Domant Bank Grab: A Guest Posting

A new law is coming which will enable the States to put to use funds from dormant bank accounts for charitable purposes. There are some exceptions:

"Precious metals or precious stones which have been sold can generally be replaced by another item of identical weight and quality.  However, if the custody account contains shares and shares in a specific company are sold, there may be circumstances in which identical shares cannot be repurchased in the market. "

It also notes that the scheme extends to “the cash from, or proceeds of sale of precious metals and precious stones (excluding jewellery) from, safe deposit boxes upon which the lease or rental period has expired”.  Jewellery is excluded because the sentimental value attached to it could be significant and would be difficult to replicate in the event of a reclaim".

But what if you come along and want to reclaim your money:

"For a customer who wishes to reclaim the monies placed with a bank they will need to contact their bank and fill in the requisite forms.  On being satisfied that the person is the owner of the account and that there are no legal or regulatory reasons to the contrary, the bank will restore access to the banking facility or transfer the monies to the customer.  The bank will then be able to reclaim the funds that were previously transferred to the Jersey Reclaim Fund."

"After 10 years has passed cases will be dealt with on a case by case basis.  Where a branch has simply closed in Jersey the customer can still contact the head office overseas to seek repayment.  Where the legal entity has been dissolved the Minister still retains the power to pay out claims where there is sufficient evidence produced by the customer."

How easy that will be is another matter.I can see people jumping through all kinds of hoops to prove that the bank accounts are theirs, especially if the basic records which banks insist on - copies  of a passport, for example - are not available when the bank account is old.

Some other questions marks over the scheme have been raised by Sarah Ferguson in the JEP, and I reprint what she wrote here;

Guest Posting: How many more Piggy Banks can the States raid?
by Sarah Ferguson

I get the impression that the government is trying to extend its tentacles even further into our lives. The latest is the “let’s tax sugar drinks”

At least that is overt. Consider the proposed Dormant Bank Accounts Law, currently in consultation.

It is proposed that balances on accounts where contact has been lost with the customer for 15 years should be transferred to a central “Jersey Reclaim Fund”. to be administered by government and used to support good and charitable causes in the local community. To begin with, the dormant accounts will be limited to banking deposits.

It is maintained that this is a totally reasonable Law since the UK, Cayman Islands and Ireland already have this and the Isle of Man is developing one. Gordon Brown first developed this concept. Does this mean that we should blindly follow suit?

The purposes for which the confiscated funds should be used are alleged to be good and charitable purposes and are the arts, sport; the heritage of Jersey; charitable purposes; and purposes connected with health, education or the environment.

The intricacies of administration get even more byzantine since the law covers sterling and currencies. Currencies will be converted to sterling at the prevailing rate. If the owner appears and requires repayment, it will be repaid – but at the exchange rate at the time of the repayment even if the rate has fallen.

The consultation notes that custody accounts will not be included for the moment but that the scheme will provide for the category of dormant accounts to be extended to custody accounts including precious metals and precious stones (but not jewellery) by Order - meaning at the Treasury Minister’s whim. The provisions also permit monies to be used to cover the costs of the Commissioner of Charities and other expenses under the Charities (Jersey) Law 2014.

The final indignity is in paragraph 31 in which it is stated that “it is considered appropriate to protect the Jersey Reclaim Fund against the risk of currency fluctuations rather than the customer.”

So, it is proposed effectively to confiscate depositors’ funds and, eventually, custody accounts, and to use them to bolster up our economy? Furthermore, if the owners appear eventually – and there is a loss on the assets – the customer (who thought their assets were held securely) will stand the loss.

The excuse is that the banks cannot use these assets and would like to remove them from their balance sheets. Actually this should improve their profits and their bonuses. Certainly the Treasury Minister would like the funds – the quantum of which is not stated. Win/win for the bankers and Minister – but what about the customer?

I wonder if there are any more piggy-banks the Ministers can raid.