Companies (Disclosure of Address) (Amendment) Regulations 2018

Monday 16th April 2018 Lords Chamber

Motion to Approve

15:33

Moved by

[Lord Henley]

That the draft Regulations laid before the House on 22 February be approved.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, these regulations will make it easier for people to protect information about their residential address on the companies register. Prior to the Companies Act 2006, directors’ residential addresses were generally publicly available on the register. The 2006 Act changed the general position by protecting this information from disclosure. However, this change did not apply retrospectively.

Regulations made in 2009 allow people to apply to the Registrar of Companies to make an address unavailable to the public in certain circumstances. An address can only be made unavailable where there is a serious risk of violence or intimidation to those living at the address, this risk arises because of the activities of the company and the information was filed with the registrar after 1 January 2003. These restrictions mean that residential address information cannot be protected if the information was filed before 2003, even if the person is at serious risk of violence or intimidation because of the company’s activities. Nor can the information be protected if the risk of violence or intimidation does not come from the company’s activities—for example, someone in the public domain who may attract abuse—or where someone is at risk of identity theft and fraud rather than violence or intimidation.

Since the companies register was made free to search online in 2015, it is much more widely used than ever. This has increased concerns about the availability of personal information. The draft regulations address these concerns, first by allowing applications where the information was filed before 2003. Most of this information is kept non-digitally; for example, on microfiche. When the original regulations were drafted in 2009, it was thought that it would not be possible to redact such non-electronic information without risking damage to the public record. However, subsequent improvements in technology mean that this is no longer the case. There is therefore no need to retain this restriction.

The regulations also remove the requirement in regulation 9 of the 2009 regulations to show a serious risk of violence or intimidation because of the company’s activities. This is consistent with the general approach taken by the Companies Act 2006 that the registrar must protect directors’ residential addresses.

The draft regulations do, however, retain this test for applications made under regulations 10 and 11 of the 2009 regulations. Regulation 10 allows applications from companies to protect the residential address information of all their members. Removing the test for such company applications could result in large-scale redactions of historic information, potentially involving thousands of members’ addresses for larger companies. While we do not consider that this is justified, an individual member will be able to apply under new regulation 9 to have their residential address suppressed without having to show any risk of harm. We are also retaining the test for applications under regulation 11 from people who register a charge, as the registrar receives very few applications and no concerns have been raised about the test in this context.

People who are legally required to maintain a current address on the register—for example, current directors of live companies—will have to provide a service address as part of their application. This will be publicly available on the register in place of their residential address. However, people who are not subject to this requirement—such as former directors of dissolved companies—will not need to provide a service address. Instead, their residential address will be partially suppressed, leaving the first half of the postcode. Public authorities—such as a police force, the Insolvency Service and the Pensions Regulator—will still be able to obtain information about a person’s residential address from the registrar, even where that information is not available to the public on the register.

We have not consulted in this instance. A number of cases have been raised recently with my department where the people involved are at risk of violence or intimidation yet cannot have their address information protected. Delaying action to consult would increase the risk that people may be caused actual harm. I believe that not consulting is justified in this case, particularly as the regulations apply the principle which has been in place since 2009 that residential address information should not be shown publicly on the register.

It is important that the information on the companies register is of real practical use to those who wish to find out information about a company. At the same time, the information should not become a tool for abuse by exposing people to a risk of harm. These regulations strike an appropriate balance between transparency and the protection of individuals, and I commend them to the House.

[Lord Fox (LD)]

My Lords, before commenting and asking some questions, I declare an interest in that I have been having personal communication with Companies House on an issue not unadjacent to this.

The Minister set out what we see as a pragmatic balance between what is practical and what is desirable—trying to balance what is needed to retain security and privacy while at the same time doing something that is both technically and administratively possible. For those reasons, we welcome the regulations. I have a couple of questions about the criteria and process for assessing applications within Companies House. Can the Minister give your Lordships’ House some idea of how the applications will be received and processed, and what criteria will be used to decide to remove a person’s private address and insert a holding address?

The Minister set out that a holding address would not be required for dissolved companies or directors who have stepped down. Would he consider a cooling-off period? After a company is dissolved, there is a period when its activity remains salient and therefore the activities of those past directors remain salient. Then there is a point at which, clearly, it is a dormant company and there is no fallout from its activities. A cooling-off period would be from the time at which the company is wound up until the time at which directors’ communications are removed.

It behoves me on these Benches to make the point that we still have a strong policy and we call for public registers of beneficial ownership to be extended to include British Overseas Territories. I understand that this SI does not necessarily cover that area, but I feel beholden to make that point. With those questions, we welcome the regulations.

[Lord Campbell-Savours (Lab)]

My Lords, I have just a couple of questions. In the regulations under the title, “Effect of a section 1088 application”, paragraph 13(4) states:

“In any other case the registrar must make the specified address unavailable for public inspection by removing all elements of that address, except—(a) for a United Kingdom address— (i) the outward code from the postcode”.


The Minister referred to “leaving the first part of the postcode”. What is the relevance of keeping that first part? Why any part of the postcode?

My second question relates to the Explanatory Memorandum, which states:

“Amendments have also been made to the 2009 Regulations by regulation 3 to ensure that one of the grounds on which an individual is able to make an application under section 243 of the Companies Act 2006 (to prevent disclosure of their address by the registrar to credit reference agencies) is that they are or have been a constable”—


that is, a policeman. Why is a special category of persons defined here in the legislation? Why do constables have this exemption?

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for introducing this statutory instrument. He expressed a view on the last one that we were at the dawn of a new era of understanding and mutual support across the Chamber. I am afraid it has lasted only 10 minutes because this is not a particularly easy SI to support. I have one or two comments that will not fit into that category, for which I apologise in advance. Also, like the noble Lord, Lord Fox, I declare an interest as a former director of a former live company, so I will be caught by at least part of the regulations.

I wonder whether this instrument should be looked at carefully in terms of its standards. I have a number of comments to make, but it seems to be based on virtually no evidence at all. There has been no consultation and there is no impact statement, so we are looking at something that has been brought forward with little prior preparation and little detail around it. That reflects badly on the department in that this is an important area, and one that may receive more attention in the future, particularly because of the growth of the internet and so on, so we have to get it right. The regulations also seem—I would be grateful if the Minister could confirm this—to have been devised outside the ambit of the Data Protection Bill. The Bill is still in the other place but it will shortly become law. It covers a large number of areas that would otherwise have been picked up in this statutory instrument; indeed, in one respect it may be otiose.

15:45

I turn now to the detailed points, the first of which concerns paragraph 7.3 of the Explanatory Memorandum. The only evidence we have of the need for this is the statement:

“Since the register was made freely available in June 2015, the Department has received an increasing number of complaints from individuals who are concerned that even though the public disclosure of their address puts them at risk they are unable to have this information suppressed”.

How many complaints have been received and what sort of information were those individuals concerned about? Is there a justifiable group here? I would be grateful if the Minister could comment on that.

Paragraph 7.4 concerns identity theft and fraud, the points I mentioned in relation to the Data Protection Bill currently in the other place. These are issues which specifically attract criminal penalties and their associated legal processes. Given that, I do not think it is necessary to change the regulations in relation to the Companies Act to avoid that. I would be grateful for any comment the Minister might wish to make about this point. I also wonder whether, in the broader scheme of things, it is right that company directors, for whom presumably the interest in making contact relates to their business, could pray in aid the fact that their domestic situation or their wider activities not associated with the company were sufficient for them to have this information concealed. It is unlikely that the information will be concealed in any case, given the pervasiveness of information on the web and the ease with which one can find it, but even so it seems a thin argument.

In paragraph 7.5, again the phrase appears:

“A number of the complaints received by the Department relate to information that was filed before”,

2003. I appreciate the issue, but that was a long time ago. Again, no information is given to judge whether the complaints were made in sufficiently large numbers to warrant the movement of a process through your Lordships’ House. The end of the paragraph makes it clear that it is now considered possible to remove information previously held on microfiche without damage to broader data concerns, but no information is given on that. I would be grateful if the Minister, not necessarily today but perhaps in writing, could explain what the technology is that has changed in this matter. We are not given that information and we should know about it.

In paragraph 7.8 the point is made that those who are active directors of live companies must provide a service address, but their residential address can be partly suppressed, a point already raised by my noble friend. Although it is not mentioned in the Explanatory Memorandum, the Minister said that public authorities would be able to access the information. Can he confirm that there will be a process for doing that? In other words, it is not something that the local police could do just by walking in and saying that they need the address of a certain person. If the address has been removed for good reason, there must be a process for that which contains at least some form of check and balance.

This is a rather thinly argued case and the fact that the department has not consulted on this instrument at all seems a little strange. Also, the end of paragraph 8.1 states:

“The Department considers that the urgency of these cases means it is imperative to act rapidly”.

However, we have no qualification of that in terms of the number of cases and no sense of what is being asked for. The phrase imperative “to act rapidly” is presumably the trump card when I turn to Regulation 1, which is the coming into force provision. It says that the regulations will not come into force on a common commencement date—that one was not kept going for very long—but,

“on the day after the day on which they are made”.

Here, again, we have a substantial change for business that is unquantified by numbers or anything else, and it will be done without any reference to a common commencement date. I think we should get this right.

Finally, there is no impact statement so we cannot assess what impact this will have on the economy, wider or otherwise. We have no idea of what it will do to small and micro companies or to people who are starting up. However it states:

“A fee is charged by the Registrar for applications under the 2009 Regulations to cover the costs … The same fee will be charged for future applications”.

Again, however, we have no detail. I would be grateful if the Minister could confirm what the figures are to be, if necessary by letter.

[Lord Henley]

My Lords, I am sorry that we could not continue with the same attitude as we had to the previous order, other than in relation to the noble Lord, Lord Stevenson. I am grateful that the noble Lord, Lord Fox, described this as a pragmatic balance. That is exactly what we have tried to achieve in providing protection for the individual but still making sure that certain public things continue to be public.

The noble Lord, Lord Stevenson, objected to the lack of consultation for something as important as this, saying that there was a lack of consultation and a lack of an impact statement. I will write to him in further detail on the lack of consultation but I assure him that we have received a number of inquiries— around 3,000, I am told. As the Minister who deals with letters from Members of another place on their constituents’ concerns, I have had to sign a number of letters relating to their concerns over not being able to get something removed. It is depressing that I often have to say, “I’m terribly sorry, there is nothing we can do at this stage”, so I was grateful that we could do something quickly and without the necessary consultation. Since individual companies are not required to do anything—or stop doing anything—an impact statement is not necessary. All the regulations do is give people the option of applying to have residential address information suppressed, if they so choose. There is no impact on Companies House, as the application fee will cover the costs of processing the application. In those circumstances, an impact assessment—whether coloured in for the noble Lord or in black and white—is not necessary.

The noble Lord, Lord Stevenson, picked up on the problem with microfiches. I understand that deleting something from a microfiche can affect it. Now that one can move things on to CDs, the process is somewhat easier, but the important thing is that the microfiches will be kept. From a historical point of view, we will still keep records from the past. I will write to him in greater detail about public authorities and how they get appropriate authority, but that will not change as a result of this order. The issue—the mere fact that it comes in immediately—does not affect companies and there will be no burden, so the lack of a commencement date is not a problem. As always, I note what the noble Lord, Lord Stevenson, said about the desirability of sticking to common commencement dates and will try to stick to that in future.

The noble Lord, Lord Campbell-Savours, asked rather a technical question about the category relating to constables in a police force. Under Regulation 5 of the 2009 regulations, on disclosing a residential address to a credit reference agency, one of the grounds for applying to the registrar is that a person is or has been employed by a police force. We are concerned that this may not cover constables because they are technically officeholders rather than employees. The draft regulations merely make it clear that police constables may apply to prevent disclosure under Regulation 5.

[Lord Campbell-Savours]

Why would they want that exemption?

[Lord Henley]

That would be a matter for the police constables themselves. It would probably be best, rather than ad-libbing an answer, if I wrote in greater detail to the noble Lord on that point.

Finally, the noble Lord, Lord Fox, asked about the criteria to be used by Companies House in considering this. The regulations merely allow a person to apply to have their residential address and information suppressed without having to give any reason. The criteria are not relevant in this case; they do not have to give a reason for their application, whereas in the past they did. That therefore simplifies matters and, I hope, continues to meet that pragmatic balance that the noble Lord so warmly welcomed. I hope that deals with all the points that were made.

[Lord Campbell-Savours]

I drew attention to half a postcode being published.

[Lord Henley]

I will possibly add this to my response to the noble Lord, but I suspect that giving half a postcode provides, as it were, some information without giving details. In other words, if someone added CA6 to my name one would know that I lived somewhere not so far from the noble Lord in Cumberland, but it would not say precisely where I live because it would not give the address. As the noble Lord, Lord Stevenson, said, there are other ways of finding out people’s addresses. We are just trying to provide appropriate protection.

[Lord Fox]

Could the Minister share that information with me as well, and perhaps others, as we are all agog to know why this might be the case?

[Lord Henley]

I will write to the noble Lords, Lord Campbell-Savours, Lord Fox and Lord Stevenson. I will make sure that a copy of the letter is placed in the Library. With those explanations and the general support of the House, I commend the regulations to the House.

Motion agreed.