Building Society Share Distribution Schemes (Hansard, 3 December 1996)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, although under building society schemes account holders who are first-named generally receive shares from a distribution, those who manage accounts on behalf of others are accountable to them for the distribution which they receive. Societies and their members decide, and vote on, the distribution scheme which is adopted, and they decide on who benefits from it. The Building Societies Act gives them a degree of discretion in the form which schemes can take.

§ Lord Ewing of Kirkford
My Lords, is the Minister aware that he has not answered my Question, in the sense that I am asking whether the Government have made any representations on this matter to the building societies? Is he further aware that I am grateful to Alistair Burt, the Minister for the Disabled, Angela Knight, the Treasury Minister in another place, and Tom Clarke, the Shadow Minister for the Disabled, for the representations they have made, as this matter relates almost entirely to people suffering from mental illness or mental handicap, or who have learning difficulties, where the first name on the account is usually the charge nurse in the establishment where these people reside? There are cases where one charge nurse is the first name on upwards of 30 accounts. The building societies are saying that they can have only one allocation of shares. Does the Minister accept that this is neither a political nor a financial matter, but a moral matter? It is wholly wrong of the Alliance and Leicester and the Halifax Building Societies to treat these unfortunate people in this immoral way.

§ Lord Mackay of Ardbrecknish
My Lords, I am grateful to the noble Lord for what he said about my honourable friend Mr. Alistair Burt, who has indeed met building society representatives on this issue. The issue is a bit more complex than at first appears. Many other accounts are held jointly with first names and subsequent names; for example, husband and wife, father and child, and grandfather and grandchild. Indeed it may be even the local club secretary and the club. The existing Building Societies Act allows societies to devise a variety of schemes involving, for instance, making a payout to each member, a payout for each account, and a payout for each name on an account, through the first-named account member. It is for the building societies themselves to decide which scheme they feel is most appropriate, and, of course, for the building society members to decide.

§ Lord Taylor of Blackburn
My Lords, have any discussions been held by any government departments with the Court of Protection on this matter?

§ Lord Mackay of Ardbrecknish
My Lords, I am aware, as I said, that disability unit officials have talked to the building societies, as has my honourable friend 583 Mr. Alistair Burt. I cannot answer the question that the noble Lord asked. Perhaps I may add that ultimately of course whether or not this is discrimination under the terms of the Disability Discrimination Act will be a matter for the courts to judge.

§ Baroness Gardner of Parkes
My Lords, I declare an interest as a former director of the Woolwich. Is my noble friend aware of the great concern felt at the moment by building societies which have already declared that they intend to convert? This is one of the many problems that they should consider. They are concerned about the uncertainty surrounding the law and their future after conversion. It is having an inhibiting effect. I am sure that he will have seen that in the financial press.

§ Lord Mackay of Ardbrecknish
My Lords, I appreciate what my noble friend has said. My understanding is that all the converting societies have taken advice from learned counsel. They have been advised that what they are doing is not against the law. But, as I said a moment ago, that will of course ultimately have to be tested in the courts. As I think I said, my honourable friend Mr. Burt is concerned about this matter. One of the problems is that many of these processes started before this week, which is when the Disability Discrimination Act has, at least in part, come into effect.

§ Lord Rix
My Lords, will the Minister confirm that meaningful talks are taking place between the building societies concerned and a number of voluntary organisations, including MENCAP, with the view to sorting out the problem? Will he also confirm that he will encourage a solution to be found?

§ Lord Mackay of Ardbrecknish
My Lords, I am pleased to hear that talks are taking place between the building societies and the organisations representing mentally handicapped and mentally ill people. As I have indicated, my honourable friend has also had discussions with them. I do not believe that the building societies can be in too much doubt about the feelings of many people on this issue.

§ Lord Addington
My Lords, does the Minister agree that a case of such legal complexity provides an example of where a more vigorous campaigning legal body might have been beneficially introduced under the Disability Discrimination Act as opposed to the rather weaker body which was introduced?

§ Lord Mackay of Ardbrecknish
My Lords, no matter how vigorous a body is it cannot act other than inside the law. I believe that the noble Lord's question invites me to suggest that organisations should be empowered to act outwith the law and I do not agree with that. The law in the Disability Discrimination Act is quite clear. As I said, ultimately, this matter may be for the courts to test.

§ Lord Skelmersdale
My Lords, within Parliament we have rules of hybridity which deal with those in the 584 same class being treated differently. Does my noble friend agree that this is not a matter of disability discrimination but of general discrimination?

§ Lord Mackay of Ardbrecknish
My Lords, the matter is good deal more complicated. One of the principles of mutuality, which is the basis on which many building societies were founded, is that the rights are conferred on members on the basis of one member one vote and not on the basis of the number of accounts held. That is perhaps why the position is that no matter how many accounts are held and for whatever reason—that is perhaps why I answered in the way I did—a person can be considered only once as a member, once as a vote and, as the building societies have developed their schemes, once with regard to any distribution.

§ Lord Dubs
My Lords, does the Minister agree that there is a tremendous sense of unfairness on the part of second-named account holders which runs through the whole of this business? It is difficult for people to understand why, when we have tight regulation in the financial services generally, the Government should adopt such a laissez-faire attitude towards building societies, allowing them to treat people in a way which is not just.

§ Lord Mackay of Ardbrecknish
My Lords, I believed that I answered that question with regard to the principle of mutuality. If the noble Lord is inviting government to interfere in private sector companies and to change the laws of mutuality, I shall resist that invitation.

§ Lady Kinloss
My Lords, is there a provision in the Building Societies Act which prevents a building society from making a bonus payment to account holders who are not members of the society?

§ Lord Mackay of Ardbrecknish
My Lords, as I indicated in an earlier answer, it is up to the building societies to decide which scheme is most appropriate.