Clause 8 - Transfer of eligible amount owing by virtue of a collective scheme investment to reclaim fund

Dormant Assets Bill [Lords] – in a Public Bill Committee am 9:25 am ar 11 Ionawr 2022.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Question proposed, That the clause stand part of the Bill.

Photo of Nusrat Ghani Nusrat Ghani Ceidwadwyr, Wealden

With this it will be convenient to consider clauses 9 to 11 stand part.

Photo of Nigel Huddleston Nigel Huddleston The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport 9:45, 11 Ionawr 2022

Clauses 8 to 11 define the investment assets and participants in scope of the scheme. Clause 8 provides that an investment institution can transfer a dormant eligible amount owing by virtue of a collective scheme investment to an authorised reclaim fund. Clause 9 defines the investment assets in scope of the scheme. These are dormant proceeds of shares or units in collective scheme investments, and distributions, redemption proceeds and orphan moneys attributable to collective scheme investments. Client money is also in scope, but is covered separately in clauses 12 and 13.

Clause 10 defines dormancy for investment assets. Reflecting market practice and Financial Conduct Authority rules, this clause provides that share or unit conversion proceeds can be classed as dormant if the shareholder has been “gone-away” for 12 years. The clause defines “gone-away” broadly to accommodate a range of industry practices that are expected to evolve over time.

Clause 11 defines the right to payment that the owner of a dormant investment asset has against an authorised reclaim fund.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Deputy Spokesperson (Treasury - Chief Secretary)

I have no objection to these clauses standing part of the Bill, but will the Minister clarify one query? The Bill excludes lifetime ISAs, if their transfer would incur any kind of tax liability to Her Majesty’s Revenue and Customs, which is understandable. Will the Minister explain in what kinds of circumstances that might happen? On the face of it, there appears to be an inconsistency in that a lifetime ISA might be liable to tax on transfer, when the whole assumption is that the person who owns that lifetime ISA is probably dead, although we cannot prove that for certain. Is there an inconsistency there? If not, what are the circumstances in which there might be a tax liability that would emerge from the transfer of an asset belonging to somebody when, in the eyes of the law, that person is probably dead?

Photo of Nigel Huddleston Nigel Huddleston The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

There was extensive consultation on what should and should not be included. The hon. Gentleman raises the point that some assets may in the future be potentially included. We want to be careful at this stage and not include things where potential liabilities could incur. We got to this point after extensive consultation with industry, and I think we are comfortable with it. As I said to the hon. Member for Pontypridd earlier on, there is potential scope to change what assets and financial products may or may not be included, but given the advice of the industry, at the moment, we are being cautious; I think that is the appropriate approach.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clauses 9 to 11 ordered to stand part of the Bill.