When does the notification provision come into play?
Dormant Accounts Bill, 2000: Committee Stage.
SECTION 1.
Question proposed: "That section 1 stand part of the Bill."
It comes into play later next year.
In October next year with a view to the first transfers being——
On 1 April 2003. In the meantime we must ensure the banks and financialinstitutions are getting things in order for next April and we should have some money in April or May.
Question put and agreed to.
SECTION 2.
Amendments Nos. 1, 11 and 34 to 36, inclusive, are cognate and may be discussed together.
I move amendment No. 1:
In page 5, subsection (1), line 35, to delete "balance" and substitute "balances".
Reference was made in the original draft to "petty balance account" which should read "petty balances account".
Amendment agreed to.
Amendments Nos. 2, 10 and 12 are consequential on amendments Nos. 3. Amendments Nos. 4 and 5 are related. Amendments Nos. 2 to 5, inclusive, and 10 and 12 may be discussed together.
I move amendment No. 2:
In page 6, subsection (1), line 1, to delete "and".
My amendment proposes that the definition of "account" in section 2 be extended to include prize bonds, bank drafts or life insurance policies. It is a bit hypocritical of the Minister to include in the dormant accounts fund money in financial institutions which has not been touched for 15 years when he does not apply the same rule to prize bonds. I am aware that prize bonds are not quite the same as bank accounts because most bank accounts would have some movement, whereas prize bonds do not. However, the principle is the same. The onus should be on the Minister to contact the owners of 15 year old prize bonds, or older, to remind them of the existence of the prize bonds. If the same endeavour as required under the Bill of the financial institutions is made to locate owners of prize bonds and fails, then the aggregate of the funds should be transferred to the dormant accounts fund.
Likewise in relation to bank drafts - I will be happy to support Deputy McDowell's expanded amendment - the banks and financial institutions will have lists of bank drafts which they have issued. They will also know the bank drafts which have not been cashed. Therefore, it appears odd that bank drafts extant for 15 years or more should not be included in the dormant accounts fund.
The Minister did not adequately explain why he has not included in the Bill matured life insurance policies that have been unclaimed for 15 years. What is good for the goose is good for the gander. If the Minister wishes to lead by example, he will accept the proposal that prize bonds should be included. The other two matters speak for themselves.
My amendment, which proposes to include bank drafts and money orders, was inspired by the contribution of Deputy Timmins on Second Stage when he made a very cogent case for the inclusion of bank drafts in the Bill. Prize bonds are a bit different. I was interested in the Minister's response on Second Stage when he effectively said that the way the prize bond system works, including the provision of prizes and so on, depends on a certain number of people forgetting about the fact that they have them. I do not think that is a reasonable way in which to base the whole scheme. It is reasonable if people have temporarily forgotten about their prize bonds or if a deceased person had prize bonds and no one is aware of that fact, that there is an onus on the Minister, as the beneficial owner of the bonds, to notify these people that the bonds exist. I do not think it is acceptable to work on the basis that a certain percentage of people are likely to forget about the prize bonds.
I understand there may be a difficulty bringing life insurance policies within the scope of the Bill and why different provisions might apply to this aspect. It is a pity it is not within the scope of the Bill. However, there is a good case to be made to include bank drafts and prize bonds.
I answered the question about life insurance products in the beginning. We are currently working on a No. 2 Bill to deal with life insurance policies. The issue was too complex for this Bill and the procedures required under the terms of notification of policy holders, rights in regard to the various types of policies and the dormancy period applying, etc., would not sit easily with the provisions in place for accounts in credit institutions. Therefore, a new Bill on dormant insurance policies will be ready later this year.
The original Government decision in this regard was to include life insurance products but the more we looked into the matter, the more difficult it became. I would not be in a position to publish a Bill in this session if I were to await deliberations on life insurance products. I decided to draft a second Bill to deal solely with life insurance products. When the issue of dormant accounts was being debated, I suggested that life insurance products should be included in the remit of the Bill. However, the more we considered the matter, the more difficult it became. The advice from the Attorney General in regard to dormancy pointed out that the two categories of unclaimed money are dissimilar and will be considered separately. This was far more complicated legislation than was envisaged at the outset. The whole issue of life insurance products is very difficult. The Irish Insurance Federation has been working with us on the Bill, together with the Attorney General's office. Last week a further draft of the legislation was received. When this Bill is completed in the next week or so my officials will work full time to have the other Bill up and running for the autumn.
Perhaps the Minister will spell out some of the difficulties. Will he give us an indication of what happens in the event of a life insurance product maturing and not being claimed? Is the money set aside by life insurance companies?
There are 13 different types of policies and the advice of the Attorney General on this issue ran to more than 20 pages. Many issues must be taken into account, including beneficiaries and so on. The easiest way to deal with the matter was to draft a separate Bill.
When the product matures do life assurance companies make provision for a possible claim or do they continue until such a claim arises? Do they set aside money or is it part of their normal——
I do not know. I presume it is taken into account in their overall provisions. I can investigate the matter for the separate Bill in the autumn. The issue of dormant life assurance products would be far too difficult to incorporate into this Bill. Had I incorporated it, the Bill would not yet be ready. The second Bill in the autumn will deal solely with life assurance products.
My understanding is that Standard Life has set an example in trying to trace the ownership of policies that have matured and have not been claimed. Despite that, they found a significant amount of money still unclaimed in spite of their efforts. These moneys should go to the people who are entitled to them. Only as a last resort should they go to the State. Does the Minister have knowledge of the efforts of other members of the Irish Insurance Federation to trace the owners of matured policies?
I do not, but the question of dormant life assurance products in financial institutions will have to be addressed in the proposed No. 2 Bill in the autumn. Deputy McDowell and others raised the question of bank drafts. Deputy Jim Mitchell asked about unclaimed prize bonds, as he did on Second Stage.
Deputy Timmins has been pursuing the topic of unclaimed bank drafts for some time. It was decided to confine the scheme initially to those products that could more readily be brought within the Bill's ambit - products singular to accounts in credit institutions. Other reasons for excluding bank drafts at this stage are difficulties in estimating the extent of dormant bank drafts and the problems that would be encountered in tracing their holders because of unknown addresses etc.
As far as I am aware, banks do not keep names and addresses of the holders of bank drafts. I do not think they did 20 or 30 years ago in any event. Section 9 of the Bill allows the scheme to be extended to other products by ministerial regulation. Further consideration may be given to dormant bank drafts at a later stage.
We are currently examining the administration of bank drafts by the credit institutions and we have asked the Central Bank to supply details pertaining to the matter. We will report on the matter in a parliamentary question tomorrow. I assume it is in the name of Deputy Timmins.
Regarding prize bonds, they are often bought to be held until the holder dies. The capital of the prize bond fund is used to generate the prize fund for the scheme. Therefore, if a large part of that capital were removed, it would greatly reduce the prize fund and undermine the viability of the whole scheme. Prize bond holders whose bonds would be removed from the draws would be rightly aggrieved. Therefore, it is best not to include the prize bond scheme in the Bill for the moment.
I am not sure how we would trace all the holders of prize bonds. They are often put in children's names by godparents and family members when the children are born and are left in the scheme for years.
Children do not know they have them because their parents bought them and they never heard about them.
There is now an efficient system in operation whereby if one knows the name of the holder, it can be typed into a computer which will state how many prize bonds are held, when they were inherited etc.
When the holder of a prize bond wins a draw, what is the procedure? Is a cheque automatically sent out?
Yes.
To what extent are such cheques cashed by the recipients?
I had better check whether one is notified beforehand that one has won a sum of money. I assume that is done before issuing a cheque to make sure the winner is still living.
Or that the winner wants it.
Does the Minister know how many winnings are not cashed? What is the percentage?
That information could be obtained from the NTMA and the prize bond company.
Is there much interest in prize bonds?
That is a separate question. I would have thought the interest in prize bonds had tapered off considerably, but recently I answered a parliamentary question that suggested that the level of interest in prize bonds has been increasing enormously in recent years. Purchases increased considerably after a static period. I can obtain more information for the Deputy.
Thanks to the Opposition, I have discovered that I have a prize bond in some box at home and I must take it out.
If one thinks one has a prize bond but cannot find it, one can ring the prize bond company and, on producing one's address and date of birth, they will tell one whether one has bonds. That process is now streamlined.
Will the Minister tell us how much there is altogether in prize bond money and how much of it dates from 15 years ago or beyond?
I will endeavour to get those figures for the Deputy. The amount of money is substantial.
The Minister is afraid of us even talking about the matter.
Amendment agreed to.
I move amendment No. 3:
In page 6, subsection (1), between lines 3 and 4, to insert the following:
"(g) a fixed deposit, and
(h) an account prescribed under section 9;”.
Amendment agreed to.
I move amendment No. 4:
In page 6, subsection (1), between lines 3 and 4, to insert the following:
"(g) a prize bond,
(h) a bank draft,
(i) a life insurance policy;”.
Does the Chairman have the numbers of the amendments tabled by the Opposition? Are they listed?
Will the Chairman put the question?
I will.
Amendment put and declared lost.
I move amendment No. 5:
In page 6, subsection (1), between lines 3 and 4, to insert the following:
"(g) a bank draft or money order;”.
Amendment put and declared lost.
Amendment No. 6 is consequential on amendment No. 7 and they may be discussed together, by agreement.
I move amendment No. 6:
In page 6, subsection (1), line 10, to delete "or".
The amendment proposes to delete the word "or".
Amendment No. 7 is to be discussed with amendment No. 6. What is the purpose of that?
Included within the definition of account holder is the term "a class . . . of person", described in section 9. This is to allow for the possibility of extending the scheme to other types of account holder at a later date by ministerial regulation under section 9. This is to ensure that any other account holder who may be identified as properly coming within the ambit of the Bill and who is provided for by way of regulation is considered an account holder.
Amendment agreed to.
Amendment No. 7 has already been discussed with No. 6.
I move amendment No. 7:
In page 6, subsection (1), line 12, to delete "person" and substitute the following:
"person, or (e) a class of person prescribed under section 9”.
Amendment agreed to.
Amendment No. 9 is an alternative to No. 8 and both amendments may be taken together by agreement.
I move amendment No. 8:
In page 6, subsection (1), to delete lines 17 to 21 and substitute the following:
" 'dormancy period' means-
(a) a period of not less than 15 years ending on-
(i) 31 March 2002, and
(ii) 30 September in each subsequent year commencing on 30 September 2003,
or
(b) any other period prescribed under section 9;”.
This amends the definition of the dormancy period. It allows for the possibility that the Minister may, by way of regulation subsequent to the enactment of this legislation, by his or her authority given under section 9, decide to alter the period of dormancy applicable to certain types of account, account holder or certain classes of institutions. Should the Minister decide that a shorter or longer period of dormancy is more appropriate to certain classes of account etc., this definition will ensure that such is provided for.
We are introducing a 15 year period. Is there a mechanism in this section whereby accounts which are dormant for 14 years will continually clock in when the 15 years are up, so that we do not always have to revisit this?
Financial institutions will have to engage in a big operation between now and next April. They will have to go back over their records to classify these accounts. I am sure, with their technology, their various account holders will be listed as well as the years, schedules and so on. Where an account is 14 years dormant and no customer transaction occurs in the following year, that account enters its 15th year. It is probable that the biggest amount of money will be incurred in the first year because it will go back 15 and more years. After that the account will move forward on an annual basis. Of course there could be an account with a lot of money in it which is only 12 years old. The big amounts should be at the start.
Let us say that the technology of the institutions is not perfect and in their balance sheets there are funds that they cannot tie down to individual accounts. Is there a mechanism whereby any unaccounted for balance——
That is accounted for in the phrase "petty balances account". It means that where the institution transfers moneys from accounts, which are in accordance with its practices and procedures, the accounts contain the amount of money below the minimum amount required by the institution for the purpose of being separate accounts and are deemed by the institutions to be inactive. Usually the petty balances account in financial institutions are for untraceable moneys. That will also fall into this category. Later in the Bill there are provisions, taken from the Public Accounts Committee inquiry legislation, to appoint inspectors who will have the powers to inspect institutions to see that they are complying with all the regulations in the proper way.
Would they not do that if they were responsible for the fiduciary management?
No.
Why is an extra inspector needed?
The system worked effectively in the Public Accounts Committee inquiry and we feel this is a better way of doing it.
To a large degree this is the core of the Bill. This specifies the length of time which is necessary to elapse before an account becomes dormant. This definition feeds into section 7 where the account is deemed to be dormant, where during the dormancy period no transaction on the account has been effected by the account holder. There are differences of view as to what lengths of time should be involved. Deputy Jim Mitchell feels strongly that a period of ten years should be the maximum period. At one stage he talked of seven years. That was the view of many members of the Committee of Public Accounts. The proposal from the Minister is 15 years.
The first time I came across a dormant account was in dealing with an account in New York. I came across a notice from the New York bank that, under state law, unless there was a transaction on the account by or on behalf of the account holder, the funds would be escheated to the state of New York. The period in question was ten years. That case has stuck in my mind, both from the point of view of principle and the length of time. Despite the amendment from my colleague, who feels strongly about the ten year period, my view is that the time period usually does not matter provided the financial institutions discharge their responsibilities.
While campaigning for this Bill I had discussions with the Irish Bankers Federation. My focus was not to have the funds seized by the State, but to try to have the institutions pay the money back to those entitled to it. I could not understand why the banks would not issue notifications to try to reduce the amounts in dormant accounts to the minimum. A lot of hocus-pocus about confidentiality was spewed. I totally rejected that and still do not accept it. I want banks to send an annual notification to any account holder who has a sum over a certain amount, perhaps £1,000. The banks told me that was impossible because of confidentiality, that a husband or wife may not know that an account existed and information might go astray. I do not accept that. An annual notification could be specified in the deposit documents unless it was expressly excluded.
I am standing in for Deputy Jim Mitchell at this Stage. I am not sure to what extent the Minister has provided for annual or other notification to account holders to try to reduce the number of dormant accounts.
There will be annual advertisements from all the institutions in at least two national newspapers.
I am not happy with that.
There was provision where the financial institutions must make every effort to notify account holders.
Even though they had instructions not to contact them?
This also came up on Second Stage. They do not write to non-correspondence accounts.
If that is excluded, is there an obligation in the Bill for the institution to notify the account holder annually or otherwise?
Not on those non-correspondence accounts. With any account where there has not been a customer initiated transaction within the past 15 years, the institution must contact that person at his or her last known address. There is provision in the Bill for people to ring or write to the institutions. That will be available to the inspectors to make sure the institutions do this in the proper way. That is covered in the Bill. Deputy Belton mentioned non-correspondence accounts. There was a specific instruction on the accounts and, therefore, the bank will not do anything about those.
My central point at all times has been that if we wait until the end of the dormancy period, people may be dead, non compes mentis or otherwise. I hoped that the Bill would provide for something like an annual notification to the account holder because I am convinced that if that were done, it would reduce the number of dormant accounts, which is what I want.
Once the first big operation, going back 70 to 100 years in the institutions, is done, and the 15 year threshold from then on is brought into line, when the new date comes up again presumably the banks will notify the new people who have fallen into this dormancy period and start contacting that smaller number each year.
It is only at the end of the 15 year period that those affected by that——
That brings us to the point Deputy Mitchell raised. His amendment proposes that the 15 years should be substituted for ten years. I dealt with this on Second Stage. I was trying to do a number of things. My original modus vivendi for this operation was to reunite customers with their money, get it out of the banks and reduce the backlog of accounts there. It is part of the capital base of the banks and they, therefore, were not in any great rush to start notifying people. If we go for a shorter period, consequently there would be a greater number involved. The Deputy must remember this will be a major administrative operation. There is a large amount of work to be done and what I want to achieve in dealing with the institutions is to let them do most of the work and that I would have an inspectorate role to ensure this is being done correctly. Fifteen years is the shortest dormancy period of any country we examined. That is why we settled on that period. I must confess there was another great imperative - I did not want to set up a whole apparatus of the State and let the State do the work. That is what we could have been faced with, the notion that this is a great idea and if we think so much about it, we could do it ourselves. I did not want to do that. I made it as simple as possible in terms of administration. The 15 years struck me as a reasonable compromise.
This 15 years compromise was arrived at in discussions with the banks, the building societies and myself and they will bear the brunt of the administration of the scheme. Given the large overhang of dormant accounts, we had to settle on a dormancy period that would be manageable by the credit institutions. However, there is provision in section 9 to reduce the 15 years benchmark by way of ministerial regulation, to which I referred earlier. When the backlog of dormant accounts has been reduced, as it should be after the first year, I will consider whether the 15 year threshold is still appropriate, but it would be premature to do so at this initial stage when we are trying to get the scheme off the ground. It is the lowest period of dormancy in the European Union.
Deputy Mitchell has figures suggesting that the period of dormancy was seven years - Deputy O'Keeffe also referred to this. The amount of moneys lying dormant in credit institutions is close to £1 billion and, therefore, there is the notion that we had not gone far enough. If we were to set the clock for dormancy at seven years, this would cause many more reactivations of accounts. This would cause a serious undue and unnecessary administrative burden on the credit institutions. Fifteen years kick-off is a reasonable period. It could be ten years or 20 years. One country - I think it was Germany - had a dormancy period of 30 years.
This turned up an interesting point which Deputies McDowell and O'Keeffe will appreciate. I have no idea of the legal text regarding money put in banks. To put it simply for the non-legal person, when one puts money in the bank, it is more or less the bank's money. The bank does not have to notify the account holder about anything. That was all news to me. I have put that too simply. I could read some of the advice I got and I have files dating back in the Department about this, but that effectively was the upshot of it all.
It was in their house.
It was in their house and they did not have to hand it over. There are questions about the rights of private property etc. For many reasons, 15 years was settled as the most appropriate period of dormancy, but it can be reduced under section 9 by way of ministerial regulation and, therefore, we will not have to come back to the House to do that. In six years' time when all this is up and running and we see how it is going, perhaps a future Minister for Finance will say the period of dormancy should be 12 years or ten years. At that stage we will have the life assurance products in the second Act. Deputy O'Keeffe kept a close eye on this over the years, long before I was Opposition spokesperson on Finance or Minister for Finance. When I was appointed Minister for Finance I raised in the Department the question of doing something about dormant accounts before I ever saw a question tabled on it from the Deputy. I got a file on it and my predecessor had considered it also. The strong advice from my officials was not to touch it and my predecessor went along with that. I answered a parliamentary question tabled by Deputy O'Keeffe subsequently and said I would examine the matter. I knew from personal experience that many people ended up getting money when relatives died who had accounts that their families did not know about. I am not talking about large amounts but sums between £400 and £500 and larger sums. Uncles of mine, bachelors, left money in banks that no one knew about. I said at the time that I thought it was unfair for the banks to have this money.
The Committee of Public Accounts pushed this matter and we went ahead with the Bill. Much of the work had been done in the Department due to the pressure from myself and Deputy O'Keeffe. I had no comprehension that the legal questions that my eminent officials had told my predecessor and I originally were far more complex than I envisaged. The money given to the banks is theirs, therefore, the position was a little more fraught than I had anticipated.
My only comment on that is the greatest the frequency the greater the overheads of the bank and the more customers will have to pay. That has to be taken into consideration. With regard to safety deposit boxes and their contents, when I was Lord Mayor the Bank of Ireland took me on a tour of its dungeon - I am sure the Minister for Finance has been down there.
No.
They have all sorts of strange boxes, chests and various things there, some of which are there from the 1800s and they were never opened. What will happen when money is found in such boxes after the euro has come in and the punt is no longer used? Could such cash be converted?
The first question is whether that money will ever be discovered. Someone will have to come along and say, "there is a box belonging to a great granduncle of mine in the Bank of Ireland vault and I am entitled to it and entitled to open it". Under the Euro Changeover Act, the Central Bank will give value for Irish notes and coins, even after 9 February 2002. One would, however, have a number of hurdles to cross before one would get one's hands on the money. The question as to what will happen to such safety deposit boxes was also raised by some Deputies on Second Stage. They are not included in the Bill for the obvious and good reason that they are not cash instruments and people put various items in safety deposit boxes.
Jewellery and proceeds from bank robberies.
That has happened.
Bookies' tickets.
I have not been in the Bank of Ireland's dungeon, but all the banks have safety deposit boxes. People put their valuables into them, go off for the weekend and never think of them. It is like giving someone a loan of a loud speaker and other equipment used in an election. I gave mine away to someone organising a field day and I cannot remember to whom I gave it, but I never saw it again. I am sure something similar has happened to everyone here. The same thing happened to Deputy O'Keeffe.
Yes, I gave it for a charity bicycle run.
One thinks one will never forget it. The same applies to safety deposit boxes. Some people who put them into banks for safe-keeping may have forgotten completely about them.
Some of the items are big sea chests.
There are two issues here. Deputy O'Keeffe made an important point, that there should be a duty on banks to notify account holders on a regular basis, annually or biannually. I tabled an amendment to section 10, that there should be an onus on the bank to provide a statement to the account holder on an annual basis where there is a balance of at least €30. It seems reasonable to ask the banks to provide such a statement. If that were the case, I assume we would find that far fewer accounts would be at risk of becoming dormant anyway and surely, as Deputy O'Keeffe and the Minister have said, that is the point of the Bill.
On balance, I am happy enough that the period involved should be 15 years. There is really only one question here, when on balance do we form the view that somebody has forgotten about an account or that the person may have died? In that context, a period of seven years is much too short. As I said slightly flippantly on Second Stage, it strikes me as a little too close to nationalising part of the capital base of the banks, which is something for which my party no longer argues.
That was well put.
I will leave it to Deputy Mitchell or Deputy Higgins to carry that particular proposal. The question must be, at what point does the level of reactivation become so low that one can assume that people have forgotten about it. The figures which have been given to me by the IBF are not the same as the Committee of Public Account's figures, which are not the same as the Minister's figures. They do, however, suggest that the level of reactivation after ten or 15 years is still about 50%. In other words, 50% of the accounts which appear to be dormant after ten years are reactivated in the following five years, which would suggest that there are still a significant number of people who clearly have not forgotten about them.
There is a vote in the House and therefore we must suspend.
I want the Minister to share with us whatever information he has on the level of reactivation so that we can form a view. Will he comment on how reliable are the figures which we have been given?
The Public Accounts Committee published this document.
I have seen it.
It lays out the dormancy periods of five, ten, 15 and 20 years and the number of bank accounts, POSB accounts, INSA accounts etc.
I assume we are relying entirely on figures from the Irish Bankers Federation?
Yes. A few years ago estimates would have been provided but at least this is more scientific. Ultimately, we will know the correct figures in another two years. In the meantime people will adjust their accounts when they receive this notification.
Sitting suspended at 4.32 p.m. and resumed at 4.55 p.m.
Are there any further contributions on amendment No. 8?
I wish to make two final points. One is not specifically on amendments Nos. 8 and 9, but I hope my colleague, Deputy Mitchell, will be taking over again once the Order of Business is concluded. The Minister referred to the fact that prize bonds were not included because they are normally a long-term investment. I accept that and often the amounts involved are very small, for instance in the case of children's confirmation gifts. I notice that savings certificates are included. I think savings certificates are more of a long-term investment than prize bonds. I mention that to put down a marker. I am concerned that the inclusion of savings certificates may give rise to a problem, particularly if there is some system for notification.
The main thing about this Bill is that we are trying to keep it simple, get the money and if somebody turns up and says that this was his money taken from savings certificates or from the Bank of Ireland in Bandon, that money will be given back immediately. The institution will claim it back from the NTMA out of the fund. There will not be a very complicated procedure if it turns out that the odd mistake is made and when people have not been aware that their account was forfeited or taken into the dormant accounts fund. The procedure for getting it back will be very simple. If the person goes to his or her local institution where the money was held, the matter will be dealt with and the total amount of money from the fund will be reclaimed. I do not think there is any great cause for concern. There were some fears among people, particularly older people, that the State would grab their money - I am sure the Deputy heard that at his party meeting because I heard it at mine. The impression was given that people who had put money aside for their funeral, as old people do, would forfeit that money. We should try to get the message across that people should not be concerned about that because it is their money. They have to notify the bank that the account is still alive and there should be no difficulties. When mistakes are made one will get the money back easily.
There are three issues here. I agree with the Minister that fears of people's funeral money being seized are groundless, and that should be made clear to the public. I agree there is ample provision for reimbursement in the event of moneys declared dormant being escheated to the State, that it can be claimed back on proof of ownership. The third point is not being dealt with. Strange as it may seem, there are people who own money and they do not know it. In some instances the amount can be reasonably substantial. I have seen evidence of up-to-date valuations of old savings certificates, probably sixth or seventh issue certificates when the rate of interest was high, which are very valuable. I have seen cases where people became aware of these certificates purely by chance and had not previously known about them or had not known about them for 20 years. My concern about savings certificates is similar to the point I made earlier. What will trigger the knowledge of ownership on the part of the person who is the real owner? If the money is escheated - taken over by the State - most further possibilities of notification or bringing it to the attention of the owner will be lost. That is my concern.
The NTMA or An Post will write to the registered owner of those certificates if the value is greater than €100. There will be an active process whereby that will be done.
Before dormancy is declared.
Yes, that procedure must be gone through before dormancy is declared and, even then, mistakes will be made. There is then the fall-back position where people can claim back money. As I said, the big effort will be between now and when they will first receive the money. All that administrative work will fall on the relevant institutions - the banks, the NTMA, An Post etc. After that the procedure should flow smoothly.
My colleague, Deputy Mitchell, is more convinced of the merits of amendment No. 9 than I am. Perhaps I can voice-vote it and he can raise it again on Report Stage.
He can. I have no problem with that. I started the negotiations and I announced in a press release in regard to dormancy that I was thinking of a period of, say, five years. I mentioned five years to people in a negotiating position. Earlier Deputy McDowell made the point that 15 years was fair enough. One could take the view that 12 years would be the best period, or 20 or ten years.
Amendment agreed to.
Amendment No. 9 not moved.
I move amendment No. 10:
In page 6, subsection (1), between lines 24 and 25, to insert the following definitions:
" 'financial year' means-
(a) in the case of the Agency and the Board, the period of 12 months ending on 31 December in each year, and
(b) in the case of an institution, the financial year of the institution concerned; ’fixed deposit’ means a deposit of moneys with an institution for a period and at a rate of interest fixed by the institution;”.
Amendment agreed to.
I move amendment No. 11:
In page 7, subsection (1), line 3, to delete "balance" and substitute "balances".
Amendment agreed to.
I move amendment No. 12:
In page 7, subsection (2), line 31, before "savings bond" to insert "fixed deposit,".
Amendment agreed to.
Section 2, as amended, agreed to.
Section 3 agreed to.
SECTION 4.
I move amendment No. 13:
In page 8, subsection (2), between lines 26 and 27, to insert the following:
"(c) (i) provide for the transfer of the value of an account to the principal office of a national, regional or parent organisation where the account was opened by or on behalf of a branch or branches of that organisation but where the branch or branches have become defunct or are in abeyance and such accounts shall not be considered dormant;
(ii) for the purposes of this subsection, the Minister may enter into negotiations with the relevant regional, national or parent organisations and may make different regulations to apply to different types of organisations;
(iii) organisations covered by this subsection include the churches; church organisations; political parties; charitable organisations; trade unions; sporting organisations and any other types of organisations which the Minister prescribes.".
I am moving this amendment on behalf of my colleagues. This amendment relates to organisations that have local branches, such as political parties, but there are many other organisations that have local branches, such as the GAA. Many of the major national sporting organisations would have branch type organisations throughout the country. Deputy Mitchell's concern was that in the event of dormancy, provision should be made for an inter-branch transfer to the headquarters of the particular organisation rather than have the moneys taken over by the State. There is a slight typographical error in paragraph (iii) of the amendment, which states: "organisations covered by this subsection include. . . " The word "include" should read "includes". It refers to churches and church organisations, political parties, charitable organisations, trade unions and sporting organisations and any other types of organisations which would be prescribed by the Minister.
The net point is that where there is a national structure, rather than moneys being declared dormant and going from one wing or arm of that national structure to another, they would go to the main body. That is the thinking behind the proposed amendment.
To provide for such an amendment would result in a two-tier system of accounts and would discriminate between the procedures put in place for tracing owners of personal accounts and holders of corporate accounts. Holders of personal accounts and their heirs and successors would justifiably feel aggrieved if better attempts were not made to unite them with their money. I am satisfied that the measures being put in place are sufficient.
Regarding notification of account holders' non-interference with contractual rights and the guaranteed right of reclaim once legal ownership of funds is established, either Deputy Mitchell or Deputy McGrath raised this point on Second Stage and used the example of a football club, that perhaps an effort should be made to contact its head office or the parent body of the relevant organisation. To do so would put in place an overly complex method of doing this. What I have sought to achieve is a system that is as simple as possible, with the least administrative costs to the State and the credit institutions to which I am giving the job of sorting out all this. While I note the purpose behind the amendment, I am not in a position to accept it.
This issue touches on a greater difficulty. What happens in residents' associations, clubs etc. when they become dormant? Most clubs will have a provision that provides for the disbursement of moneys in circumstances of that kind. Certainly there are residents' associations in my area which have ceased to function and there is probably a few pounds in an account somewhere. This comes down to annual notification. If there was an onus on the bank or credit institution to notify the beneficial owners of the trustees on an annual basis, sooner or later somebody would decide to take it upon themselves to do something about it. If there is a once-only notification during the whole period, just before it becomes dormant, there is every likelihood that accounts of that kind will escape and will be escheated. I do not think that is the purpose of the Bill.
I am informed by my officials that we receive many calls in the Department of Finance from individuals who have been contacted by financial institutions which have already started to activate these procedures, asking them about particular accounts. In some cases, the account holder may have forgotten its existence. From a bank's point of view, a good manager will want to hold on to his capital base and, to avoid handing over funds to the State, he will make a big effort to contact the account holder, for example, to check that Mr. Fleming from somewhere near Emo, County Laois, is still alive. Such efforts by the financial institutions may result in a lesser amount of money being given over to the State than we would have expected on the basis of the numbers of so-called dormant accounts. When we reach the activation process, financial institutions will make sure that many of those accounts are active. For that purpose, a customer-initiated transaction would have to take place. It would not suffice for a bank to apply a charge of, say, 50p to an account in respect of a telephone call, not that I am suggesting any bank would do that. In any event, the procedures under the inspectorate will guard against anything of that kind.
I appreciate the point being made by Deputies about dormant accounts, particularly those held by residents' associations, small groups or other accounts set up for a particular purpose. I have personal experience, in my political life and previously, of accounts being set up for particular jobs, such as a group water scheme or some charitable project, on completion of which a small balance might remain in the account. This could also happen in the case of a GAA, soccer or athletic club. If we set out to provide a different system of dealing with such accounts, we would be in some difficulties. When such accounts are discovered many years after the event, they often cause more trouble than they are worth to the organisation concerned.
Perhaps the concern is not so much with the surplus from local fund-raising but rather something connected with a national organisation. Take, for example, the Kill cumann of Fianna Fáil - I am not of course predicting its early dormancy——
That is where I started and am still a member.
No doubt, the accounts are well looked after.
I see the Minister's point that it would involve a different approach. I also accept his point that the onus will now swing to the financial institutions. It was not in their interest, in the past, to bother about dormant accounts. It will now be very much in their interest to activate those accounts to retain the funds. My colleagues wished to raise the issue and we can pursue it at the next Stage.
Would it be feasible for all national organisations to write to the head offices of the associated banks, asking if there are any accounts in their names in any branches throughout the country? Is there a confidentiality issue?
The banks already have a procedure by which one can write to them to find out about any accounts in one's name in any part of the country.
I am talking of national organisations.
The same arrangement would apply to a national organisation.
A national organisation might not know of accounts opened by a local branch or unit of the organisation.
I will look further into it but I do not wish to make the system unduly burdensome. Some organisations have hundreds of branches around the country with various sub-accounts.
On that issue of balances, does this Bill address the question of unpaid tax which might arise, such as deposit interest on those accounts? Will there be a problem in establishing who is the beneficial owner of, say, a 28 year old account?
It will not be a problem for the State, which will simply acquire the funds in the account. Assuming such an account exists and the financial institution contacts the owner to advise him or her of the effects of this new legislation, that may encourage the person concerned, if there has been any tax evasion, to rush to his or her friendly local inspector of taxes to pay the tax arrears.
When one includes tax, interest and penalties, it could amount to a substantial sum.
The names of people to whom such accounts belong will not be known to anybody outside of the financial institution concerned.
The Minister is not introducing an amnesty?
No, but the funds from dormant accounts will be remitted in bulk, without any accompanying list of names and addresses, to avoid breaching the confidential relationship between the institution and its customer.
How can it be reclaimed if one does not have names and addresses?
It will be very simple. The institutions will keep that list. All the administration will take place at that level. A person wishing to claim funds in a dormant account will go to the financial institution, which will have a procedure in place to pay out the money and claim it back from the State in bulk. The control and inspection system will ensure that all the rules have been complied with. Accordingly, the State will not know the names and addresses of the people concerned. Suppose £50 million comes in, we will not know to whom it relates. People need not have fears in relation to tax or other issues. That is not to say people should not pay their taxes, but the confidential relationship between the financial institution and the account holder is being preserved. The names will not be available to the State.
I take it the register will be maintained at branch level, not at national level?
It is a matter for the individual institutions to operate their own controls. The inspectors will be able to check at branch or head office level as appropriate.
Suppose I or a deceased relative had a dormant account with Bank of Ireland and I am not sure which branch it is in, will it be possible for me to locate it by contacting the head office of the bank?
Yes. Even at present that facility is available from the financial institutions. I am glad to have the opportunity to make the point that people need not be afraid of this system. There may be a view that we should go down that route but that would be totally against the privacy arrangements.
If there was a potential tax liability, the prospective beneficial owner might initiate a transaction with a view to making sure it is not returned.
This is not tax legislation. If the bank contacts the beneficial owner and a transaction is initiated and the owner then wishes to let the account remain, that is sufficient.
For another 15 years?
I am told there has to be one transaction, either a penny in or a penny out.
Otherwise the banks could make a telephone call and log them all as not dormant.
That point was raised earlier in negotiations with the banks. They wrote to me asking if it would be possible and I said there would be some kind of transaction, otherwise there would be rows about telephone calls——
Exactly.
——and there would be another scandal down the road.
I was going to indicate I would not press the amendment.
There is a valid point contained in the amendment. We all know that in organisations such as political parties, but also sporting bodies, etc, cumainn and branches come and go, that special accounts are set up and that people die or move on and the treasurer's book is not passed on and it is forgotten about. The Minister on Report Stage should at least include an amendment to take the power to make regulations. Why should money in a St. Vincent de Paul or Fianna Fáil account, for example, not go to the national organisation given it is readily identifiable, if the local unit of the organisation has ceased to exist? The true owners should be the parent body of the organisation. If the Minister is not disposed to accepting this amendment I ask him to look at it for Report Stage and, if necessary, take unto himself power to make regulations subsequently. I think the point being made is very valid.
Section 4 gives power to the Minister to make regulations and orders in relation to the Bill. I have explained why I was not anxious to set up a two tier system of accounts, namely, personal dormant accounts and non-personal dormant accounts. I am sure that as time passes and we see how the Bill operates changes might be made. I want the Bill to be as effective as possible and as least costly as possible to the State and the institutions on which the bulk of the administration will fall.
I accept that, but the largest tranche of money will come in the first year.
That should be the case, unless people have money in the 14th year about which we do not know.
After the first year there will be very few additions in subsequent years.
That should be the case.
The Society of St. Vincent de Paul, for example, will not benefit from money in accounts of lapsed conferences. The local persons who were involved in the conference may have moved on or have died. The same applies to sporting organisations and particularly to political parties.
It is where all our money is.
I do not see why the Minister should not, even on Report Stage, include a paragraph in this section giving him the necessary power. It is up to him to make regulations governing the accounts.
I will consider bringing forward an amendment giving me power to do this through regulation. In a few years if it was thought worthwhile or not too complicated, the regulation could be made. The Deputy is not asking me to make such provision in the Bill but to give the Minister power to introduce a relevant regulation.
The Minister should take the discretion to do so and if he thinks it can be implemented without too much complication, the regulation should be introduced.
I will look at it for Report Stage.
I think it is reasonable. I am not necessarily talking about future years if the Minister thought it was feasible to make suchprovision before the Bill comes into effect next year.
Amendment, by leave, withdrawn.
Amendment No. 14 is a drafting amendment. Amendments Nos. 15, 16 and 17 are cognate and may be discussed together by agreement.
I move amendment No. 14:
In page 8, subsection (4), line 35, after "regulation" to insert "or order".
Amendment agreed to.
I move amendment No. 15:
In page 8, subsection (4), line 37, after "regulation" where it firstly occurs, to insert "or order".
Amendment agreed to.
I move amendment No. 16:
In page 8, subsection (4), line 37, after "regulation" where it secondly occurs, to insert "or order".
Amendment agreed to.
I move amendment No. 17:
In page 8, subsection (4), line 39, after "regulation" to insert "or order".
Amendment agreed to.
Section 4, as amended, agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."
If I am reading it correctly the section provides that for two years after the establishment date funds will be provided by the Minister to fund the operation of the board. What is the intention thereafter?
The cost of administering it will be borne by the dormant accounts fund. The fund itself will bear the costs.
Question put and agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."
Subsection (3) states that "Where an offence under this Act is committed by a body corporate and is proved to have been committed with the consent, connivance or approval, or to be attributable to any neglect in the past or any director, manager, secretary or other officer of the body corporate or any other person who was purporting to act in any such capacity, that officer or person as well as the body corporate shall be guilty of an offence". In other words, the sentences provided for include jail in certain circumstances. Is that correct?
Yes.
And a fine not exceeding €1,900.
The purpose of this section may come from the Deputy's work on the Committee of Public Accounts where it was pointed out that a bank or building society could not be sentenced to a term of imprisonment. This section provides for an offence by the body corporate, but also on the part of the individual officer. If it is proven they are guilty, they will also be subject to the fines and other sanctions.
The subsection refers to "any director, manager, secretary or other officer of the body corporate or any other person who was purporting to act in any such capacity". So many people could be covered by that and what is everybody's business is nobody's business. The effect would be to render it impossible to prosecute an individual. The Committee of Public Accounts recommended there should be a compliance officer, namely, the chief executive. Why is the chief executive not named here? One jailing of a chief executive would send out many messages to others.
We will have to see somebody from these institutions going to jail to satisfy the Deputy's lust in this regard.
There is no lust. We have been enacting laws for years and nobody has ever been called to account.
That is a good point.
That is the reality. In Northern Ireland or Britain I have seen big business people going to jail. Here the penal system is only for the working classes. It is wrong. These people ignored DIRT. In this context I again bring to the attention of the Minister the issue of the Isle of Man and the fact that banks are still turning a blind eye to tax evasion - the banks are being used for tax evasion and none of them cares because they will not end up in jail. I am not gung-ho about putting people in jail but I am gung-ho about making the law effective and fair.
This section sets out the level of fines to be applied for summary and indictable offences and provides that the Minister may bring summary proceedings in respect of offences under the Act. It further provides that a person convicted of an offence under this Act shall meet any costs and expenses incurred by the Minister in the course of the proceedings.
On summary conviction the maximum fine is €1,900 or six months imprisonment, or both, and, on conviction on indictment, the maximum fine is €100,000 or five years imprisonment, or both. Summary proceedings shall be brought within two years of the commission of the offence or two years from the date on which the Minister became aware that an offence may have been committed.
On financial institutions, I am sure we will never be able to guarantee that everybody in a financial institution will comply with the letter of tax law or any other law. However, from soundings I have made in the wake of the publicity surrounding the DIRT inquiry and other matters relating to the banks in recent years, I know that bank officials are very aware of their obligations nowadays and that no bank official with any sense would take the types of chances they were, perhaps, forced to take in the past because of pressure to attract business or whatever. That will not happen in the future because banks have notified their officials about complying to the letter of the law and are putting all types of regulations in place. It will be a big operation initially to get this up and running, but if it is found that some banks or institutions are not operating correctly, the power is there to impose these fines.
This section is drawn in such a way that a director, manager, secretary or other officer shall be guilty of an offence and penalised as well if an offence is proved to have been committed with their consent, connivance or approval or is attributable to neglect on their part. Institutions will put in place proceedings and designate who will be responsible for enforcing procedures and making sure everything is done correctly. The purpose of this section is to address the situation that arose in the DIRT inquiry whereby officials of an institution could not be prosecuted or at least could not be sent to jail.
They could be prevented from trading.
There are other ways of dealing with this besides locking up the banks, which the Minister cannot do. I worked in a building society and I agree with much of what theMinister said. Enormous pressure was put on staff because of competition and so on and there were few financial institutions that did not get involved in this. Could the Minister for Finance not introduce legislation to prevent institutions that break the law from trading for a time?
The Central Bank supervises the institutions and there are powers under the Central Bank Acts to impose restrictions and, possibly, revoke a license. The power is reserved to the Minister for Finance on the recommendation of the Central Bank. A new Central Bank of Ireland (Financial Services Regulatory Authority) Act will be before the Dáil in the autumn. This came about as a result of the decision to have a single regulatory authority and the subsequent decision to have an interim board.
Question put and agreed to.
NEW SECTION.
I move amendment No. 18:
In page 9, before section 7, but in Part 2, to insert the following new section:
"7.-(1) Subject to subsections (2) and (3) an account shall be deemed to be a dormant account where, during the dormancy period, no transaction on the account has been effected by the account holder and is not an account in the name of a defunct branch of a national, regional or parent organisation which still exists.
(2) In the case of life insurance policies or bank drafts they shall be deemed to be dormant if they remain unclaimed or uncashed after the elapse of the dormancy period.
(3) In the case of prize bonds the Minister for Finance shall take such steps as are necessary and reasonable to communicate with the registered owner of prize bonds issued prior to the commencement of the dormancy period or their legal heirs and where they are untraceable the value of the prize bond shall be deemed to be a dormant account of that value.".
This lapses in view of the Minister's stubborn refusal to accept the inclusion of prize bonds.
Amendment, by leave, withdrawn.
SECTION 7.
Question proposed: "That section 7 stand part of the Bill."
I want to tease out the part of this section which states: "An account shall be deemed to be a dormant account where, during the dormancy period, no transaction on the account has been effected by the account holder." What is meant by the word "effected", given that financial institutions may be acting on an instruction given 30 years ago by paying dividends into an account? Dividends may be paid to an account every year and, therefore, there are transactions during the 15-year dormancy period, but they are not effected by the customer. Could banks interpret this as meaning that there had been transactions within the 15 years, notwithstanding that the instruction to effect the transactions was 30 years old? These should be taken into account because it would complicate matters for the banks if they had to discount lodgments into an account which were based on an instruction given when the account was opened. These transactions are effected on behalf of the customer, but the instruction from the customer may be 30 years old. How will this be dealt with?
In the interpretation section a transaction is defined in the case of an account as a debit from or credit to the account effected by the account holder or, in the case of a deposit receipt, encashment by the account holder or, in the case of Post Office Saving Bank products, encashment or partial encashment of the product by the account holder. We have endeavoured in the interpretation section to define what is a transaction. It is something that is effected by the account holder.
What does the Minister mean by "effected"? When is it effected and when is it a transaction? What is the distinction between the two?
The Deputy is making the case——
The standing order was signed 30 years ago and the customer has not done anything within the dormancy period to effect a transaction, but transactions are occurring within the dormancy period on the basis of an old instruction.
The money has to come from somewhere.
Yes. I gave an example. Let us say there is nominee stock and the bank lodges dividends to an account every year when they come through. The customer might not touch that account.
The customer could be deceased.
The customers might be deceased, but there is an old instruction dating from when the account was opened and transactions are being effected. It is the word "effected" with which I am concerned and the fact that there are transactions every year or every month. I would like this section to cover transactions that are initiated within the dormancy period.
I know what the Deputy means, but I do not have a ready-made answer. We have to impose restrictions on the institutions. This is awkward. This goes back to an earlier amendment which deals with looking up records to see whether the account holder is still alive. Deputy McDowell proposed that banks should investigate whether accounts are still active every year. How would a bank know whether an account was active if money is still going in and out of it?
It would have to go behind the transaction to find that out.
That would be imposing excessive bureaucracy and red tape on the financial institution.
Perhaps this should eventually be dealt with by way of regulations.
Would we be walking into further difficulty if we left out the words "by the account holder"?
Could we use the word "initiated" because it keeps coming up? The gist of the legislation is to ensure there has been a customer-initiated transaction within the period.
That refers to a customer-initiated transaction.
The initiation did not happen within the period.
It is still active. The number of cases involved here is very small.
The initiation did not happen within the period. It might be an old initiation that is——
It is still active. The number of cases involved would have to be very small. If a person was dead for 20 years, one would first have to say that the beneficiaries did not know about the shares that person had in the Smurfit Group, James Crean or whatever the company. In those 20 years, some of those institutions would have issued new shares or bonus shares and had rights issues and one would have to say that had escaped them as well. It is hard to see how they would have escaped that scrutiny down through the years. I am not saying it can or cannot happen. I am sure there is one case or maybe 20 cases but the number would not justify making a significant change because one would have to put an imposition on the institutions to check every account each year to see whether it is active.
One must remember that the banks do not operate they way they did when I was growing up. They knew every customer who walked in the door. Now I could ring up the bank and give my name as Charlie McCreevy - I suggest I am quite well known - and the young woman at the other end of the telephone will ask me who I am. That has happened. I am sure the same has happened to Deputy Mitchell and other people who are well known. I could say I was the Minister for Finance and it would not mean much to them. It would mean far more if I said I was the fellow on "Bull Island" as they would know him. People in positions like the Deputies and I think people know us but that is not quite true. There are young people who are completely oblivious to who we are and it is great. Is that not right?
That is right. They are not all young people. There is an element who do not read newspapers or watch television or who read the British tabloids in which the Minister is an infrequent star.
Maybe as a result of the DIRT inquiry and other matters, I do not think any of the main financial institutions will try to find methods to circumvent this legislation.
Where it states "no transaction on the account has been effected by the account holder", I presume that also includes a transaction initiated on behalf of the account holder. Does that phrase cover it?
Yes.
Does it cover a trustee or an authorised agent?
It is covered by section 2. An item has been brought to our attention in regard to section 2 which might necessitate a further Report Stage amendment.
Question put and agreed to.
SECTION 8.
Question proposed: "That section 8 stand part of the Bill."
In relation to the institutions, I presume the Minister would have given some consideration to the possibility of including credit unions as part of the——
The original purpose was to include credit unions from the outset. I pointed out when I announced the drafting of the Bill that we are going to enter into discussions with the credit unions. We have been lobbied in the interim by——
Maybe if the Minister helped them out with their information technology and gave them a few bob to——
We have been lobbied in the interim by many of the other institutions such as the building societies about the unfair advantage we are conferring on the credit unions in that they are not part of this. We tried to reach agreement with the credit unions before the publication of the Bill so that they would be included. We put forward various suggestions and compromises. The credit unions came back with the retort that they use their money in local areas in any event. To be honest——
I think I see where the Minister is going.
I did not tell my officials to pursue it and include them. I recognise the arguments made by the other institutions that they possibly should be included, but I equally recognise the arguments from the credit unions that they should not be. Given my dealings with them over the last number of years, I have no desire to start another war.
Question put and agreed to.
SECTION 9.
I move amendment No. 19:
In page 10, subsection (1), line 4, to delete "subsection (2)" and substitute "subsection (3)".
This is a drafting amendment.
Amendment agreed to.
I move amendment No. 20:
In page 10, subsection (3), lines 26 and 27, to delete paragraph (a) and substitute the following:
"(a) consumer protection;
(b) the proper and orderly regulation of the financial services industry;”.
As currently drafted, the Minister could make regulations having regard to the interests of consumer protection and the proper and orderly regulation of the financial services industry. The suggested amendment would see this paragraph split into two subparagraphs. In other words, paragraphs (a) and (b) originally made up one subparagraph. The Minister could make a regulation for the purposes of paragraph (b) of the suggested amendment, for the proper and orderly regulation of the financial services industry, which would automatically be in the interests of consumer protection, that is, paragraph (a). However, if the Minister decides to make a regulation for the purposes of paragraph (a), in the interests of consumer protection, this might not have anything to do with the proper and orderly regulation of the financial services industry, paragraph (b). Therefore we decided to split the original single paragraph into two paragraphs.
Paragraphs (b) and (c) as in the original section become paragraphs (c) and (d).
Amendment agreed to.
Question proposed: "That section 9, as amended, stand part of the Bill."
This section means that the Minister may reduce the dormancy period at some time in the future. Section 9(3)(b) states “to facilitate the accessing or identification by persons of accounts or moneys to which they are entitled”. That refers to what I talked about earlier. In regard to the legal heirs of a person, the children, the spouse, etc, and even where they are intestate, would this facilitate the organisational point I made earlier?
I will check it. I promised I would bring in a Report Stage amendment but maybe it is covered by section 9(3)(b).
Maybe another subparagraph.
Section 9(3) gives the Minister power to make regulations under subsection (1) which states after consultation, etc, in these particular areas. It may cover that point. Therefore, the earlier commitment in regard to the need for a Report Stage amendment may not be necessary because it may be covered. I will have to look at it further.
I would like to make a point which does not only apply to this section, although it clearly does, and that is how we knit in the role of the future director of consumer affairs - I cannot remember the fancy title we are going to give him or her under the new Act but basically the person within the new regulatory authority who will be responsible for consumer affairs. It seems that person or that directorate in the regulatory authority should have a serious role in determining this since the definition of that work, or that job, as I understand it from the Government's announcement, is very much aligned to what we are doing in this Bill, which is basically consumer protection and financial regulation as well. I know section 9(1) provides for consultation with the Central Bank but the director of consumer affairs for financial services should have a significant initiating role in terms of guiding how this legislation is worked and should be in some way knitted into the process. We have not established that job yet, so it is difficult to do it at this stage. We should keep it in the back of our minds.
When the financial services regulatory authority legislation comes into effect, references to the Central Bank will in certain instances be replaced by a reference to the new director of consumer affairs. Some issues will fall to the director of consumer affairs, some will fall to the monetary authority and so on. We aim to introduce the new Act in the autumn; it will be the major piece of legislation coming from my Department. We have engaged external expertise to expedite the preparation of the legislation.
Question put and agreed to.
NEW SECTION.
I move amendment No. 21:
In page 10, before section 10, but in Chapter 2, to insert the following new section:
"10.-All institutions shall notify all account holders at least once in every calendar year that an account is held by that institution and that an amount not less than €30 stands to the credit of the account holder with that institution.".
We discussed this issue, which goes to the heart of the Bill, earlier. In effect, the Bill provides for only one notification process, namely, that if one holds an account with which one does nothing for 15 years and in which there is more than €100, one will be notified once and once only. People may not see notices which are posted in financial institutions and if they do not do anything about their accounts, the funds therein go to the State. There is no obligation, as I understand it, for the fund to notify or to ask the financial institutions to notify the beneficial owners of the accounts. Many of these difficulties could be avoided if banks were to follow the simple procedure of issuing statements once a year. That does not seem unreasonable.
The simple procedure advocated by Deputy McDowell is not necessarily connected to dormant accounts.
It is designed to prevent dormancy.
Yes, there is a loose connection. As a general provision, Deputy McDowell suggests that if the amount standing to the credit of one's account is €30 or more, one should automatically receive an annual statement.
Yes, €30 is an arbitrary figure which could be increased or decreased or one could provide for statements to be issued less frequently than once a year. For example, the issuance of statements once every two years would also address my concerns. My basic point, which I do not believe would impose an unreasonable administrative burden on banks, is that people should be informed if they have reasonable amounts of money in accounts.
We introduced a figure of €100 for dormant accounts.
As I said, €30 is an arbitrary figure. If the Minister felt it would be appropriate to opt for a higher figure, that would be acceptable.
The general principle of the Deputy's argument is that banks should be obliged to issue statements to people in whose accounts there is a reasonable amount of money.
Yes.
This issue does not necessarily relate solely to dormant accounts but I am, however, sympathetic to the Deputy's objective.
The issuance of statements would make people aware they held accounts and may prevent accounts becoming dormant.
This legislation is intended to apply to dormant accounts, not to accounts generally. It would be reasonable to issue such statements and I will endeavour to accommodate an amendment to this end on Report Stage without upsetting the principle on which the Bill is based. I am not sure it would be appropriate to include such a provision in this legislation. If it is feasible, I suggest a figure of €100 would be more appropriate. The banks would charge for the provision of such statements. The Deputy may press the amendment at this point if he wishes and I will undertake to examine the issue prior to Report Stage.
I will follow the Minister's suggestion and press the amendment.
Amendment put and declared lost.
SECTION 10.
I move amendment No. 22:
In page 11, subsection (1)(d), line 5, after “prescribed” to insert “but which shall, without prejudice to the generality hereof, notify the account holder that his account can be reclaimed at all times subject to the provisions of this Act.”.
I imagine the Minister intends this provision to apply in any event, but it is appropriate to specify it. The section specifies the information which must be given in the notification procedure. We are all concerned that people would not be unduly alarmed. Any notification should include the information that the money will be reclaimable at any future date.
Section 19 provides that a claimant can at any time reclaim moneys transferred to the dormant accounts fund. Therefore, I do not consider the proposed amendment to be necessary. Section 19 refers to moneys from a dormant account which would include accounts prescribed by the Minister under section 9. Section 19 covers any future accounts which would come within the ambit of the legislation. In addition, sections 10 and 11 provide for notification to issue to all holders of dormant accounts. Section 10(1)(b) provides that such notification should include that a dormant account is held at the institution to which the holder appears to be entitled.
That is not the point I was making. I am proposing that when people receive notification, it should include a clear note to the effect that the money can be reclaimed. As it stands, the Bill requires that people be informed of the name and current address of the institution in which they appear to own an account and that if they do not effect a transaction prior to 31 March, the money will be transferred to the fund. They should be clearly informed that the money is reclaimable into the future.
Yes, we do not want to frighten people.
The Minister stated that the notification can include any other matters which may be prescribed and I believe one such matter should be a notice to the effect that the money can be reclaimed.
I think I could accept that proposal. We could include "but which shall, without prejudice to the generality hereof, notify the account holder that his or her account can be reclaimed at all times subject to the provisions of this Act" under section 10(1)(d) on any other matters that may be prescribed. That is a reasonable proposition.
I have an observation on this amendment with which, on a first reading, I was in agreement. However, people will be more inclined to initiate transactions or reclaim accounts if they feel they will lose entitlement to the money. The inclusion of this provision would dramatically reduce response rates. If one tells people they can reclaim the money in any event, that defeats the purpose of the Bill.
Years ago, I approached this matter from the same viewpoint as Deputy Jim O'Keeffe in that I was anxious to reunite people with their money. It was Deputy Jim Mitchell who came up with the idea that it should go to the State to be used for societal purposes. Even if people receive notices in the post to the effect that their money will go into a dormant accounts fund owned by the State but that they can reclaim it at any point, I still believe they would react speedily. I would like to reunite people with their money and I feel Deputy McDowell's concern is legitimate. Many older people who have put money aside and not touched it for years may be unnecessarily alarmed if such a provision is not included. This legislation is not designed to frighten people. It is designed to take money on which the banks are sitting away from them. If we are penalising anyone, it is financial institutions. The purpose of the legislation is not to penalise, say, Joe or Mary Smith who has had an account for many years. That is not the purpose of the legislation. I am inclined to accept Deputy McDowell's amendment.
Amendment agreed to.
I move amendment No. 23:
In page 11, subsection (2), lines 8 to 11, to delete paragraphs (a) and (b) and substitute the following:
"(a) as soon as practicable after 31 March 2002, and
(b) in each subsequent year, as soon as practicable after 30 September.”.
The amendment makes it clear that attempts are made to notify the account holder in only one year. As previously drafted, section 10(2)(a) referred to “in the case of the first notification” which may have been interpreted as meaning that there were to be notifications to that account holder in subsequent years after the moneys in the account had been transferred to the fund. That is not the case as evident in section 10(1) of the section. The holder of a dormant account should be notified of the requirement in writing under this legislation only in the year that the account has been deemed dormant.
Amendment agreed to.
Question proposed: "That section 10, as amended, stand part of the Bill."
Do I read it correctly that the only notification is one letter of ordinary post? There should be a requirement for notification in the national newspapers.
That is provided for in section 11. It deals with publication of notices and it will be seen that this notification must appear in two or more daily newspapers and in Iris Oifigiúil. That is the minimum requirement that must be complied with. I suspect institutions will call people and will not rely only on letters.
I will wait until section 11 to go into detail on this but I read it that this requirement of notification will occur where the amount in question is less than €100 and the institution has been instructed by the account holder not to correspond. This notification appears to be only for accounts where banks were told not to correspond with account holders. There should be a notification for all account holders. There should be a great deal of publicity and it should not be just for the ones specified in section 11.
Question put and agreed to.
SECTION 11.
Amendments Nos. 24 and 25 are related and amendment No. 29 is related to amendment No. 25. Amendments Nos. 24, 25 and 29 may be discussed together by agreement.
I move amendment No. 24:
In page 11, subsection (1)(a), line 15, to delete “€100” and substitute “€50”.
The section is not completely clear but, as I understand it, the intention is that, people who have more than €100 in credit in their accounts will receive individual notification by post and that there is no obligation on banks or credit institutions to notify individually anyone with less than €100.
That figure is probably too high. The information given to the Committee of Public Accounts and by the Irish Bankers' Federation to the Minister suggests that a great many accounts have a great deal less than €100 and that the average is around €70 to €80, which is about £60. It would not be unreasonable in the circumstances to lower the threshold, certainly for the first autumn notification next year. It would not be unreasonable to require banks to notify individually people who have less than €100 in their accounts.
In the final stages of preparation of this legislation the figure was set at more than €100 at the suggestion of the banks and it was on my initiative that it was reduced to €100. I was asked on Second Stage about the power to make regulations to reduce the amount and I replied that, while I had the power to increase the amount, I was not sure I would give myself the power to reduce it. The power is in the section to allow me make regulations to reduce the amount. I anticipate future holders of the office will reduce the amount. This is to kick start the process. The figure of €100 is about £78.
The banks argued that the average amount in dormant accounts is less than €100. The figure they gave was about £65 which is about €80 to €90. Is there any guesstimate of how many notifications will be required or what percentage of holders of dormant accounts will be notified personally?
We will see if we can find out. I thought we should begin with a much lower figure than what the Deputy suggests, but the amount of administration this will entail is substantial. To get it up and running, I have decided to fix the figure at €100 and we can make adjustments as required. The banks, who will set up this system, will probably have waiting lists, age lists and lists of the amount of money in accounts. When the amount in question is reduced, there will be much less difficulty in coping with that than there would be now because the system will be up and running. That is the reason I decided on €100. The institutions wanted a much higher figure but it is what I decided.
The Minister agrees with me but he negotiated the figure of €100 with the banks.
They wanted a much higher figure.
I am sure they did.
It is a compromise, like the 15 years.
I would like to know how many or what percentage of dormant accounts will be caught by this figure.
Amendment put and declared lost.
I move amendment No. 25:
In page 11, subsection (1)(a), line 15, to delete “(or a greater” and substitute “or its equivalent in any other currency (or any other”.
I know we discussed this and it appears to be an innocuous amendment but I presume it is intended to include foreign currency.
Yes, that is its purpose.
Do we have any idea of the volume of such accounts which are effectively dormant?
We do not know the actual numbers but we know from having been told recently by the Irish Bankers' Federation that some are in dollars and in yen.
These would have not seen any transactions for 15 years and we have no idea of the numbers or the amounts in them.
We do not know but we have been told there are amounts in dollars and in yen for which the 15 year period will click in. We can approach the Irish Bankers' Federation to give us some figures.
Amendment agreed to.
I move amendment No. 26:
In page 11, lines 38 to 43, to delete subsection (3) and substitute the following:
"(3) (a) An institution which publishes, or causes to have published on its behalf, a notice under this section shall, on request, make available free of charge-
(i) details of the current address of its head office and any information regarding a change of name, and
(ii) subject to paragraph (b), any other relevant information specified in the request.
(b) Where the information referred to in paragraph (a)(ii) is otherwise made available to persons subject to a lawful charge, that information may be made available under this subsection subject to that charge.”.
Amendment agreed to.
Amendment No. 28 is an alternative to amendment No. 27 and both may be discussed together by agreement.
I move amendment No. 27:
In page 12, subsection (5), lines 6 to 9, to delete paragraph (a) and substitute the following:
"(a) displayed in a prominent position at each premises in which the institution carries on business that is open to the public, and”.
I tabled my amendment because I wanted it to be clear that, once the notice was displayed, it should be left on display and that the provisions of the Bill would not be satisfied by erecting a notice and removing it a week later. The amendment would require ongoing continual display of a notice in a prominent position as set out in the Bill.
I will bring this amendment to the attention of the draftsperson to seek her advice on the need for it. However, I consider the current requirement that the notice be displayed in a prominent position as sufficient. I will have it double checked.
Amendment agreed to.
Amendment No. 28 not moved.
I move amendment No. 29:
In page 12, subsection (7), line 16, to delete "increase" and substitute "amend".
Amendment agreed to.
Question proposed: "That section 11, as amended, stand part of the Bill."
Does the Minister's reference to publication of notices in two or more national newspapers refer to an account with less than €100 and where the institution has been instructed by the account holder not to correspond or contact him? The publication of notice seems only to deal with those accounts and not the ordinary run of the mill account that would not have such an instruction attached to it. There should be publication of a notice in the——
What point is the Deputy making?
Sections 10 and 11 are related. Section 10 deals with notification of this issue to customers. Such people will receive only one letter by post. There should be a requirement for publication of a notice in all national newspapers.
Section 11(b) refers to the publication of a notice where the institution has been instructed by the account holder not to correspond with or contact him or her. That only applies to a minority of accounts. The majority of accounts do not come within the definition of subsection (b). Section 10 sets out the procedure to notifying ordinary account holders of this matter by way of letter. Section 11 appears to state that we are placing a notification of this matter in the national newspapers for those people who told us not to correspond with them. I think the notification should apply to all account holders.
The advertisement I am pursuing will be headed "Dormant Account Funds" and will be seen by everybody. People will be aware of the streaking, if that is the appropriate phrase, that will take place in the case of accounts lying dormant for over 15 years. That is the purpose of this advertisement.
We seem only to be placing the advertisement in relation to accounts——
No one will be named in the advertisement.
It is stated on the next page that the first notice will appear on 30 April 2002. I think it would be better if it read that the first notice will appear during the month of April 2002. As it stands the legislation is specifying that this notification will appear in the newspapers for one day only. I can imagine the need for a supplement to accommodate the notification from every financial institution. If a person does not get the newspaper they will never see the notification. I am simply saying it should be done over a month. It will be like the CAO leaving certificate results; there will be a huge supplement containing over 200 advertisements and nobody will look at them. Confining the publication of the advertisement to one day is too tight. Will the Minister consider my suggestion?
I understand the point the Deputy is making. If he looks at page 5, he will see that copies of notices published under this section shall be displayed in each premises in which the institute carries out business and is open to the public in a position where it can be read by all members of the public affected.
I know that.
The point the Deputy made——
It specifies one Tuesday only on which day the notice shall be published.
The date of 30 April 2002 could be a Saturday or Sunday.
It is a Tuesday.
Section 4(b) states: “. . . in any other case, it shall in the first week day in October in that year.”
Yes, but why not just say notification shall be published in April 2002? The Minister is limiting the public's ability to become aware of this matter by specifying one day. The provision, as it stands, is too restrictive. Does the Minister understand my point?
The only requirement placed on institutions was to ensure they placed one advertisements in each of the two national newspapers and Iris Oifigiúil. The theory was that we might as well specify a particular day when this must be done.
It is bad practice that notice is only allowed to be published on one day. The people who miss this advertisement on 30 April 2002 will miss this information.
I see the Deputy's point.
The Minister used the first week in October concept. Why does he not say in the first week of April? Why has he specified one day only for the publication of these advertisements? The Minister is inconsistent.
Section 11(b) states: “. . . in the first week day. . . ”.
That is my point. The Minister should specify a period of one month or one week, not one day. That is too restrictive.
I take the Deputy's point. I would like to tie this down to a particular week.
I do not mind whether it is the first or last week.
We will look at this for Report Stage.
Every financial institution is obliged to publish an advertisement on the date specified by the Minister. They would have to——
The Irish Banking Federation will run the advertisement on behalf of the institutions.
So we will have one advertisement on a particular day. I am simply making the point that that is not sufficient notification.
I will look at it again.
I had assumed each financial institution would publish its own advertisement. The banks are well able to advertise their own wares, why are they taking a short-cut by placing only one advertisement in this instance? Each institution should publish its own advertisement.
I take the Deputy's point.
Question put and agreed to.
SECTION 12.
I move amendment No. 30:
In page 12, lines 25 to 34, to delete subsection (1) and substitute the following:
"(1) Subject to subsections (2) and (3), if a transaction is not effected on a dormant account on or before the date specified in section 10(1)(c) or 11(2)(c), as the case may be, the institution at which the account is held shall, not later than 30 April next following, transfer to the Fund the moneys in the dormant account and the first such transfer shall take place not later than 30 April 2003.”.
The original draft left a gap in the timing for transactions to have the effect of preventing dormancy occurring. As originally drafted, any transaction occurring between 31 March 2002 and 30 April 2002, date of public notice and 31 March 2002 and date of personal notification in 2002 to account holders and between 30 September commencing 2003 and the date of personal notification to the account holders and between 30 September commencing 2003 from the date of public notice need not legally have been taken into account for the purposes of preventing that account from becoming dormant. This amendment plugs that gap so that any transaction occurring after the account has been deemed dormant but before the moneys are transferred to the fund will prevent the funds being transferred. The purpose of this amendment is to close off a possible gap in the timing for transactions to have the effect of preventing dormancy occurring.
Amendment agreed to.
Amendment No. 32 is consequential on amendment No. 31 and they may be taken together by agreement. Agreed.
I move amendment No. 31:
In page 13, subsection (5), line 30, to delete "The moneys" and substitute "(a) Subject to paragraph (b), the moneys”.
As drafted, this subsection provides that the moneys transferred to the fund are equivalent to the ledger balance on the date of transfer. In the case of deposit receipt and petty balances account, the ledger balance will not be transferred, even though the ledger balance is defined in the section as "the moneys in an account on the date of transfer . . . together with any accrued interest thereon". In regard to deposit receipts, only the value of the deposit receipt will be transferred to the fund, not any interest that will accrue to that date. Normally the interest is only applied to this product at the time of encashment, therefore, interest will only be applied to it if a claimant seeks a refund, that is, the date of refund will need to be the date of encashment. On petty balances, the ledger balance of this account is made up of moneys from many small accounts, not all of which would be dormant. Therefore, the entire ledger balance would not be transferred to the fund, just the proportion of the ledger balance which the institution estimates has come from dormant accounts.
The proposed amendment takes account of the de facto situation in relation to both deposit receipts and petty balances accounts.
Amendment agreed to.
I move amendment No. 32:
In page 13, subsection (5), between lines 31 and 32, to insert the following:
"(b) Paragraph (a) shall not apply to-
(i) a deposit receipt, in which case the amount transferred to the Fund under subsection(1) shall be the amount of the deposit receipt only but excluding any lawful charges that may be withheld by the institution concerned, or
(ii) a petty balances account, in which case the amount transferred to the Fund under subsection (1) shall be the amount that the institution estimates to be equivalent to the total value of the accounts from which moneys have been transferred to the petty balances account by that institution and which are dormant accounts.".
Amendment agreed to.
I move amendment No. 33:
In page 14, subsection (9), line 16, to delete "Holidays (Employees) Act, 1973" and substitute "Organisation of Working Time Act, 1997".
Amendment agreed to.
Question proposed: "That section 12, as amended, stand part of the Bill."
I have spent years trying to determine how exactly this works. Am I right in saying that the post office savings bank fund is now substantially in credit since significant moneys were transferred into the fund in recent years to cover the State's liability to the fund and that we will, in effect, be taking part of that fund out of the dedicated fund in which it now stands and putting it into the dormant accounts fund?
I do not have a briefing about the post office savings bank fund.
It has been central to the Minister's creative accounting for years.
No, it has not. The post office savings bank fund has been used as a type of bank account for many purposes. The Deputy is referring to the provision up to 1997 when I provided for accrued interest on post office savings and so on. In 1997, and perhaps 1998, I transferred the amount to limit the hit on any one year and reduced the overall Government surplus. My predecessors did this too. I have not done this for a number of years because it was a depreciation and not a physical transfer of money. We increased the current deficit but it is not related to this provision.
Are moneys outstanding in the post office part of the Central Fund? The reference to savings bonds and savings certificates appear to suggest they are.
I do not think they are but I will come back to the Deputy on that matter.
Question put and agreed to.
Section 13 agreed to.
SECTION 14.
I move amendment No. 34:
In page 16, subsection (3), line 3, to delete "balance" and substitute "balances".
Amendment agreed to.
I move amendment No. 35:
In page 16, subsection (3)(a), line 5, to delete “balance” and substitute “balances”.
Amendment agreed to.
I move amendment No. 36:
In page 16, subsection (3)(b), line 8, to delete “balance” and substitute “balances”.
Amendment agreed to.
I move amendment No. 37:
In page 16, line 12, to delete subsection (5) and substitute the following:
"(5) (a) Subject to paragraph (b), the register shall not be open to public inspection.
(b) Nothing in paragraph (a) shall be construed as restricting-
(i) the application of the Data Protection Act, 1988, or
(ii) the right of a person, who proves to the satisfaction of an institution that he or she is, or may be, an account holder, to inspect the register in so far as that account is concerned.".
This amendment proposes to insert a new subsection (5). The original draft prevented the register from being open to public inspection. The proposed amendment takes cognisance of the fact that a person is always entitled to access personal information under the Data Protection Act, 1988. It further provides that an institution will be obliged to let the owner of a dormant account or someone who may have a dormant account in the institution have access to the register in respect of that account. This is what the institution will allow for in practice.
I am concerned whether in practice the banks have all the information to properly maintain the register. Looking back 20 or 30 years, I would be very surprised if the Bank of Ireland in Belfield still has a register of the account I had for two or three months in 1978 or 1979. I wonder whether the banks have all the information or whether they have it in accessible form. Perhaps the Bank of Ireland does, but I wonder about the smaller institutions.
We are told they have the information.
Have you difficulty——
As the Chairman pointed out, it has been a surprise to me that they can go back over many years. As a practising accountant, whenever I rang the banks looking for simple information I was told it was impossible, they did not have it. I am sure Deputy McDowell also experienced this as a solicitor. Up to five or six years ago they did not seem to have details of accounts but now they seem to be able to come up with all sorts of information.
Amendment agreed to.
Section 14, as amended, agreed to.
Sections 15 and 16 agreed to.
SECTION 17.
I move amendment No. 38:
In page 17, subsection (4), line 14, after "Minister" where it firstly occurs, to insert ", after consultation with the Director of Consumer Affairs,".
This amendment seeks to knit in the functions of the Director of Consumer Affairs. As I understand the legal position, only the Minister can put regulations before the Dáil and get them approved. He is the only person who can make a statutory instrument. The person who should be primarily responsible for ensuring the proper regulations are made is the Director of Consumer Affairs within the new financial regulatory authority.
We can revisit that issue when we deal with the Bill later in the year. The major change in the old system is that there was more consumer focus.
Amendment, by leave, withdrawn.
I move amendment No. 39:
In page 17, subsection (4)(a)(i), line 19, after “Act,” to insert “and”.
Amendment agreed to.
I move amendment No. 40:
In page 17, subsection (7)(b), line 38, after “shall” to insert ”, as soon as practicable,”.
Amendment agreed to.
Question proposed: "That section 17, as amended, stand part of the Bill."
There is a basic lack of understanding of one point, that is, the balance as between the reserve account and the disbursements and investments accounts, who decides what the balance should be at any given time and what the Minister intends the balance should be. I assumed the methodology here would be to try to assess what is likely to be claimed over a given time and that the remainder would go into the disbursements account. In regard to the money in the disbursements and investments account, there is provision for an investment plan and a disbursement plan to be drawn up, but is the intention that most of the money will be spent or that most of it will be invested, or who decides?
When the legislation is passed, the Minister for Social, Community and Family Affairs will be responsible for this.
So he could decide to put the money on deposit account, invest it and not use it?
That would be a matter for the NTMA who will utilise the dormant accounts fund. The money will then be transferred to the disbursements fund.
The section provides that the NTMA will establish, control and manage the dormant accounts fund. The management fee will be paid through the fund. The fund will consist of two accounts, first, the reserve account and, second, the investments and disbursements account. Moneys in the reserve account will be used to meet potential claims, the fees, costs and expenses of the NTMA and the board established under section 30 and the remuneration, fees and allowances of the inspectors provided with the Minister for Social, Community and Family Affairs under section 22.
The level of this reserve will be set by the NTMA following the approval by the Ministers for Social, Community and Family Affairs and Finance. The officials from the two Departments will consult with those from the NTMA to ascertain how much money is entering the fund in a given year and from how many accounts. In that way, a prudent level of reserve can be set. Again, it is expected that the reserve will be maintained at a high level in the first number of years of the scheme. A high percentage of the total moneys coming into the fund will be retained in the reserve account until a feel for the number of potential reclaims that may need to be met in any year is ascertained.
All moneys not paid into the reserve account should be paid into the investment and disbursements account. Any moneys in this account may be used by the board for the purpose of making disbursements to applicants who have been successful in applying for the funding. Should it arise that the moneys in the reserve account are insufficient to meet any of the liabilities of that account, the value of validated reclaims or the various expenses it is supposed to provide for, the section provides that whatever moneys are required to cover the deficit will be paid into the reserve account of the investment and disbursements account.
Furthermore, should it arise that there are insufficient funds in the investment and disbursements account to meet the deficit in the reserve account, the amount of the deficit will be paid into the reserve account from the Central Fund. This will be on a loan basis, and moneys will be returned to the Central Fund as soon as it is practicable. Clearly, this repayment to the Central Fund can only take place when moneys become available in subsequent years and, even then, it can only be effective once the other liabilities of the fund and claims expenses have been met in that year.
I am still not clear on that point. Perhaps it has to do with the nomenclature or the reference to the investment and disbursements account. From what the Minister said, all of the money in that account in any given year will be available to the board to disburse. Is it the intention that they will spend the money to credit in that account in any given year or will they invest some of it?
The board will draw up a plan for disbursements and another every three years.
Am I reading too much into the word "investment"? The account is really a disbursements account.
Yes. It is a disbursements account.
It is called an "investment and disbursements" account so I am wondering if money will be invested and held for a number of years before spending.
The money in that account should be there for only a short period. The main money will be in the reserve account and that will be transferred into the other as the need arises.
Initially, a cautious approach will be adopted regarding the amount of moneys coming in in case people claim it all back in the one year, but afterwards a more realistic approach will be adopted.
Basically, if moneys are not in the reserve account, they are available to be spent.
Yes. The purpose is to use the money for the benefit of society, in which case the money should not really be used for investment.
Section 18 prescribes how it can be invested.
As my official points out, if there was £20 million available to be spent, the board might decide there are no causes meriting the money. The board could then invest it.
That is a matter for the board.
That is right.
Question put and agreed to.
SECTION 18.
Question proposed: "That section 18 stand part of the Bill."
The Minister deliberately excluded shares in a company. I presumed that is to keep it——
It is too speculative.
Question put and agreed to.
SECTION 19.
Amendments Nos. 41 to 44, inclusive, not moved.
I move amendment No. 45:
In page 19, subsection (5), line 19, after "held" to insert "provided that the Minister, after consultation with the Director of Consumer Affairs, may specify a minimum rate of interest which may apply to any class of account".
This amendment relates to the interest that should be paid to somebody if they successfully reclaim money from the fund. I understand the basic concept in the Bill that if one lodges money at a certain rate of interest, one should have this honoured by the bank. I do not know what applies to savings certificates, but normally they are there for a period of five or seven years. When the period is over, is the money frozen? Do people not get any benefit for the next ten years after maturity if no claim is made in that time? There should be a base minimum benefit to the account holder who has not claimed the money for the period it is held by the State. This is to ensure he does not get miserable rates or no rates of interest because his particular bond or deposit is no longer eligible for the initial rate of interest after a certain period.
Such people will get whatever rate of interest they signed up for in the financial institution. For example, if it was a current account, for which there was no interest payable, they will get none. If there was interest payable, they will get it.
Using the Minister's example, if the State is taking custody of somebody's money for a period, then, even if the account is not an interest earning account, it seems reasonable that the State should pay the account holder for the use of the money during that period. I was thinking of savings certificates. After maturity, I am not sure if the holder receives any benefit if he does not claim it. If, for example, a certificate was for five years and it matured in 1980, would one receive any benefit at all for the period thereafter?
I know from personal experience that one is notified when the period, say five years, has expired and that if one does not withdraw one's money, the account is put on a scheme in which interest is added. That may not apply to the old saving certificates but it certainly applies to those from the past 15 years. If we were to do as Deputy McDowell suggests, there would be an incentive for people to allow their accounts become dormant.
For example, consider someone who overpaid his schedule D tax deliberately. On settling the account, he would receive an attractive non-taxable rate of interest. If one overpays, the Revenue Commissioners pay back the amount overpaid, plus the relevant rate of interest. Some people discovered in the last few years, given the low interest rates, that it was an attractive way to earn some money. I am not talking about tens of thousands of pounds——
I know what the Minister is saying.
No one will be worse off.
I agree that nobody will be worse off and that one is simply replicating the deal received from the credit institution in the first place. It seems reasonable that, if the State or bank has the use of somebody's money for a period, and the person has clearly forgotten about it, he or she should be guaranteed a base minimum. I am not suggesting that it should be a very high figure.
I understand what Deputy McDowell is saying but I do not accept it. It is a generous idea.
Amendment, by leave, withdrawn.
I move amendment No. 46:
In page 19, subsection (7)(a), line 24, after “winding up” to insert “and following dissolution of the institution”.
Amendment agreed to.
I move amendment No. 47:
In page 19, subsection (7), lines 26 to 33, to delete paragraph (b) and substitute the following:
"(b) Where a register is submitted to the Central Bank under paragraph (a), the Central Bank shall-
(i) process, in accordance with this section, claims for repayment of moneys transferred by the institution to the Fund under section 12, and
(ii) enter in the register the particulars specified in paragraphs (f) and (g) of section 14(2).”.
Amendment agreed to.
Section 19, as amended, agreed to.
SECTION 20.
Question proposed: "That section 20 stand part of the Bill."
Why did the Minister choose to make the Minister for Social, Community and Family Affairs a central player here?
The recommendation was that disbursing this money would be for societal and community purposes. That is why I made my decision. It is most unusual for a Minister to introduce a Bill under which the operations go to another Minister. The Department of Finance has a name for grabbing all and holding on to money. I thought it was better to transfer the operation of this to the Minister for Social, Community and Family Affairs. He, in consultation with the Minister for Finance, will appoint the board. The board will be independent and certainly will have nothing to do with the Minister for Finance. I think that is what Deputy Jim Mitchell had in mind. His proposal in the Public Accounts Committee inquiry was that the money would be given for societal and community purposes. I did not think the Minister of Finance would be the appropriate person to——
——decide on societal and community purposes.
Well, I am revered in certain institutions who write reports on my social conscience.
Question put and agreed to.
Section 21 agreed to.
SECTION 22.
I move amendment No. 48:
In page 21, between lines 22 and 23, to insert the following subsection:
"(5) Subject to section 24, the Minister may give directions in relation to the form, manner and content of the report to be prepared by an inspector.”.
I have a question about the establishment of inspectors. What will be their function? Is it envisaged that the inspectors should inspect every financial institution or will there be a sample basis?
In time they will all be investigated. The powers are there to investigate them all. Every one will not be investigated every year, but in time, every institution will be investigated.
Amendment agreed to.
Section 22, as amended, agreed to.
SECTION 23.
I move amendment No. 49:
In page 22, subsection (1)(c), line 7, after “English” to insert “or Irish”.
Amendment agreed to.
Section 23, as amended, agreed to.
SECTION 24.
Question proposed: "That section 24 stand part of the Bill."
There are a few gaps in this section. In a nutshell, section 24 states that an inspector will provide a report if he or she believes an institution is in breach of the provisions of the Act or that there is a material defect. It appears an inspector will produce a report only if he or she believes there is something wrong. I would like the inspector to make an annual report to the Minister on the operation and compliance of institutions. There is no provision for a regular or annual report. Subsection (4) states that an inspector shall provide to the Minister any information and assistance that may reasonably be required. It deliberately does not state "report". That means providing additional information when breaches of the Act are detailed in the report. The inspector should be obliged to issue an annual report on the entire operation of the Act. This section states that he or she will issue a report only where there are breaches of the Act.
Under amendment No. 48 the Minister for Social, Community and Family Affairs can specify the detail in this regard.
I know that is within the power of the Minister for Social, Community and Family Affairs, but surely the inspector reports to the Minister for Finance.
No. The Minister for Finance will have nothing more to do with this once it has been passed. The inspector will report to the Minister for Social, Community and Family Affairs. The Department of Social, Community and Family Affairs is happy to disburse the money but would have preferred if the Department of Finance appointed the inspectorate, but I resisted that. The point about what Minister should appoint the inspectorate was at issue between the Departments.
The Bill does not state that there should be an annual report, but it should.
The purpose of this section is to allow that the form, manner and content of the report incorporate that point. The inspectorate could be instructed to produce an annual report.
It would be better if the Bill stated that an annual report should be published. I accept this section may cover that, but I do not think that was the intention of the amendment.
It can be interpreted like that if the Minister so wishes. I do not think we should approach this Bill with the idea that the financial institutions will try to evade it.
Every institution will submit a report to the inspector, and he or she might be able to report that he or she has inspected the institutions and they all comply.
The inspector will not inspect them all every year.
I am making the general observation that if there is an inspection procedure there should be an annual report.
I have approached this assuming the institutions will co-operate with the provisions of the Act.
Question put and agreed to.
SECTION 25.
I move amendment No. 50:
In page 24, line 1, after "made" to insert "in good faith".
Amendment agreed to.
Section 25, as amended, agreed to.
Sections 26 to 29, inclusive, agreed to.
SECTION 30.
Question proposed: "That section 30 stand part of the Bill."
I am opposing sections 30 to 40, inclusive, or, in effect, all of Part V of the Bill. This board is unnecessary. It is just another one of the multitude of quangos we are creating. It will become another forum for patronage. There is no necessity for it. Why can this not be left to the Minister for Social, Community and Family Affairs?
I have argued very much against this policy myself. I am on record, both as Minister and as Opposition spokesman, as saying that whenever Ministers or Governments are presented with a sticky political problem, they give it to an outside agency or a board rather than make decisions themselves. Consequently, nearly everything is decided by somebody outside Government. It has proved to be a useful tool for Ministers of all political persuasions to get themselves out of a hole. However, it should be pointed out that, given the standing in which politicians are held, people feel that politicians are not the best people to decide the allocation of lottery grants and so forth.
For those reasons and many others in this new era of political correctness, it was decided that whatever money is yielded from the dormant accounts should be given out by the disbursements board, the members of which will be appointed by the Minister for Social, Community and Family Affairs. The board will deal with the functions outlined in the Bill. That was considered the best way of dealing with the issue.
I rebut that argument. If a board is set up, there is no accountability to the House in the sense that the Minister will not be answerable to the House for its behaviour on a daily basis. Second, these boards are political patronage gone mad. Instead of appointing people of merit, regardless of political affiliation, we appoint political hacks. Many of the political hacks are people of merit but some of them are not. If we appoint political hacks, they will be tempted to do the political thing when the opportunity arises.
Third, I believe part of the reason the Nice Treaty was rejected is that people are fed up having no say and no power. They also see we have no power in the House. They elect us to represent them but we have no power. We have given it away either to Europe or to boards and quangos. There is no role for the Dáil. Look at what happened today. Deputy McDowell had to leave this meeting to deal with other business. I was absent for a while because I was dealing with other business. There are several committees sitting; five committee rooms are in use at the same time. The Dáil Chamber is also in use. We are devaluing our role.
This board is superfluous. I would love to trawl through legislation with the policy of getting rid of as many quangos as possible. We are creating these unanswerable bodies everywhere and that is one of the reasons people are getting fed up. The people they elect have no say. Decisions are being made on roads not by the local authority but by the National Roads Authority. The Minister is not answerable for the authority in the Dáil. Planning decisions are made by a planning authority that is not answerable to anybody. There is now no accountability in the system.
This is another board which will not be answerable but it gives the Minister a grand opportunity to put a few pals on it and to create another distance between the people and power. That is wrong.
The only possible solution to the problem put forward by Deputy Jim Mitchell is that we go to the electorate in the next election and say that only people like himself and myself will be elected to Dáil Éireann and we will deal with the problem. I agree with much of what the Deputy said. We have divested ourselves of power and it is no longer possible to make decisions.
However, there is a small difference with regard to the moneys to be disbursed in this case. These are not public moneys but moneys that belonged to individuals which will be taken into the maw of the State to be distributed. The membership of the board is set down in section 32. There must be a chairperson and eight ordinary members. One of the persons must be a person from the Department not below the rank of principal officer appointed by the Minister. There will be people from the financial services industry, three persons from other areas and three other appointees.
I accept the point made by Deputy Jim Mitchell but it was felt that there should be a board in place to disburse this money and keep it at arm's length from the Minister and that the board would do things in a more brilliant fashion than any Minister could. That was the decision.
I am dissatisfied. Non-elected people will decide areas of priority. I have put down an amendment outlining what I believe should be the priorities for these funds. Under the Bill, non-elected people will decide where these funds should go. Why should it not be left to the Minister for Social, Community and Family Affairs or to a committee of this House on the proposal of a Minister for Social, Community and Family Affairs?
These provisions are ridiculous and should be deleted. We set up a Referendum Commission that is answerable to nobody. It can parade ridiculous arguments on television, which none of us can do, and create havoc and confusion yet be answerable to nobody. If I have any influence in the next Government, I will propose that we trawl through all legislation and Departments and shoot quangos on sight. I am serious. The role of the Members of these Houses, who are elected by the people to act on behalf of the people, has been completed devalued. That is wrong. People sense it is wrong and they are rebelling against it. We had better start rebelling in here. When we divest ourselves of power, we are divesting the people who elected us of power because they have no influence. They see non-elected bodies having influence which they do not have because we do not have it.
The Minister is an innovative, radical man and has been since he came to this House in 1977. He is one of the few people, like myself, who has been here that long.
It is less than ten.
I appeal to the Minister. For God's sake, stop appointing these quangos.
All I can say is that we made this decision. Hopefully, I will be in a position to support the Deputy when he is in a position of influence about quangos.
The Minister should go back to his colleagues before Report Stage and tell them I am right and that they should get rid of this board and give responsibility to the Minister.
I cannot accept the Deputy's proposals.
Question put and agreed to.
SECTION 31.
Question, "That section 31 stand part of the Bill", put and declared carried.
SECTION 32.
Question, "That section 32 stand part of the Bill", put and declared carried.
SECTION 33.
Question, "That section 33 stand part of the Bill", put and declared carried.
SECTION 34.
Question, "That section 34 stand part of the Bill", put and declared carried.
SECTION 35.
Question, "That section 35 stand part of the Bill", put and declared carried.
SECTION 36.
Question, "That section 36 stand part of the Bill", put and declared carried.
SECTION 37.
I move amendment No. 51:
In page 28, subsection (2), line 41, to delete "member" where it firstly occurs and substitute "representative".
Amendment agreed to.
Question, "That section 37, as amended, stand part of the Bill," put and declared carried.
SECTION 38.
Question, "That section 38 stand part of the Bill", put and declared carried.
SECTION 39.
Question, "That section 39 stand part of the Bill", put and declared carried.
SECTION 40.
Question, "That section 40 stand part of the Bill", put and declared carried.
NEW SECTION.
I move amendment No. 52:
In page 30, before section 41, but in Part 6, to insert the following new section:
"41.-(1) The moneys in the investment and disbursements account shall be applied by the agency for the following purposes:
(a) programmes or projects that are designed to assist the personal, educational and social development of persons who are economically, educationally or socially disadvantaged or persons with a disability with special priority to be given to primary school pupils with learning difficulties so as to ensure, to the maximum extent possible, that the number of children leaving primary school with literacy or numeracy levels below standard for their age is brought down to the irreducible minimum;
(b) programmes or projects to improve facilities, including accommodation of all kinds, for the elderly with a view to establishing in every community adequate services and/or accommodation so that persons who have lived in a community for many years do not have to leave that community in old age.
(2) Any programme or project under subsection (1)(a) may include any home and family support deemed necessary to help achieve the objective.”.
The amendment would involve the deletion of the current section 41 and its substitution with this new section. Subsection (1)(a) would remain the same, but I want to identify one particular area for half the expenditure. The amendment would add the words “with special priority to be given to primary school pupils with learning difficulties so as to ensure, to the maximum extent possible, that the number of children leaving primary school with literacy or numeracy levels below standard for their age is brought down to the irreducible minimum”.
This area is crying out for attention. There are many problems about which it is difficult to do anything. However, on the basis of comparisons, other countries are way ahead of Ireland is relation to literacy and numeracy. For example, Finland has approximately the same population and wealth, but the number of children who leave primary school there with literacy and numeracy problems is one quarter the rate in Ireland. This means four times as many Irish children leave school with such problems, but that need not be the case.
Almost every one of those children will have a life of disadvantage because we as legislators failed to provide adequate resources and systems to nip their learning difficulties in the bud. However, three quarters of those children need not have difficulties. Some teachers say 90% of the children need not have such problems. However, once they leave primary school, in almost every case they remain behind. Some will do the leaving certificate, get poor results and not progress to third level, but most will drop out of secondary school. Spending £65 million on this area over a number of years would ensure wonderful results. It is wrong that children are allowed to leave school with learning difficulties when that need not be the case. I plead with the Minister to accept that part of the amendment.
The second part of the amendment proposes programmes and projects to improve facilities, including accommodation of all kinds, for the elderly with a view to establishing in every community adequate services and-or accommodation so that persons who have lived in a community for many years do not have to leave that community in old age. Subsection (2) of the amendment states that any programme or project under subsection (1)(a) of the amendment may include any home and family support deemed necessary to help achieve the objective. This also relates to primary school pupils because, in many cases, children’s difficulties arise because of problems in the home. Children are unsettled because of tensions, problems or sickness in the home and they cannot learn as quickly as possible.
Regarding paragraph (b) of the amendment, people are living longer. Due to the high employment participation rate, not as many families are in a position to look after their elderly relatives. Many elderly people end up in nursing homes a long distance from their homes. We should embark on a programme of building senior citizens’ villages in every parish. This would ensure that people do not have to leave the community. They could move into a bungalow or a nursing home on the same campus where there would be joint services, including hairdressing, chiropodist and physiotherapy facilities. If they reach a point where they cannot continue living in the bungalow, they could move into the nursing unit. The amendment depicts a vision with regard to young and old people. These are areas in which the fund could make a real difference.
As the Deputy may be aware, section 41(1) states that the moneys in the investment and disbursement account shall be applied by the agency, on the direction of the board, for the following two purposes. Section 41(2) states that whenever a purpose is determined under subsection (1)(b), the board shall publish notice of it in Iris Oifigiúil. The Minister for Social, Community and Family Affairs can, within the parameters set, choose to direct the board to give priority to certain areas. Section 42(2) states that the Minister may issue directions or guidelines to the board concerning the preparation of the plan and the board shall comply with those directions and prepare the plan in accordance with those guidelines.
I am satisfied that the Minister has the power to give the board directions as to the policy area he wishes it to address. There is no point giving the Minister and the board powers regarding a specified purpose and then defining the purpose. My other objection to the amendment is that if I agreed to paragraph (a), all other Departments would want to know why I did not classify many other areas as well. It would arbitrarily select some areas of special disadvantage.
However, I agree with Deputy Jim Mitchell that many of our social difficulties would be solved over a period if children left primary school with adequate levels of literacy. I find it amazing in this day and age - I do not wish to disturb a hornet's nest in relation to any other areas - that the percentage is increasing rather than decreasing. I find it difficult to believe, and I accept the Deputy's comments in that regard. I will compromise with the Deputy and consider between now and Report Stage whether the spirit of paragraph (a) of the amendment which relates to literacy can be incorporated. However, if I include paragraph (b), I might have to consider including many other areas.
That would dilute the purpose of the amendment.
Perhaps the Deputy would agree to me bringing forward an amendment on Report Stage that would accommodate the spirit of paragraph (a) of his amendment. That might send a message that we are serious about the matter.
One in every five teenagers has literacy problems. It is astonishing.
It is extraordinary.
It would be a good day's work if this provision was included, so I welcome the Minister's comments.
We may tighten up the provision or incorporate it as it stands. I will consider the matter.
Amendment, by leave, withdrawn.
Amendment No. 53 not moved.
Section 41 agreed to.
SECTION 42.
I move amendment No. 54:
In page 30, subsection (1)(a), line 39, to delete “of” where it secondly occurs.
Amendment agreed to.
Section 42, as amended, agreed to.
Sections 43 and 44 agreed to.
SECTION 45.
I move amendment No. 55:
In page 32, subsection (1), between lines 4 and 5, to insert the following:
"(d) details of the remuneration, fees and allowances for expenses of the inspectors referred to in section 17(4)(a)(ii),”.
Amendment agreed to.
Amendments Nos. 56 and 57 are related and may be discussed together, by agreement.
I move amendment No. 56:
In page 32, subsection (1), line 7, to delete "2003" and substitute "2004".
Amendment agreed to.
I move amendment No. 57:
In page 32, subsection (2), line 13, to delete "2003" and substitute "2004".
Amendment agreed to.
Section 45, as amended, agreed to.
Sections 46 to 48, inclusive, agreed to.
SCHEDULE.
Question proposed: "That the Schedule be the Schedule to the Bill."
Is the Central Bank covered under the Schedule? Does it hold accounts that fall into the category about which we are talking?
We will check that.
Why are funds in the hands of the courts exempted?
The Minister for Justice, Equality and Law Reform intends to take steps in that regard.
The Committee of Public Accounts raised this issue. We are talking about huge sums of money. To my astonishment, there is over £0.5 billion involved. The poor box is a miserly £400,000 per year or so.
That is not the case in Portlaoise, I assure the Deputy. There is a judge there who is very good in that regard.
There is no accountability. Judges give out this money whatever way they like. There is a lot of money in these funds and provision should be made by the State for this. There should be greater accountability.
It was the Committee of Public Accounts that recommended that a report be made on these funds. The NTMA was involved in compiling the report and it turned up an astonishing amount of money. A better administrative and regulation system was proposed. The courts are anxious that this is done. At the same time, the Minister for Justice, Equality and Law Reform is to regulate the area.
Until recently the courts have resisted investigation by the Comptroller and Auditor General of those accounts. That has been the case under the current Chief Justice and since the Courts Service was set up. There had been no audit on some of this money for 20 to 30 years. The funds of up to £0.5 billion are held manually.
With ledgers, I understand.
Monetary changes can affect interest. There is a lot of dead money that will be there for ever. It is a can of worms. There should be a provision that if an account has been dormant for 15 years, it should be subject to discipline.
The Minister for Justice, Equality and Law Reform intends to bring a parallel system into place with the dormant accounts legislation. I believe it was the Public Accounts Committee which discovered this money. The system was very antiquated.
It was the Public Accounts Committee which discovered it. I initiated an inquiry and discovered that there was more to the matter than was realised. It unveiled a lot of money and a lot of worrying facts. As an example, I would like to tax the Minister by asking him what or who is the Admiralty Marshal?
We will find him for Report Stage. There are sailors in my Department but they are not at this table today.
The Minister should know his Admiralty Marshal, otherwise he is not on top of his brief.
Question put and agreed to.
Title agreed to.
I thank the Minister and his officials for attending today's session.
When will Report Stage be taken?
On Friday, 29 June and it should be completed by 1.30 p.m.
I did not know that. Will Report Stage of the Standards in Public Office Bill be taken on Thursday?
Yes.