Economic Crime (Transparency and Enforcement) Bill

Debate between Baroness Kramer and Lord Faulks

Committee stage
Monday 14th March 2022 Lords Chamber

[Lord Faulks (Non-Afl)]

My Lords, I entirely support what the noble Lord, Lord Eatwell, said. It is very much along the lines of the recommendations of the Joint Committee which I had the privilege of chairing. I quote just one paragraph:

“It is regrettable that, as currently conceived, the proposed Register of Overseas Entities will have insufficient verification checks to deter criminals who wish to submit false information. It therefore seriously risks failing in its central policy aim: to provide a reliable and transparent record of the beneficial ownership information of overseas entities investing in the UK property market.”


We discussed a number of the points that the noble Lord made so eloquently at Second Reading and today, including placing a greater burden on professionals to verify information. It is clearly fundamental; without verification, the Bill will not be as successful as it should be.

[Baroness Kramer (LD)]

My Lords, I will speak briefly on this issue, because I am very much of the opinion, as are many in the Committee, that a combination of both a public register—so that civil society groups, journalists, activists and people in different countries will have access to different kinds of information—and vigorous verification is the kind of safeguard we need if we are to end the history of the London laundromat and prevent London remaining a magnet for a great deal of dirty money that is floating around the globe.

Like many people, when I heard that there would be a register of beneficial owners of property that would have a verification component and that verification would be introduced at Companies House, I was elated. Then I actually read the language in the Bill and it seemed, as the noble Lord, Lord Faulks, said, so light touch that there might be something vigorous, but on an exceptional basis and not as a matter of routine. As there is little in the Bill to strengthen the responsibilities of the enablers, I am worried that we will end up with the worst of all worlds—a headline that makes it looks as though we are taking significant and serious action, but implementation that completely misses the mark.

I know the Minister has sometimes said that we have plenty of legislation to deal with enablers, and which has been strengthened somewhat, but if we had adequate legislation to deal with enablers we would not have a single instance of money laundering in this country, because nobody bringing in dirty money is able to buy a single piece of property, take control of a company or engage in any other activities without using an enabler. You need the lawyers, accountants and property developers. We clearly cannot choke off that particular avenue to sustain the London laundromat. All these things come together. I hope the Minister will look again at verification. It will partly be a matter of resources—those absolutely matter—but it also has to be standard practice that a very high level of verification is embedded to deal with every item in the register.

Sanctions and Anti-Money Laundering Bill [HL]

Debate between Baroness Kramer and Lord Faulks

Report stage (Hansard - continued): House of Lords
Monday 15th January 2018 Lords Chamber

[Lord Faulks (Con)]

My Lords, I was present in the Chamber and listened to the debate when this matter was debated in Committee, although the amendment has changed slightly. Since then, I have read and considered the arguments. At the time, I was persuaded that, on balance, the noble Lord, Lord Pannick, was right and the absence of such a power as is envisaged by the amendment was a real risk of injustice. However, I have changed my mind. It is, of course, fundamentally important that we respect our treaty obligations, particularly Article 103 of the UN charter. What higher obligation could there be?

The UN, in common with all international institutions, is not infallible. For example, we know that the European Court of Justice, which we must obey, and the European Court of Human Rights are not infallible. However, sometimes there is a need to subsume individual, national needs into the need for an overall, international understanding. It is vital that we respect the decisions on sanctions that have been made by the UN. As a permanent member of the Security Council, we can influence those. The Human Rights Council, to which my noble friend referred, can of course make mistakes, but it is undesirable that individual countries can pick and choose which sanctions they want to follow. I look forward with interest to hearing what the party opposite says about our relationship with the UN.

The Secretary of State can, and should, use his best endeavours in appropriate circumstances to try to influence matters, and can be told to do so by the court, but this goes further. Although the amendment has precursors to the exercise of the power, it does ultimately give the court the power to set aside the decision of the Minister. The noble Lord, Lord Pannick, says that this is a rule-of-law issue. It is indeed; it is a rule of international law and international comity, so I am afraid I cannot support the amendment.

[Baroness Kramer (LD)]

My Lords, I have no legal background, but I want to intervene quickly to pick up an issue which has been treated as almost in passing. I understand that the United Nations entirely accepts that the European Court of Justice can provide the kind of protection that the noble Lord, Lord Pannick, has described as being contained within the amendment. If I happen to be Russia, China or some country that wishes to abuse a correct designation by the United Nations, I have the European Union and the ECJ as my example of an entity that does take upon itself the right to provide protection where it believes the UN is in error. Allowing citizens of the United Kingdom to have that same protection adds no particular strength to any such position that might be taken by some other power. We have heard a deep commitment from the Government that exiting the European Union will not reduce the rights and protections that have been provided to British citizens through the mechanism of the ECJ. There can, therefore, be no challenge to the appropriateness of the measure which the noble Lord, Lord Pannick, has put before this House.

Financial Guidance and Claims Bill [HL]

Debate between Baroness Kramer and Lord Faulks

Report: 1st sitting: House of Lords
Tuesday 24th October 2017 Lords Chamber

[Baroness Kramer (LD)]

My Lords, perhaps I can be helpful on a couple of the points just raised by the noble Viscount, Lord Trenchard. These amendments ban solicitations in real time, as he will have noticed. That obviously excludes letters. It means that you can send information through the post; no one would wish to prohibit proper kinds of marketing. It is the nuisance and intrusion and the element of pressure that comes from that real-time activity that is the pernicious side of solicitation. That, essentially, is cold calling and is exactly what this is intended to deal with.

The noble Viscount suggested that financial education and capability are the way to go; indeed, many in the Government feel that that is the route to deal with cold calling, so that people know to hang up. However, the noble Viscount, Lord Brookeborough, was very clear in illustrating that, while we all get cold calls, we are merely the tip of an iceberg. For those who pursue this, the real focus is on people who are absolutely the most vulnerable. Being realistic, financial education and capability, even on the most extraordinary scale, would be very unlikely to provide adequate protection to that group of people who are now constantly being abused.

On the point made by the noble Lord, Lord Faulks, if this body is not associated with consumer protection, quite frankly I wonder what this body is for. That is the underlying premise that sits behind both the predecessor groups that are now being put into the single financial guidance and advice body. It is essential to bring this on to the face of the Bill in a very clear way, as it is the underlying motivation and characterisation of this body, and certainly it is a responsibility.

The noble Lord, Lord Faulks, also suggested that the Government do intend to move in this area. We have been hearing that for an incredibly long period of time and, with constant pressure, perhaps one day the Government will move. The problem is that we need protection now. We need protection in the near term because, as my noble friend Lord Sharkey, the noble Earl, Lord Kinnoull, and others have illustrated, this has grown in such scale and momentum that there are daily victims. Every day that we wait there are more victims. Since it is completely unnecessary to wait because the language in this Bill serves the purpose, then in a sense it would be extraordinary to say we will sit back and wait 18 months or two years or whatever else, allowing people to be abused. We can bring a stop to it now in a very simple and straightforward way.

If I understand the Government correctly, they are willing to look at certain targeted areas in which to stop cold calling but not to provide a stop to cold calling in each area where there is clear detriment, which is what the amendment allows through use of this new single body to identify and communicate that detriment. These organisations are so slick and quick they can move from one topic to another very rapidly—you close one door and another door gets opened. For example, we stopped cold calling on mortgages. That is an excellent example that tells you we can do it. It is straightforward. The dimensions are understood. The complexities are well-considered and we have plenty of track record to look back at to make sure that it is done well. We have all of that in place. However when cold calling on mortgages was banned, it shifted on to the next issue—currently, it is pensions, claims management and holiday sickness. Everybody can be absolutely sure there will be something new, provided loopholes are left, by simply attacking one issue here and one issue there. That is the beauty of this particular amendment: it gives us the power to deal with this whole industry, the same people and the same players.

I shall make one last remark and then sit down. I want particularly to congratulate the four noble Lords whose names are on this amendment, all of whom have been working so hard in this area. Three of them are here today, able to speak for themselves, but one of them cannot. The noble Baroness, Lady Altmann, as we know, has been a real mover and shaker on these issues, not just over cold calling for pensions—pensions are her area of real expertise and we have heard her on that—but we have also heard her in this House speaking around the much broader issue as well, which is why she has put her name to the amendment. She had a speaking engagement at lunchtime in the Midlands which she felt she could not cancel. She has not eaten lunch but run to the train station. She is on the train which pulls in to the station at 4.30 and had been greatly hoping there would be a Statement today that would delay this long enough that she could be here to join in with this particular section of the debate. I am sure she will speak in later parts of this Report.

The noble Baroness should not be left out when we recognise that the movers and shakers on this are from every side of the House. This is not a partisan or party-political set of amendments. This is a set of amendments by Members of this House who recognise their responsibility to protect those who are most vulnerable now, before more damage is done, and I hope the Government will see it that way.

[Lord Faulks]

Before the noble Baroness sits down, will she clarify one thing? She was critical of my suggestion that the insertion of the consumer protection function is in some way an attempt to expand the scope of the SFGB. She said, quite correctly, that it is part of the SFGB’s function to protect consumers, but surely the purpose of this amendment is to expand the scope of its activity beyond that which is already in the Bill so that it can deal with matters that are beyond what is apparently in other parts of the Bill.

[Baroness Kramer]

I thought that we could only speak once on Report, but I hope that the House will excuse me if I get to my feet again. Fundamentally, I disagree with the noble Lord. Consumer objectives are merely bringing to the face the underlying discussion and the ethos which sits entirely behind this body and every one of its instructions. If the noble Lord reads all the roles and responsibilities and the debates about those roles and responsibilities, he will understand that this meshes perfectly with these activities. It strengthens its hand in an obvious way, rather than leaving it in a slightly awkward, ambiguous situation.

Damages (Personal Injury) Order 2017

Debate between Baroness Kramer and Lord Faulks

Tuesday 18th July 2017 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I congratulate the noble Lord, Lord Hodgson, and thank him for bringing forward his regret Motion on this order. So much of the detail has been described to the House that I am not going to repeat it, but there can be almost no one who looks at a discount rate of minus 0.75%, even for a risk-free investment, who does not come to the conclusion that the number is simply preposterous. For the Government to implement a result that is preposterous seems to me entirely inappropriate, not just for this Government but for any.

For many years I was a banker. There were times when it was necessary to price instruments, and I would turn to one of the junior bankers who worked with me and ask them to go away, go through the analysis and come forward with a conclusion. You would find one or two who were wedded to a particular formula that had been brought to their attention at some point during their training, and were absolutely certain that by applying the formula they would come to an appropriate result, even though when one looked at the result it was completely inappropriate for the situation and the purpose. That is what we have here: an allegiance to a formula—which was probably the wrong formula from the day that it was brought in but is certainly an inappropriate formula today—that the Government are insisting on applying simply because it is the existing formula. Frankly, I can think of no worse way in which to manage any aspect of finance in this economy.

The Government may take the view that the impact of making a preposterous and inappropriate decision does not matter very much. I think that it does, as I think does most of this House. Of course it is crucial that anyone who has been severely injured and is awarded damages over a long period should not be undercompensated, but there is no rationale either for overcompensation. If I understand correctly, this does not change the award; it is with the translation of the award into a lump sum that the discount rate comes into play.

The impact on insurance premiums matters. I admit that I am less concerned about the profits of insurance companies than about the impact of rising insurance premiums on many of the people who have to take out insurance. The noble Lord, Lord Hodgson, referred to young people who are now having to pay significantly more for motor insurance. It has been proposed that the price could be as much as an additional £1,000 a year, a very significant sum. We have already seen a significant rise in insurance premiums, partly due to changes in the Government’s tax regime. I point out to the noble Lord that if you are a young person living in a rural community you may have no choice but to drive if you want to have a job and go to school, as we have cut back on rural bus services, so there is an ongoing impact that is quite significant.

There is also very little discussion of the impact on various different departments. I think that the MoD suffers badly from this change in the discount rate, although I have no idea what the figure is. Presumably the National Health Service is impacted significantly as well. All that rolls back on the taxpayer, so there are real implications of getting the discount rate wrong.

I do not understand why the Government persist in applying a formula that they know is entirely inappropriate and comes up with a preposterous result, particularly when they have almost completed a consultation, with a review to follow which, we hope, will mean that they go back to the drawing board in a matter of weeks to try to right this set of wrongs.

I would become very angry with a junior banker who blindly applied a completely inappropriate formula. When it is a Government blindly applying a completely inappropriate formula, it begins to be unforgivable.

[Lord Faulks (Con)]

My Lords, I congratulate my noble friend Lord Hodgson on bringing these matters to the attention of the House. I ought to preface my few comments by declaring an interest: I am a practising barrister and much of my practice is concerned with the application of the discount rate in calculating damages. Some of my clients will benefit from this and others will not, but I hope to be able to stand back to make a few general comments about the appropriateness —or, I fear, the lack of it—of the proposed changes.

As several noble Lords have pointed out, this came about in rather unusual circumstances. The noble Baroness, Lady Kramer, is quite right: it is adherence to a formula which is inappropriate. There may be some internal mathematical integrity about the exercise, but it bears little relation to the proper approach to the assessment of damages. We approach them on the basis that there should be full compensation, and nothing that I say should derogate from that—we think that claimants ought to be properly compensated—but how do we assess what the compensation should be?

It has always been said that by giving a claimant a lump sum, the one thing you are certain about is that the damages will be inappropriate. Either the sum will be too much, because the claimant dies earlier than expected, or it will not be enough. Either way, that is undesirable. That is one reason why judges often said that it would be much better for there to be periodical payments. From about 1996, periodical payments became part of the picture. With great respect, I rather disagree with the noble Lord, Lord Beecham, who seemed rather to distance himself from the advantages of periodical payments. Perhaps he did not—he was referring to the Law Society’s dislike of the overreliance on periodical payments.

If we are to approach the assessment of compensation on the basis that claimants should not be taking too much by way of risk, surely periodical payments offer a significant advantage. For example, the largest head of damage is often the future cost of care for a badly damaged claimant. Most claimants nowadays will seek periodical payments. Sometimes the cost may be £100,000 or even £200,000 for a long life, and life expectation has been increasing, particularly for brain-damaged babies and others severely affected. Periodical payments provide security, but if claimants are now to say, “No, I would prefer to have a lump sum”, they are, as it were, saying, “I do not want the security provided by periodical payments”. What then is the sense of awarding damages on the basis that they are an entirely risk-free investor? That simply does not make any sense.

The noble Lord, Lord Beecham, referred to the often somewhat unedifying disputes that exist between claimants’ lawyers on the one hand and insurers on the other. I distance myself from that and concentrate on the position of the NHS. The noble Baroness, Lady Kramer, referred to the MoD. The NHS will feel the effects of this measure very considerably. Speaking to a colleague of mine, a schedule of damages was priced before the discount rate operation at £9 million. It is now £23.5 million. Very often a standard brain-damaged baby case might have been on a lump sum calculation £10 million; it is now going to be £30 million. That is partly because life expectation of those claimants has vastly increased, but it is a result of the discount rate alteration.