The Select Committee met at: 3.30 p.m.

+ In the absence of Deputy J. Mitchell for part of meeting.

DEPUTY M. AHERN IN THE CHAIR

Business of Select Committee.

Chairman: This meeting has been convened for the purpose of consideration by this committee of the Dormant Accounts Bill, 2001. I welcome the Minister for Finance and his officials to the meeting. I suggest we consider the Bill until 10 p.m. with a sos from 7.30 p.m. to 8 p.m. if not previously concluded. A further meeting has been arranged for tomorrow, 27 June 2001, at 4.30 p.m. if we have not concluded the Bill this evening. Is that agreed?

Mr. J. Mitchell: What time will we meet tomorrow?

Chairman: At 4.30 p.m.

Mr. J. Mitchell: Until what time?

Chairman: Until we conclude the Bill. I am sure we will finish it this evening. Is that agreed? Agreed. We now proceed to consideration of the Bill.

Dormant Accounts Bill, 2000: Committee Stage.

SECTION 1.

Question proposed: "That section 1 stand part of the Bill."

Mr. McDowell: When does the notification provision come into play?

Minister for Finance (Mr. McCreevy): It comes into play later next year.

Mr. McDowell: In October next year with a view to the first transfers being ----

Mr. McCreevy: On 1 April 2003. In the meantime we must ensure the banks and financial institutions 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.

Chairman: Amendments Nos. 1, 11 and 34 to 36, inclusive, are cognate and may be discussed together.

Mr. McCreevy: 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.

Chairman: 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.

Mr. McCreevy: I move amendment No. 2:

In page 6, subsection (1), line 1, to delete "and".

Mr. J. Mitchell: 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.

Mr. McDowell: 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.

Mr. McCreevy: 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.

Mr. McDowell: 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?

Mr. McCreevy: 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.

Mr. McDowell: 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-----

Mr. McCreevy: 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.

Mr. J. O'Keeffe: 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?

Mr. McCreevy: 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.

Mr. Belton: Children do not know they have them because their parents bought them and they never heard about them.

Mr. McCreevy: 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.

Mr. J. O'Keeffe: When the holder of a prize bond wins a draw, what is the procedure? Is a cheque automatically sent out?

Mr. McCreevy: Yes.

Mr. J. O'Keeffe: To what extent are such cheques cashed by the recipients?

Mr. McCreevy: 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.

Mr. Belton: Or that the winner wants it.

Mr. J. O'Keeffe: Does the Minister know how many winnings are not cashed? What is the percentage?

Mr. McCreevy: That information could be obtained from the NTMA and the prize bond company.

Mr. O'Flynn: Is there much interest in prize bonds?

Mr. McCreevy: 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.

Mr. O'Flynn: Thanks to the Opposition, I have discovered that I have a prize bond in some box at home and I must take it out.

Mr. McCreevy: 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.

Mr. J. Mitchell: 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?

Mr. McCreevy: I will endeavour to get those figures for the Deputy. The amount of money is substantial.

Mr. J. Mitchell: The Minister is afraid of us even talking about the matter.

Amendment agreed to.

Mr. McCreevy: 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.

Mr. J. Mitchell: 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;".

Mr. McCreevy: Does the Chairman have the numbers of the amendments tabled by the Opposition? Are they listed?

Mr. J. Mitchell: Will the Chairman put the question?

Chairman: I will.

Amendment put and declared lost.

Mr. McDowell: 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.

Chairman: Amendment No. 6 is consequential on amendment No. 7 and they may be discussed together, by agreement.

Mr. McCreevy: I move amendment No. 6:

In page 6, subsection (1), line 10, to delete "or".

The amendment proposes to delete the word "or".

Mr. McDowell: Amendment No. 7 is to be discussed with amendment No. 6. What is the purpose of that?

Mr. McCreevy: 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.

Chairman: Amendment No. 7 has already been discussed with No. 6.

Mr. McCreevy: 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.

Chairman: Amendment No. 9 is an alternative to No. 8 and both amendments may be taken together by agreement.

Mr. McCreevy: 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.

Mr. Fleming: 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?

Mr. McCreevy: 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.

Mr. Fleming: 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-----

Mr. McCreevy: 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 PAC 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.

Mr. Fleming: Would they not do that if they were responsible for the fiduciary management?

Mr. McCreevy: No.

Mr. Fleming: Why is an extra inspector needed?

Mr. McCreevy: The system worked effectively in the PAC inquiry and we feel this is a better way of doing it.

Mr. J. O'Keeffe 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.

Mr. McCreevy: There will be annual advertisements from all the institutions in at least two national newspapers.

Mr. J. O'Keeffe I am not happy with that.

Mr. McCreevy: There was provision where the financial institutions must make every effort to notify account holders.

Mr. Belton: Even though they had instructions not to contact them?

Mr. McCreevy: This also came up on Second Stage. They do not write to non-correspondence accounts.

Mr. J. O'Keeffe If that is excluded, is there an obligation in the Bill for the institution to notify the account holder annually or otherwise?

Mr. McCreevy: 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.

Mr. J. O'Keeffe: 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.

Mr. McCreevy: 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.

Mr. J. O'Keeffe: It is only at the end of the 15 year period that those affected by that----

Mr. McCreevy: 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.

Mr. Belton: It was in their house.

Mr. McCreevy: 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.

Mr. Briscoe: 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.

Mr. McCreevy: No.

Mr. Briscoe: 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?

Mr. McCreevy: 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.

Mr. Briscoe: Jewellery and proceeds from bank robberies.

Mr. McCreevy: That has happened.

Mr. Belton: Bookies' tickets.

Mr. McCreevy: 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.

Mr. J. O'Keeffe: Yes, I gave it for a charity bicycle run.

Mr. McCreevy: 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.

Mr. Briscoe: Some of the items are big sea chests.

Mr. McDowell: 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.

Mr. McCreevy: That was well put.

Mr. McDowell: 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.

Chairman: There is a vote in the House and therefore we must suspend.

Mr. McDowell: 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?

Mr. McCreevy: The PAC published this document.

Mr. McDowell: I have seen it.

Mr. McCreevy: It lays out the dormancy periods of five, ten, 15 and 20 years and the number of bank accounts, POSB accounts, INSA accounts etc.

Mr. McDowell: I assume we are relying entirely on figures from the Irish Bankers Federation?

Mr. McCreevy: 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.

Chairman: Are there any further contributions on amendment No. 8?

Mr. J. O'Keeffe: 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.

Mr. McCreevy: 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.

Mr. J. O'Keeffe: 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.

Mr. McCreevy: 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.

Mr. J. O'Keeffe: Before dormancy is declared.

Mr. McCreevy: 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.

Mr. J. O'Keeffe: 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.

Mr. McCreevy: 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.

Mr. McCreevy: 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.

Mr. McCreevy: I move amendment No. 11:

In page 7, subsection (1), line 3, to delete "balance" and substitute "balances".

Amendment agreed to.

Mr. McCreevy: 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.

Mr. J. O'Keeffe: 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.

Mr. McCreevy: 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.

Mr. McDowell: 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.

Mr. McCreevy: 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.

Mr. J. O'Keeffe: 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---

Mr. McCreevy: That is where I started and am still a member.

Mr. McDowell: No doubt, the accounts are well looked after.

Mr. J. O'Keeffe: 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.

Mr. Fleming: 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?

Mr. McCreevy: 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.

Mr. Fleming: I am talking of national organisations.

Mr. McCreevy: The same arrangement would apply to a national organisation.

Mr. Fleming: A national organisation might not know of accounts opened by a local branch or unit of the organisation.

Mr. McCreevy: 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.

Mr. Fleming: 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?

Mr. McCreevy: 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.

Mr. Fleming: When one includes tax, interest and penalties, it could amount to a substantial sum.

Mr. McCreevy: The names of people to whom such accounts belong will not be known to anybody outside of the financial institution concerned.

Mr. Fleming: The Minister is not introducing an amnesty?

Mr. McCreevy: 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.

Mr. J. O'Keeffe: How can it be reclaimed if one does not have names and addresses?

Mr. McCreevy: 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.

Mr. McDowell: I take it the register will be maintained at branch level, not at national level?

Mr. McCreevy: 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.

Mr. McDowell: 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?

Mr. McCreevy: 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.

Mr. Fleming: 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.

Mr. McCreevy: 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.

Mr. J. O'Keeffe: For another 15 years?

Mr. McCreevy: I am told there has to be one transaction, either a penny in or a penny out.

Mr. Fleming: Otherwise the banks could make a telephone call and log them all as not dormant.

Mr. McCreevy: 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-----

Mr. Fleming: Exactly.

Mr. McCreevy: -----and there would be another scandal down the road.

Mr. J. O'Keeffe: I was going to indicate I would not press the amendment.

Mr. J. Mitchell: 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.

Mr. McCreevy: 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.

Mr. J. Mitchell: I accept that, but the largest tranche of money will come in the first year.

Mr. McCreevy: That should be the case, unless people have money in the 14th year about which we do not know.

Mr. J. Mitchell: After the first year there will be very few additions in subsequent years.

Mr. McCreevy: That should be the case.

Mr. J. Mitchell: 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.

Mr. Belton: It is where all our money is.

Mr. J. Mitchell: 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.

Mr. McCreevy: 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.

Mr. J. Mitchell: 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.

Mr. McCreevy: I will look at it for Report Stage.

Mr. J. Mitchell: I think it is reasonable. I am not necessarily talking about future years if the Minister thought it was feasible to make such provision before the Bill comes into effect next year.

Amendment, by leave, withdrawn.

Chairman: Amendment No. 14 is a drafting amendment. Amendments Nos. 15, 16 and 17 are cognate and may be discussed together by agreement.

Mr. McCreevy: I move amendment No. 14:

In page 8, subsection (4), line 35, after "regulation" to insert "or order".

Amendment agreed to.

Mr. McCreevy: 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.

Mr. McCreevy: 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.

Mr. McCreevy: 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."

Mr. McDowell: 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?

Mr. McCreevy: 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."

Mr. J. Mitchell: 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?

Mr. McCreevy: Yes.

Mr. J. Mitchell: And a fine not exceeding €1,900.

Mr. McCreevy: 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.

Mr. J. Mitchell: 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.

Mr. McCreevy: We will have to see somebody from these institutions going to jail to satisfy the Deputy's lust in this regard.

Mr. J. Mitchell: There is no lust. We have been enacting laws for years and nobody has ever been called to account.

Mr. McCreevy: That is a good point.

Mr. J. Mitchell: 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.

Mr. McCreevy: 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.

Mr. Fleming: They could be prevented from trading.

Mr. Belton: 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 the Minister 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?

Mr. McCreevy: 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.

Mr. J. Mitchell: 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."

Mr. Fleming: 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?

Mr. McCreevy: 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.

Mr. Fleming: What does the Minister mean by "effected"? When is it effected and when is it a transaction? What is the distinction between the two?

Mr. McCreevy: The Deputy is making the case-----

Mr. Fleming: 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.

Mr. McCreevy: The money has to come from somewhere.

Mr. Fleming: 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.

Mr. McCreevy: The customer could be deceased.

Mr. Fleming: 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.

Mr. McCreevy: 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?

Mr. Fleming: It would have to go behind the transaction to find that out.

Mr. McCreevy: That would be imposing excessive bureaucracy and red tape on the financial institution.

Mr. Fleming: Perhaps this should eventually be dealt with by way of regulations.

Mr. Belton: Would we be walking into further difficulty if we left out the words "by the account holder"?

Mr. Fleming: 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.

Mr. McCreevy: That refers to a customer-initiated transaction.

Mr. Fleming: The initiation did not happen within the period.

Mr. McCreevy: It is still active. The number of cases involved here is very small.

Mr. Fleming: The initiation did not happen within the period. It might be an old initiation that is-----

Mr. McCreevy: 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?

Mr. J. Mitchell: 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.

Mr. McCreevy: 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.

Mr. J. Mitchell: 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?

Mr. McCreevy: Yes.

Mr. J. Mitchell: Does it cover a trustee or an authorised agent?

Mr. McCreevy: 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."

Mr. McDowell: 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-----

Mr. McCreevy: 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-----

Mr. McDowell: Maybe if the Minister helped them out with their information technology and gave them a few bob to-----

Mr. McCreevy: 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-----

Mr. McDowell: I think I see where the Minister is going.

Mr. McCreevy: 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.

Mr. McCreevy: 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.

Mr. McCreevy: 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.

Mr. J. Mitchell: 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."

Mr. J. Mitchell: 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?

Mr. McCreevy: I will check it. I promised I would bring in a Report Stage amendment but maybe it is covered by section 9(3)(b).

Mr. J. Mitchell: Maybe another subparagraph.

Mr. McCreevy: 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.

Mr. McDowell: 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.

Mr. McCreevy: 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.

Mr. McDowell: 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.

Mr. McCreevy: The simple procedure advocated by Deputy McDowell is not necessarily connected to dormant accounts.

Mr. McDowell: It is designed to prevent dormancy.

Mr. McCreevy: 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.

Mr. McDowell: 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.

Mr. McCreevy: We introduced a figure of €100 for dormant accounts.

Mr. McDowell: 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.

Mr. McCreevy: 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.

Mr. McDowell: Yes.

Mr. McCreevy: This issue does not necessarily relate solely to dormant accounts but I am, however, sympathetic to the Deputy's objective.

Mr. McDowell: The issuance of statements would make people aware they held accounts and may prevent accounts becoming dormant.

Mr. McCreevy: 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.

Mr. McDowell: I will follow the Minister's suggestion and press the amendment.

Amendment put and declared lost.

SECTION 10.

Mr. McDowell: 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.

Mr. McCreevy: 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.

Mr. McDowell: 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.

Mr. McCreevy: Yes, we do not want to frighten people.

Mr. McDowell: 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.

Mr. McCreevy: 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.

Mr. Fleming: 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.

Mr. McCreevy: 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.

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