Fine Gael calls for law on dormant accounts to extend to prize bonds

About £100 million of dormant prize bond money is not provided for under new legislation on dormant accounts.

The Fine Gael spokesman on finance, Mr Jim Mitchell, said it was an act of partisanship on behalf of the Government and the Minister not to include these in the Dormant Accounts Bill.

"Dormant" government funds should be treated like similar funds in banks and building societies, he said. The Minister for Finance, Mr McCreevy, was saying the legislation was good for the banks but not for prize bond funds.

Neither did the Bill cover unclaimed insurance policies, Mr Mitchell added. He welcomed the Bill but disagreed that 15 years should be the minimum period before an account could be declared dormant.

"The financial institutions take great advantage of the inertia of their customers," he said.

He said the funds should go to disadvantaged areas of primary education and providing better care for the elderly.

The Minister said the "dormancy period" had been arrived at in discussion with the banks. There was provision in the Bill to reduce it by way of ministerial regulation.

Mr McCreevy, who was introducing the second stage reading of the Bill, said the legislation, due to come into effect from April 1st next year, would require the financial institutions to "actively take all reasonable steps to identify the beneficial owners" of dormant accounts.

"In the event that the owner or owners cannot be traced, dormant funds will be taken into the care of the State, with a right being guaranteed to the beneficial owner to subsequently seek a refund." The money would be held in a fund to be established by the National Treasury Management Agency, whose remit would be to invest it prudently.

"I am also proposing the introduction of a scheme for the disbursement of surplus dormant funds for the benefit of charities and the community at large," Mr McCreevy said. There were four key features to the Bill.

First, the term, "dormancy", would now be statutorily defined - and applied uniformly.

Second, the banks would have to "make best efforts" to contact customers. Accounts in excess of £100 would require "personal contact" with the customer; for accounts below £100, notification would be sought in advertisements.

Third, the NTMA would manage the fund from April 2003.

Finally, the Minister for Social, Community and Family Affairs would be responsible for the scheme and appoint members of a "disbursement board" and inspectors to ensure compliance by the banks.

Mr Derek McDowell, Labour Party spokesman on finance, said he would prefer the power to define the dormancy period be "kept in the House". He added: "It would not be unreasonable to expect a bank to notify customers on a yearly or two-yearly basis that they have an account and what the balance of the account is."

Any funds that became available to the Exchequer should go to "health-related matters".