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Last Updated: Saturday, 24 April, 2004, 13:02 GMT 14:02 UK
Banks 'stealing by finding' says MP
By Paul Lewis
BBC Radio 4's Money Box

MP Martyn Jones
MP Martyn Jones wants the money to be put to good use

A Labour MP has accused High street banks of "stealing by finding" after it was revealed that some use money their customers have forgotten about to boost their profits.

Labour MP Martyn Jones was speaking to the BBC's Money Box programme after Financial Times Journalist Eoin Callan spoke about his investigation into the banks' accounts.

Mr Jones said: "Banks have been using money from customers' dormant accounts to bolster their profits, adding them in as income on their accounts after a number of years.

The banks refused to tell us how much money they are adding to their profits from dormant accounts
Eoin Callan, Financial Times

"They had obviously come to the conclusion that the likelihood of a claim was slim."

Mr Jones said the practice was simply unacceptable:

"If I was to find 50 in the street and I made a very careful note of where it was, and 12 months later I went and put another note and said 'if anybody has lost this money I have got it and I will give it back with interest', I do not think a court would think that was a good idea.

"They would think that was stealing by finding, and I think we have got exactly the same situation here."

Significant amounts

Barclays, Abbey and Royal Bank of Scotland, which owns NatWest, have all admitted they use customers' money to boost their profits.

HSBC bank
HSBC holds 400 million in dormant accounts

Only HSBC has said it does not. Eoin Callan says the amounts involved are significant:

"The banks refused to tell us how much money they are adding to their profits from dormant accounts.

"But people who look closely at these things have been telling us it could be under 100 million a year, and that is per institution.

"Others have suggested it could be somewhere between 20 million and 50 million a year."

This is a perfectly normal practice and there are parallels outside banks
Ian Mullen, BBA

The banks are also secretive about how much money they actually have in dormant accounts, but some have now responded to a survey by Mr Jones.

Only HSBC has admitted to holding a significant sum - 400 million - and Nationwide Building Society has admitted to having 39 million.

Altogether, Mr Jones has identified around 555 million in dormant accounts in banks and building societies.

But 16 banks, including most of the biggest, would not give him the information. He believes the total is around 15 billion.

The banks are keen to come to an agreement with the government that involves a voluntary approach
Ian Mullen, BBA

None of the banks would comment on Eoin Callan's findings. But Ian Mullen, Chief Executive of the British Bankers' Association (BBA) defended the practice of using customers' money to boost profits:

"When these monies are taken to profit, a memorandum item is maintained, and the obligation to repay the customer on contact being re-established remains intact.

"This is a perfectly normal practice and there are parallels outside banks."

But Ian Mullen said they will change: "The banks are keen to come to an agreement with the government that involves a voluntary approach.

"The chancellor has said he wants to have a clear estimate of progress by November and that is quite a tall order.

"There are a number of intricate issues, particularly tax, law, and accounting."

If they do not, then the chancellor has made it clear he will force them to allow this money to be "reinvested in society".

BBC Radio 4's Money Box was broadcast on Saturday, 24 April, 2004, at 1204 BST.

The programme was repeated on Sunday, 25 April, 2004, at 2102 BST.



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SEE ALSO:
Lost money to benefit charities
20 Mar 04  |  Moneybox
Finding your lost fortune
27 Dec 02  |  Moneybox
Have Your Say: Dormant accounts
23 Apr 04  |  Moneybox


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