§ '(1) The Secretary of State may appoint a person to be the Scottish charities nominee (in this section referred to as "the nominee") who shall have the functions conferred by this section.
§ (2) Where the nominee receives from a relevant institution the following information—
- (a) that every account held by the institution in the name of or on behalf of a named body is dormant; and
- (b) the amount of the balance standing to the credit of the body in each such account,
§ (3) Where the aggregate amount standing to the credit of the body in such accounts as are mentioned in subsection (2) above does not exceed £5,000, unless it appears to the nominee—
- (a) that a person is concerned in the management or control of the body; or
- (b) that there are circumstances relating to the body which would make it inappropriate to do so,
§ (4) Where, in the case of a body to which subsection (3) above applies, the nominee is unable to ascertain the purposes of the body in whose name or on whose behalf such accounts are held, he shall transfer the balance standing in the name of the body concerned to such other recognised body as appears to him expedient.
§ (5) Where the aggregate amount standing to the credit of the body in such accounts as are mentioned in subsection (2) above exceeds £5,000 or in any case to which paragraphs (a) or (b) of subsection (3) above applies, the nominee shall advise the Lord Advocate of the information received by him in respect of the body and of any other matter which appears to him to be relevant in the circumstances.
§ (6) Where the Lord Advocate receives information in pursuance of subsection (5) above he shall inform the nominee—
- (a) in the case of a body which is a trust, whether he intends to exercise his power under section 11(2) of the Act to appoint new trustees to the body; or
- (b) in any case, if he intends to apply to the Court of Session for the appointment of an interim judicial factor under section 6(4)(c) of this Act,
§ (7) Notwithstanding anything in any enactment or rule of law to the contrary, the nominee shall, by virtue of this subsection, have the right to effect any transaction (including a transaction closing the account) in relation to any account to which subsection (3) above applies; and the receipt of the nominee in respect of any funds withdrawn or transferred from an account by virtue of this subsection shall, as regards the interest of the nominee in respect of such funds, be a full and valid discharge to the relevant institution holding the account.
1076§ (8) No liability (other than liability for a criminal offence) shall attach to the nominee in consequence of any act or omission of his in the performance of his functions under this section.
§ (9) The power of the nominee to effect transactions in relation to the accounts of a body shall cease to have effect—
- (a) when the Lord Advocate notifies him of his intention to proceed under subsection (6) above;
- (b) if the relevant institution by which the accounts are held notifies the nominee that the accounts held by or on behalf of the body are no longer dormant; or
- (c) where the nominee becomes aware of the identity of a person concerned in the management or control of the body, when he informs the institution of that fact,
§ (10) The Secretary of State may, by regulations made under this section—
- (a) make provision as to the procedure to be followed by the nominee in exercising his powers under this section;
- (b) require the nominee to make to the Secretary of State an annual report as regards the exercise of his functions and such regulations may specify the form and content of such report; and the Secretary of State shall lay a copy of such report before each House of Parliament;
- (c) prescribe the circumstances in which and the extent to which the nominee may apply any interest accruing to any account as regards which subsection (3) above applies during any period for which he is entitled to effect transactions in respect of the account for the purpose of defraying his expenses in connection with the exercise of his functions under this section;
- (d) require the nominee to keep accounts as regards his outlays and expenses in connection with the exercise of his functions under this section; and
- (e) amend subsections (3) and (5) above by substituting a different figure for the figure for the time being mentioned in those subsections.
§ (11) Where every account held by or on behalf of a body which appears to a relevant institution to be a recognised body is a dormant account, no obligation of confidentiality or requirement of secrecy (whether imposed by any enactment or rule of law or otherwise) shall prevent the institution from supplying to the nominee information such as is mentioned in subsection (12) below.
§ (12) Information referred to in subsection (11) above is information relating to any account such as is mentioned in that subsection above which consists of any of the following:—
- (a) the amount of the balance of the account as at the date the information is supplied;
- (b) the last date on which a transaction (other than a transaction consisting only of the accrual of interest to the account) was effected in relation to the account;
- (c) so far as is known to the institution, the terms of the trust deed or other document constituting the body or any information as to the nature of the purposes of the body.
§ (13) For the purpose of this section—
- (a) a "relevant institution" is—
- (i) an institution which is authorised by the Bank of England to operate a deposit-taking business under Part I of the Banking Act 1987;
- (ii) a building society which is authorised by the Building Societies Commission under section 9 of the Building Societies Act 1986 to raise money from its members;
- (iii) such other institution mentioned in Schedule 2 to the Banking Act 1987 as the Secretary of State may, by regulations made under this section, prescribe;
- (b) an account is dormant if—
- (i) in the period of ten years preceding the date on which the institution reviews the account, no
1077 transaction (other than a transaction consisting only of the accrual of interest to the account) has taken place in respect of the account; and - (ii) the institution has no knowledge of the identity of any person concerned in the management or control of the body in whose name or on whose behalf the account is held.'.—Lord James Douglas-Hamilton.]
§ Brought up, and read the First time.
§ Madam Deputy Speaker (Miss Betty Boothroyd)With this it will be convenient to debate Government amendments Nos. 90 and 91.
§ Lord James Douglas-HamiltonIn Committee, the hon. Member for Cunninghame, North (Mr. Wilson) tabled an amendment which would have required banks to identify accounts of recognised bodies which had lain unused and to require the Inland Revenue to list such bodies. The object of the hon. Member's clause was for moribund charitable funds to be brought back into use. That principle was warmly supported by Committee members, and I gave the hon. Member an assurance that I would explore with the banks how such moneys might be brought back into charitable use.
The Committee of Scottish Clearing Bankers and the Building Societies Association have been co-operative in exploring how moribund charitable funds might be brought into use. We propose to remove any duty of confidentiality from the relevant institution in respect of dormant accounts and to enable them to inform an authorised person—the Scottish charities nominee—of such accounts. They will pass to the nominee details of the account holders' funds, and information as to the founding document. The nominee is to be satisfied that the account holders are recognised bodies. He will be concerned only with those which are recognised bodies. The nominee will have a right to effect transactions in respect of accounts.
The nominee will take different actions according to whether the aggregate amount in the account is £5,000 or less, or more than £5,000. Where the amount is £5,000 or less, subsection (3) procedures provide that the nominee may transfer the balance to such other recognised body as he may determine, having regard to the purposes both of the moribund body and of the body to which he transfers the funds. In many instances, the amounts will be small, and it will not be economically viable to appoint new trustees. Frequently, trust deeds will not be located and therefore there will be no means of appointing trustees. The important consideration is that the money is made available for charitable use, so he is empowered under subsection (4) to transfer funds to such other recognised body as appears to him expedient.
Subsection (5) relates to accounts with funds amounting to more than £5,000 and to cases under subsection (3)(a) and (b). Under that subsection, the nominee is to advise the Lord Advocate of the information received from the relevant institution about the body together with any other relevant matter. Under the powers of clause 11(2) and clause 6(4), the Lord Advocate is able to appoint trustees or to apply for the appointment of an interim judicial factor. Where the Lord Advocate does not so act, the nominee shall dispense the funds in the same way as those under £5,000.
Subsection (10) empowers the Secretary of State to make certain provisions by regulations. They include the procedures to be followed by the nominee in exercising his 1078 powers, in reporting annually to the Secretary of State. They also require him to keep accounts under subsection (10), and the Secretary of State is to lay a copy of the report before each House of Parliament.
The functions of the nominee must be paid for. Subsection (10)(c) enables my right hon. and learned Friend to prescribe the circumstances in which, and the extent to which, the nominee may apply any interest accruing during the period when he may effect transactions. Such interest would be used for defraying the nominee's expenses. There will therefore be no public expenditure implications.
Power for the relevant institutions to report to the nominee are included in subsections (11) and (12). Clause 11 removes any duty of confidentiality while subsection (12) sets out the information to be provided to the nominee. I have received an assurance from the banks that their branches will undertake routine periodical trawls of dormant accounts to identify any that they believe fall within the definition of "recognised body". The institutions have assured me that they will make every effort to identify moribund charitable accounts and will make particular efforts to identify accounts with balances in excess of £50. Below that figure, the cost of the efforts involved in addressing the matters becomes a balancing factor, but they have undertaken to use their best endeavours.
Given the assurances and co-operation of the relevant institutions, I am confident that this new provision will prove a very worthwhile innovation in ensuring that good use is made of charitable funds.
§ Sir Nicholas FairbairnThe criteria in subsection (13)(b) are very rigid, referring to
the period of ten years preceding the date on which the institution reviews the accountand to the institution havingno knowledge of the identity of any person concerned in the management or control of the body".Ten years seems to me to be an arbitrary period. Surely it should be that if the institution has lost contact with any person concerned with the body's management, the funds will be considered dormant in those circumstances.
§ Lord James Douglas-HamiltonI sympathise with the point that my hon. and learned Friend makes. We entered into detailed negotiations with the banks, and new clause 23 is drafted in such a way as to ensure that it can be effectively implemented. The spirit of the amendment proposed by the hon. Member for Cunninghame, North has been honoured; although a slightly different approach has been taken, nevertheless substantially the same objective is achieved in bringing funds into use. I am grateful to the hon. Member for Cunninghame, North for raising the matter and I hope that the House will support the clause.
§ Mr. WilsonThis is probably the first evidence I have seen since entering the House of a good idea—if I can claim that for it—being translated into legislation. I am grateful to the Minister and to his civil servants for the work that has gone into producing what I hope is a useful reform, and one that was not conceived of at any stage of the Bill.
Scotland will be taking the lead with this interesting innovation, and if it proves half as relevant as was suggested in Committee, it may be viewed with envy by other parts of the United Kingdom. In Committee, I 1079 qualified the value of my proposal but said that it could be useful in some cases—but as other members contributed their anecdotes, the suspicion grew that perhaps we were on to something much bigger than I had realised at the outset. It remains to be seen just how substantial that innovation will be.
The basic point, which I shall reiterate for hon. Members who were not on the Committee, is that in my experience and in random contacts and researches in every rural and urban community in Scotland, there are funds which were raised for some specific purpose and which, for all sorts of historical reasons, have fallen into dereliction. In some cases, those funds have lain in banks for many years and no one knows that they are there: their purpose and the people who administered them have become lost in the mists of time.
I shall follow this matter with considerable interest to see if we shall uncover something big or whether the funds are more modest.
§ 5 pm
§ Sir Nicholas FairbairnI congratulate the hon. Gentleman on achieving the amendment. Many private accounts which were set up by or for people who are now dead, must be sitting in the coffers of banks. Perhaps he would like to table another amendment to the next law reform Bill to deal with those.
§ Mr. WilsonI should be so lucky. However that is a good point, and the hon. and learned Gentleman may recall that one of his English colleagues said in Committee that a Select Committee had discovered that literally tens of millions of pounds were being held in accounts on behalf of people who had gone into mental institutions or similar places. Money in bank accounts which to all intents and purposes have become defunct could amount to a great deal. We are taking the first step in Scotland, and I warmly welcome it.
For my own clarification, as I am sure the Minister has attempted to meet the spirit of the original amendment, I shall ask him two questions—the first about the term "recognised bodies". As more than a few months have intervened, I have perhaps become hazy about all the debates that we had about recognised bodies, but in practical terms, are we talking about the type of organisation established perhaps 100, 50 or 30 years ago—in most cases pre-war—when the definitions of a recognised or non-recognised body were not current, as they have only recently become?
Within the terms of the clause, will the phrase "recognised bodies" give the nominee access to the type of accounts which I have described? That question is purely for information, as the answer obviously could transform the situation, and I might have to withdraw everything good I said if that is not the case.
§ Lord James Douglas-HamiltonThe answer is yes.
§ Mr. WilsonThat is excellent; I shall withdraw nothing.
Secondly, I should like clarification about the public availability of information given to the nominees. I should have thought that to some extent the activities of the nominee should be demand-led. If a village hall is to be built, and folk can check up and find that there is a 50-year-old village hall fund which no-one knew anything 1080 about, then that is clearly better than having to wait for the nominee to tell them at some random time that such a fund exists. Will there be public access to the information that the nominee obtains?
§ Lord James Douglas-HamiltonIs the hon. Gentleman aware that the nominee will have to publish an annual report and from time to time may have to advertise information depending upon the situation, and that that matter is currently being looked into?
§ Mr. WilsonI know about the annual report and I welcome it, but it will deal with what has been done in the past year, rather than list funds and give an idea of what the nominee may do. However, I am happy to leave the matter there. Clearly, once a register of such funds is established, there should be public access to it.
I do not want to delay the House, and I am delighted with what the Minister has done. I am perfectly happy with the mechanisms drawn up to bring this into effect. We shall know within a year or two whether the measure will be substantial. The important thing is the certainty that, in some communities in Scotland, money which would not previously have been available for useful purposes, which was given for useful purposes, will be unlocked because of the new clause. In that spirit, I thank the Minister for his efforts.
§ Madam Deputy SpeakerDoes the Minister wish to respond before I put the Question? He does not have to, as there seems to be a degree of agreement.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.