Economic Crime (Transparency and Enforcement) Bill

Debate between Baroness Bloomfield of Hinton Waldrist and Baroness Smith of Basildon

Committee stage
Monday 14th March 2022 Lords Chamber

[Baroness Smith of Basildon (Lab)]

My Lords, in some ways, the amendments from the noble Baroness, Lady Kramer—she has done the House a service in tabling them—go to the heart of some of the issues that we have with the Bill as a House. It is that tension between recognising that the Bill is inadequate in many ways and recognising its necessity and why we are passing it today.

I am grateful to the noble Baroness, Lady Kramer, because her speech tonight was very powerful in setting out the reasons why such measures are essential. From what she was saying and in listening to the Minister earlier, and given the impact that these measures could have on the implementation of the measures in the Bill, it seems to me important that the Government look at this as a matter of urgency. There are huge merits to her arguments and it would be useful to know what the Minister can say on behalf of the Government.

It has been clear over a number of years that there is a multitude of undesirable activities that have come to light only because of the bravery of whistleblowers. The process started by this Bill—to be continued, as we have heard, by the second economic crime Bill—will, we hope, result in a lot more information coming forward. If that is the case, we should recognise that those who bring forward information of wrongdoing are performing a public service, and we rely on them to do that. No one should be in the position that they fear giving evidence because of reprisals or because they think no one is going to take them seriously and nothing will be done about it. Both are equally bad.

We accept not only that the registrar’s office should have a mechanism for receiving and processing the information but, on the point the noble Baroness, Lady Kramer, raised, the importance of doing everything possible to protect the individuals who have raised concerns. Without that protection, we are not going to get the people we need coming forward or they will do so at huge detriment to themselves. I hope the Minister will be able to tell us what the Government are doing on this. We have heard previously that this is something they are looking at and that something will come forward, but we need something a little more concrete, given the importance of this to this Bill.

The noble Lord the Minister spoke earlier about the measures that will be in the second economic crime Bill. I think we really needed a commitment not only that something like this will be considered for that Bill—we are happy to have discussions about how that could be done—but that it will come forward not just in the next Session but early in the next Session. To delay anything undermines the very purpose of being here tonight, to see through legislation which is now an emergency but need not have been an emergency. As the noble Lord, Lord Faulks, mentioned earlier, many of these things have been known about and talked about, but they have not come to fruition. Tonight there is an opportunity to say that we recognise the inadequacy of the Bill but also the necessity of it. I hope we will hear a very positive response from the Minister that there will be something to address this in the next Bill and that this will come very early in the next Session.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Baroness, Lady Kramer, for this amendment. I acknowledge that she has a very impressive record of championing the whistleblowers’ cause. Indeed, as a number of noble Lords have said, this is clearly a common cause in the House.

Amendment 40 seeks to establish a whistleblowers’ office within the office of the registrar to receive whistleblowing reports on the accuracy of information and provide confidentiality and protection from retaliation. This amendment would do so by conferring an obligation on the Secretary of State to create the office within six months of Part 1 of this Bill coming into force.

This amendment would make changes to Clause 14, a supplementary clause that relates specifically to Clauses 12 and 13. Clause 12 sets out that an overseas entity must take reasonable steps to identify registerable beneficial owners and obtain the required information. The steps that must be taken in this regard include giving an information notice to any person that it knows or has reasonable cause to believe is a registrable beneficial owner. It also gives the person who is thought by the entity to be a beneficial owner an opportunity to correct inaccurate information where necessary.

Clause 13 builds on what is presented in Clause 12 by providing an overseas entity with additional powers to obtain information in order to identify beneficial owners if necessary. It provides that an information notice can be presented to a person who is thought to be able to assist with providing beneficial ownership information. This clause allows for entities to take extra steps in ensuring they have taken all reasonable steps to identify the beneficial owners. The Government believe that the provisions in Clauses 12 and 13 will help in making sure that the correct beneficial owners are identified and registered.

Companies House already offers an anonymous “report it now” function for anyone to raise concerns about the accuracy of information it holds. We will ensure that this functionality is extended to the new register of overseas entities. It is also worth noting that Companies House will be provided with expanded and stronger powers to challenge and pursue suspicious filings in the forthcoming second part of the economic crime Bill, as set out in our recent White Paper. This will include a new power for the registrar to query information, including in light of concerns raised by third parties. Those concerns might be raised through the “report it now” function or through other mechanisms, including duties on the regulated sectors. We will take care to ensure that those third parties are suitably protected.

The noble Baroness, Lady Kramer, mentioned the American scheme. There are different opinions on the impact of providing financial incentives to whistleblowers, reflecting local legal, political and social norms. However, organisations representing UK whistleblowers, such as Protect, do not recommend the introduction of financial rewards or incentives. The FCA and the PRA undertook research considering an incentive scheme for whistleblowers and published their conclusions in July 2014. They concluded then that providing financial incentives to whistleblowers would not encourage whistleblowing or significantly increase the integrity and transparency of financial markets.

The noble Baroness, Lady Smith of Basildon, asked what the Government had done to improve the whistleblowing framework. This work is ongoing, but we have already increased the scope of those protected by our whistleblowing laws by extending protection to groups previously not included. This greater transparency around the work of prescribed persons aims to increase confidence among whistleblowers that their disclosures are taken seriously and to improve consistency across different bodies in the way they respond to disclosures.

[Baroness Smith of Basildon (Lab)]

I asked not what the Government had done but what they were going to do.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Sorry; I misunderstood.

It is right and proper that the Government review the whistleblowing framework once we have had sufficient time to build the necessary evidence of the impact of the most recent reforms. We acknowledge that an effective whistleblowing framework is an important part of the UK’s ability to tackle corruption and all forms of economic crime and illicit finance. These acts are, by their nature, often covert. The Government are committed to ensuring that individuals are able to speak up about the behaviour of bad actors.

In recent years the Government have continued to improve the whistleblowing framework, and we will continue to do so in future. It is important that whistleblowing disclosures are dealt with properly and by the right body. This is why BEIS maintains and regularly updates the prescribed persons order. Officials work closely with other government departments, the devolved Administrations and regulators to ensure the list is up to date. I can assure noble Lords that this work is ongoing, and we will continue to improve the whistleblowing framework in the near future.

With that, I ask the noble Baroness to withdraw her amendment.