite to curtail costs, but this issue is bigger than cost. It goes to the root of fairness. There are no statistics available, but I would put the figure at tens of thousands of Irish citizens who could benefit from a windfall of property that they simply do not know is there.

They might not be wealthy individuals. They might be individuals who are in desperate need of money. The cost issue probably deflects from the core issue of fairness in terms of what I am hoping to convince the committee to adopt.

I thank Mr. Connolly. Does Mr. Jordan have a view on any of the issues mentioned?

Mr. Kenneth Jordan

Under the Dormant Accounts Act, in the case of bank accounts, the period of dormancy is 15 years. The figure varies, but, on average, approximately €50 million comes into the fund each year, while another €25 million is reclaimed. Even with a period of dormancy of 15 years for bank accounts, there is a huge turnaround of people who are discovering they have a bank account. The answer I give on the issue is that it should definitely be longer than 15 years if somebody has lost touch with his or her bank account. For assets, it would have to be longer.

The other question is what is the primary objective of the proposed legislation. If it is about the cultural and heritage elements, the Dormant Accounts Act is not the place to achieve it. In addition, the idea of a windfall does not necessarily hold true in the case of the Dormant Accounts Act because the State must keep the asset to pay the person or his or her estate in perpetuity. It is not a windfall but more like almost a loan reserve, if that makes sense. I am not sure if I am explaining it well. The cash sits there. The NTMA keeps a reserve to ensure it can pay people who come for their money. In reality, it is an alternative source of loaned money, rather than a windfall.

They are the two points that come to mind. What is the key objective or the common good? Having heard the two other inputs, I do not believe the key benefit is a boost to the Dormant Accounts Fund. Again, there would have to be a rough idea of the value of assets. There is significant money in the fund, while there are significant inflows from bank accounts. The relative scale of what the inflows might be gives one an impression of what the cost-benefit would be.

Mr. Jim Connolly

The dormant deposit instrument was the catalyst for placing an obligation on banks to address the property they held. Mr. Jordan is right. If an obligation was placed on the banks to catalogue exactly what they hold, it would give the State the opportunity to examine the property and assess ownership under the National Monuments Act, for example. It does not have to use the Dormant Accounts Act to claim ownership of some of the property, but there must be a catalyst to force the institutions to catalogue the property in the first place. I still believe the dormant deposit legislation would be a nice conduit to achieve that goal.

I thank the delegates for their contributions and, in particular, Mr. Jim Connolly for initiating this process. He has done a great public good in initiating this conversation. Having listened to this and previous discussions at this committee, this is property that cannot simply be left there. We have the choice of leaving it alone, but that would not be appropriate, particularly when we consider that a certain amount of it has been there for 100, 150 or 200 years and that the people who own it are probably long dead. The issue is one for the families. Recently I spoke to somebody involved in the legal sector. Usually when somebody passes away ,the solicitor writes to the banks to ask what moneys are in the person's bank accounts. He or she does not ask if the person had ever brought a parcel to the bank. Normally that issue is overlooked and it certainly was overlooked 50 or 100 years ago. Record keeping is much better today.

It is very likely that there is a large number of valuable items. Some safety deposit boxes could contain valuable jewellery, but they could also contain items that were of value to the individual only. It could be a set of love letters from somebody in India that the person had received, bundled up and put into the box. Perhaps they might have been of value to the person only, but they might be of historical interest and value. Mr. Connolly made that point very clearly. The issue concerns private property and the law in that regard. That is where the tangle is. The bank has taken on a responsibility to protect the interests of the individual and hold his or her private property in safe keeping and, as a result, for his or her estate.

Some mechanism must be put in place to move property into a space where it can be dealt with appropriately. While it is sitting in a vault and probably not costing the bank much from that point of view, at the same time it would be in its interests to have it moved off the pitch to somewhere where it could be sorted out properly. The State has an obligation to try to do this and come up with a solution that would work for everyone. The cost involved would probably be considerable. I accept the point that if some goods were damaged in transit, somebody would be able to sue the State, but whatever legislation is put in place would have to be able to deal with that issue. It would have to consider all of these issues and provide that if the State was to take on that role, it could not be sued, as it would be doing it in the public interest and the interests of the estate of the person who had first lodged the items. The issue is how can we legislate in a way that would yield the end result we want, that the items would be taken into safe keeping, opened and examined, a decision would be made on what was to be done with them and a clear effort made to establish the next of kin of the persons who had deposited the items. At that stage, there would be negotiations with them on what should happen to the particular items. For example, they might purely be of personal value such as letters or documents that would be of no value to the State, but if they were of great value, perhaps a historical artefact, a way could be found to put them in the National Museum of Ireland for safe keeping. There is an opportunity to resolve this issue, but we must find a way of doing so that would not expose the State to a huge loss. The people who lodged these items would not have lodged them in the first place if they were not valuable.

The other issue is that of heir hunters. Mr. Connolly referred to the experience in Britain. Are there examples in other jurisdictions? In every country there are safety deposit boxes in which items are lodged. What happens in other jurisdictions? What models are used in other countries in Europe or elsewhere at which we could look as examples of good practice? Some of the envelopes lodged could contain large sums of money, but it is probably long out of date. What will happens to it? How does the system work if they are old guineas dating from 150 years ago? What value would they now have, or is there a way of translating the value for the next of kin?

Perhaps Mr. Dorgan might address some of the points raised.

Mr. Eoin Dorgan

Deputy Martin Kenny said the banks would be eager to transfer the items and I believe he is correct. They would prefer to get rid of many of them because there is an opportunity cost in storing them. One of our concerns is that we do not allow the banks an easy avenue to offload to the State the problems that come with them in establishing who is the heir or successor. The models used in other member states would be useful. The examples Mr. Connolly cited are correct. In America, in particular, there is a big industry surrounding it. The big challenge we have always faced - it arose in the case of the Dormant Accounts Act in the period 2001 to 2003 - is Article 43 is viewed as being very restrictive when it comes to private property. In using a safety deposit box a person consciously makes a decision that it is his or her private property and that he or she is putting it in it for safe keeping.

Cash is a fiduciary issue; that is the benefit of it.

In terms of old money, it is a very interesting question and I honestly do not have an answer. We can contact the Central Bank to see what cash it will exchange. It will exchange Irish punts but I do not know how far back it will redeem cash. We might even have to go further back to see if the Bank of England took over liabilities that were attached to the old, pre-independence Bank of Ireland. We would have to come back to the committee on that.

Mr. Kenneth Jordan

Having followed through on the idea of opening the boxes and finding out what is in them, I am left wondering whether, if the original owner or the next of kin sought compensation, there might be an ongoing issue in respect of who would decide the appropriate level of compensation for the asset. As Mr. Dorgan said, it would be a good idea to look at what other jurisdictions do.

On the old money, my knowledge is limited but one would expect that no matter how the money is exchanged, inflation is most likely to have completely wiped out the value of anything that has been in a box for 100 years. I do not imagine the cash deposits would have a huge value in that respect.

Mr. Jim Connolly

I disagree that the banks would be eager. Although they might be very eager to get rid of this property, it would be very conditional. I have a genuine concern that the banks would view this property as explosive; I am not sure what adjective to use but that is probably the closest term. To cite an example, imagine we passed legislation and the bank opened the first envelope and it was a will, which the bank would give back to the individual concerned. The will might state that everything be left to that person's dad, who might have given it to him or her in turn. However, because the will had not been produced, that would be no good now; the estate may have gone in ten different directions. The banks might take a view that there is nothing in it for them. It is possible that a decision would be made to destroy the items for fear of what might be unearthed. The idea of an amnesty should be considered. We should recognise that banks will only engage with this if we give them a clear comfort that they are not going to suffer legally as a result and that people cannot go after them for their non-activity. Whatever we do, the banks have to be insulated in some way.

On the currency issue, there is a point at which the Central Bank will exchange currency but if it is guineas, for example, the historical value might be greater than the monetary value. One might get more for them at an auction than through the Central Bank. It is a how long is a piece of string type question.

I call Deputy Ó Cuív next. He raised this issue for the committee and I am grateful to him.

I seem to be unlucky in that whenever the committee is discussing something in which I have an interest, there are also questions in the Dáil that have relevance for me. It is hard to be in two places at once. In respect of the current dormant accounts, the obligation first is to find the owner. It is only in the event of the bank not being able to find the owner that there is any question of it being transferred. The second principle that has always existed is that the money always belongs to the owner if he or she turns up. This is taken to the point of nonsense, in that the State sees all of the dormant account money that has ever been handed over to it as a current liability. There are two chances of all of that being reclaimed: none and none. The amazing thing is that the net inflow every year is approximately €20 million. That is reclaimed versus money coming in. There is, therefore, no chance of all the people ever turning up to claim their money. We are not here to discuss dormant accounts but those two principles are of relevance.

My understanding is that deposit boxes go back to the beginning of the 19th century. If it is money and we know who owns it, we know what to do with it; we give it back to the owner. That is in black and white. If it is goods and we know to whom they belong, the same principle applies. We may take it as a certainty that if we opened every box between 1800 to 1900, there would not be anybody alive who put anything in a box. We would be talking about heirs and descendants, probably at a fair degree of removal at this stage. Allowing that we can match it up for them to get their property back, they might not want to leave it in a deposit box but they might not realise it is there. We would decide using the same principles we have used elsewhere. If an artefact is found that is over a certain age, the State has a claim on it anyway. If I find a golden chalice on my land, unfortunately I do not get to own it. Even though I bought the land and everything in the land, despite what I thought, I do not own everything, depending on what is found under the land or in the property. That principle is well established.

If we started at 1800 and stopped at 1900, on the issue of privacy, we have published the 1911 census. There was a question when people wanted us to move forward faster in terms of people being alive who are mentioned in censuses and so on. We have decided that, even though census documents are confidential, they can be made public, and they have been made public up to 1911. We have all found our own relatives in them and discovered all sorts of interesting facts we did not know. In our family, we found that Seán Ó Cuív, my grandfather, filled out the census form in Irish but spelled our name phonetically in a simplified Irish: C-U-I-B. He carried that to the nth degree.

Let us presume we go in and open every box, starting at 1800 and working up through the years. If we find money and find the owner, we give it back. If we find articles and find the owner, we give them back. Supposing we find very interesting artefacts akin to what we might find in museums or whatever, which do not compromise anybody or any family. They could be lent to the State and put on display but that they would still belong to the owner if he or she ever turned up. In that case, we are not transferring ownership but putting them display. We would take a little liberty with the property but not transfer the ownership. In Kilmainham or any of those places there are artefacts on permanent loan. They do not have to be owned. Assuming more current boxes were not opened - I suspect it would be a long time before we would get to 1900 - by keeping it back in the very distant past and only putting items of national interest on display without transferring ownership - would that pose a huge problem?

If this area were covered by legislation, there would be a lot of good for the State. There could be interesting documents or artefacts that could give a much wider understanding of our history.

It would show us some probably beautiful items that have been hidden away. There is probably a Caravaggio, a Rubens or something else there. It would be an awful pity not to have it on display. Owners can come to collect if they can prove their ownership.

If that is the way it is done and deposit boxes of a much more recent vintage are not opened and publicly displayed, and a committee is set up to adjudicate whether certain standards and criteria were followed, would Mr. Connolly foresee problems, if it was legislated for? I have heard about Article 43 all my life in politics. I have never understood the interpretation that was imputed to the article by the courts regarding private ownership. It always seemed that the right to private ownership was being taken as absolute whereas the Constitution is clear that it is subject to the exigencies of the common good. I always remember when we had to make decisions in this House curtailing rights to property, etc., relating to wages, pensions and such during the recent financial crisis. The legislation stated that there was a right to private ownership but it was not absolute and it could be curtailed if it was outweighed by the common good. By not transferring ownership, only using a loan and doing that judiciously, I often wonder what challenge could arise. In one of the documents, Mr. Connolly mentioned a jewelled sword. Supposing a jewelled sword turns up and one puts it on display as something valuable and interest from the Crimean War, a dress sword, the Battle of Waterloo or an award for gallantry or such, if the family turns up and says it is theirs, what complaint could they have since they would never have found out it was there in the first place?

We have become paranoid in the State about challenges. I take the view that we took as a House in 2010 that one weighs up the circumstances and says that if somebody wants to challenge it, it is fine, but very unlikely. It was proven to be unlikely in 2010 and did not happen. If constructed properly, it would prove unlikely in this case as well. The principles should be not to transfer ownership of any artefacts, because one cannot replace them, but just put them on display; start with the oldest ones first and work forward so that nobody alive will be affected one way or another, and the depositor can never come back to say he or she deposited it on the basis that it would never be opened, because he or she does not exist any more; if the owner is found, he or she gets it immediately; and if the owner cannot be found but subsequently turns up because it was put on display, he or she gets it, which means that it has been an advantage to their property rights because he or she gets property that he or she would not have known existed.

That leaves one question that seems to worry banks. I thought banks were full of money but they are worried about the cost of all of this. If this is done judiciously and carefully, it might not be that much of a cost and if there is a cost to either the State or the banks, that is something that one would work out as one goes along. There is a matter of corporate responsibility. Agencies spend much money on corporate responsibility, goodwill, advertising, sponsoring sports and such. Older banks with older deposits could generate a lot of goodwill by doing this if it was done properly.

There is a separate issue that has nothing to do with the debate, which we can put aside. That is the regulation of safe deposit boxes from here on, because that has become a private industry. People who go to them are going to non-regulated entities. It is an interesting question, since it has moved away from the banks, of how safe all these deposit houses are. I do not know but it is nothing to do with this so we will leave that to the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach.

That begs the question of who is responsible for regulation in that regard. Will Mr. Dorgan address the issues raised?

Mr. Eoin Dorgan

Following on from Deputy Ó Cuív's point about corporate and social responsibility, it was always emphasised through the dormant accounts fund debates that there was personal responsibility too. If people are fortunate enough to have significant assets, they should think of how to properly set out what the assets are and how their property flows to their successors or inheritors.

With regard to the point about private property, Article 43.2 states that one can delimit it for the common good. The Deputy's point is right that the common good is the historic and national importance of these artefacts. It is more difficult to justify these on a common good basis if an individual gets an asset of wealth because the State has taken an action. That is why the Deputy's point about looking at this from an historic and cultural perspective is a strong basis to allow some exercise to take place.

There will be a cost and it will either fall on the Exchequer or the private sector. If it falls on the private sector, it will fall on ordinary bank customers eventually, not on the people who will benefit from these assets if they were to go back to private ownership. Mr. Jordan outlined earlier how 50% of these dormant accounts funds end up going back but there is a net €25 million. We have to account for them through standard Government accounting rules. We all know it is highly unlikely that it will ever be called upon.

I would dispute that. I had this argument before with various Ministers for Finance about the idea of saying that everything is a liability. The Central Bank, which is not represented today, used to have a habit, although I do not know if it still does, of writing off non-returned currency that could theoretically exist somewhere and be claimed. Every now and then, there would be a windfall on the Government balance sheet after the Central Bank said that a certain number of notes and coins had gone missing which would probably never turn up.

Mr. Eoin Dorgan

EUROSTAT rules would apply for both those cases.

They were able to in the old days. There is no constitutional difficulty here.

Mr. Eoin Dorgan

It is accounted for as a contingent liability on the State under the EUROSTAT European system of national and regional accounts, ESA, rules.

If European rules are that stupid, it is time that we changed them. I sometimes wonder if we have come to the point of living in the real world at all but we will not come to that matter of dormant accounts. It is ridiculous. One could say that everything is a liability. I am probably diverging slightly here but the Chair might indulge me. My view was always that anybody who wants their money back would get it back and that that would be unlimited. They get it back in the following order. First, they get it from this year's influx. If that was not sufficient, which had a million to one chance in any one year, they would get it out of the statutory reserve. Otherwise, they would get it out of the money on-hand that the Dormant Accounts Fund inevitably always has. If that was not sufficient either, rather than saying that they would get it out of the State having this contingency, they would get it from the next money that would come in. I would love to go to Paddy Power and place a bet that one would ever get that far in the contingency. It is a bit of a codology of Government accounting. If EUROSTAT rules are that stupid, it dramatically reduces my belief in their intelligence.

Does Mr. Dorgan wish to make a further comment?

Mr. Eoin Dorgan

No. I think I have covered the points.

I will invite Mr. Jordan to comment.

Mr. Kenneth Jordan

As we said in our opening statement, the issues arise from the legal regulation of property. I could not express the view of the Department, and what I would offer are opinions rather than anything else.

We are responsible for the Dormant Accounts Acts and as the Deputy noted, on average there is an annual inflow of €50 million and an average outflow of €25 million. There is a net gain. Since the Dormant Account Fund has been set up, some €380 million has been reclaimed since 2000. The amounts of money reclaimed are significant.

That is in a very short timeframe. It is 15 years after there is no activity in the account that the account is classified as a dormant account.

Mr. Kenneth Jordan

Yes.

That is in all of our living memory. Most of the people whose money has lain dormant are still alive. Obviously one will have a large number who will reclaim their money but what always amazes me is that the inflows are twice the size.

In Mr. Jordan's view who does he think should be responsible for regulation of the return of this property?

Mr. Kenneth Jordan

The Chairman asks me who in my own view should be responsible. Can I have my own view? I am not sure.

Mr. Kenneth Jordan

Honestly, I cannot answer that. After the Chairman's comments, I said at the very outset that the objective will determine what happens. Is the objective about heritage and culture, raising money or banking regulation, which I think Deputy Ó Cuív states it is not, as that lies elsewhere? We have to come back to the core objective of what we are trying to achieve.

I invite Mr. Connolly to respond to Deputy Ó Cuív.

Mr. Jim Connolly

I must congratulate Deputy Ó Cuív as he brings an eloquent simplicity to this whole issue in the way he articulates the issue in question.

I took advice on the relevance of Article 40.3 of the Constitution and the advice suggests that somebody's right to privacy is a personal right and is not actionable after the person's death. So that argument is a red herring.

I totally agree with everything Deputy Ó Cuív has said. I can give a bit of colour on the sword he mentioned, because it is a very interesting story in its own right. My engagement with Bank of Ireland was actually in a professional manner and does not relate to the time that I worked for the bank. I created a television programme that never saw the light of day that was based on safekeeping. I was given a tour around the vault in Bank of Ireland's branch in College Green. One of the questions I asked is whether any of the items were every opened and I was directed to this chest, with a big belt around the middle of it, which is like a chest that was carried at the back of the Titanic. The chest was deposited for safekeeping at the turn of the 20th century. To the best of my knowledge it was deposited in 1905. I was visiting the vaults in 2003 but I was told the chest was opened in 1995, when President Clinton addressed the nation from College Green. The American Secret Service, as well as welding shut all the manholes and getting rid of all the bins around College Green, went into the vaults which would have been directly below the stage from where President Clinton was addressing the nation and a sniffer dog took issue with the chest that had been there for the guts of 90 years. Out of courtesy to the American Secret Service, the chest was opened and inside was war memorabilia, including a ceremonial sword with a jewel encrusted butt, as well as a loaded pistol. It was the gunpowder in the loaded pistol that the dog had picked up on. That gives members a flavour of the richness of the history that this stuff represents. The idea is to go back to the oldest item on deposit and deal with each item seriatim. This is a task of elephantine size that can be eaten one bite at a time. The easiest way to proceed is to go to the earliest item and move forward from there.

I thank Mr. Connolly. Does Deputy Ó Cuív want to come back in?

No, but my question is who will do this task? I suppose there is an easy answer and I presume the Department will agree with this, the Oireachtas does. The next question is who sponsors the Bill. If it is a Government Bill, it will be a Government decision to decide, whether it will come under the Department of Culture, Heritage and the Gaeltacht or the Department for Rural and Community Development. If this had happened during the period when there was a single Department of Community, Rural and Gaeltacht Affairs or earlier, when arts and culture and dormant accounts were under a single remit, one would not have this problem. The Government has to decide which Department will sponsor the legislation and that it consults with the other Departments. That is a technical issue.

I think it would be much better if it were to come under the dormant accounts legislation but that is a personal view and if somebody decides otherwise, I am happy. Basically, one would be returning property to the people who owned it and it would only be when one could not find the heirs and the artefacts were of national interest that one would then decide, on a case-by-case basis, to put them on display rather than leave them to moulder.

Let us suppose that we added another 500 years, such that some of the items were 600 years or 700 years of age. Would anybody think it would be correct to leave interesting and valuable artifacts that long? No, of course not.

I think the issue of privacy is a total non-issue because we published the census. That was much more immediate. The 1911 census has been open for ten to 15 years. We did not go forward with opening up the next census, because of issues.

When we get to items dating from 1860 to 1880, if there were issues arising that had not been foreseen, one would deal with them then. Would Mr. Connolly agree that if one were to put the items on display, one would have to have a committee who would decide what was appropriate, along with criteria of sensitivity, national interest and so on, so that it would not be a case of throwing everything on the table but that a committee would oversee it? If we had such a procedure, would it ameliorate the concerns of the witnesses?

Mr. Eoin Dorgan

All we have to go on is the previous advice from 2002 and 2003 on the issue of private property. The right of private ownership is spelled out and there is a general right to transfer bequests and inherit property. It is quite specific.

How would my proposal interfere with that right?

Mr. Eoin Dorgan

I think Deputy Ó Cuív's proposal is the correct way to go, in that it proposes delimiting Article 43.2 of the Constitution, that is, it proposes to delimit by law the exercise of the right "with a view to reconciling its exercise with the exigencies of the common good", which the Deputy is clearly defining as the public interest of displaying these artefacts. I do not disagree with Deputy Ó Cuív.

Mr. Dorgan raised an issue about the State spending money, and an individual suddenly finds that he or she has an inheritance that he or she did not know about and will benefit from it, that it might in some way impinge. I do not get the logic, because the State spending lots of money trying to help us.

Mr. Eoin Dorgan

At an earlier stage of the debate, there was a much wider interpretation that this should be about giving all of the property back to the beneficial owners. That was the point I was making then.

I will give my personal view, having had the unenviable task over the years of helping people who had great-grandparents and grandparents who had not registered their land and who were trying to deal with a legal problem. They would come to me and I had to tell them there was no quick way to establish title except to get every relative who might have an equal claim on the land. That is difficult when one is talking about grandparents and great-grandparents. Consequently, I actually think the chances of anybody being able to establish ownership of the early boxes is very slight. If there was somebody so lucky that there was a clear succession of wills they were able to produce, I wish them good luck. That would be incidental luck like winning the lottery.

I invite Mr. Connolly to make his final comments and wrap up.

Mr. Jim Connolly

One thing that has occurred to me and that has escaped the debate so far is that in respect of a large percentage of the property, the bank's records are so incomplete it is not possible to establish ownership. It does not know who dropped in the item and has no record to support it. There may be no evidence within the item as to who might own the property. A large amount of it is going to be deemed lost. We also need to be cognisant of that aspect.

This debate has been really useful and I thank the Chairman for giving me the opportunity to share my thoughts. I particularly thank Deputy Ó Cuív for his support. I will remain available to the committee to fill in any of the blanks or add colour, where necessary. I am really grateful for the profile this issue has been given.

On behalf of the committee, I thank Mr. Connolly for making a very strong case for regulation, reform and analysis of this very interesting area. There is no regulation, law or obligation directing the financial institutions to do anything in it. As Mr. Connolly said, the banks' records are incomplete. A good starting point would be placing an obligation on the banks to catalogue the issues involved. Deputy Ó Cuív has brought forward a very robust and logical process whereby these issues could be tackled. There are challenges and Article 43 keeps popping up its head. There are also legal complexities. The committee has discussed the issue before. We will publish a report on it, including an analysis of the current position and an outline of the steps that could be taken. We will remain in contact with Mr. Connolly. We will also consult our legal staff, with a view to drafting a Bill to address the gap in the law governing abandoned safety deposits.

I thank the delegates for attending and sharing their insights.

The joint committee went into private session at 11.55 a.m. and adjourned at 1.05 p.m. until 10.30 a.m. on Wednesday, 17 April 2019.