Financial Guidance and Claims Bill [HL]

Debate between Lord Deben and Lord Flight

Report: 2nd sitting (Hansard): House of Lords
Tuesday 31st October 2017 Lords Chamber

[Lord Flight (Con)]

My Lords, I rise briefly to support the amendments in the name of my noble friend Lord Hunt. We all know what they address and we may have experienced these abuses. The existing law and regulations fail to address them, and it is time that they did so. As has just been pointed out by the noble Earl, this is an appropriate piece of legislation in which to include them. I hope very much that the Government will accept the amendments.

[Lord Deben]

My Lords, in the 19th century there were great battles over trying to insist that people properly labelled their products so that the public could make informed choices. I am afraid that our predecessors would put forward arguments that this was interference in one way or another, the time was not ripe and there was no suitable Bill. A series of reasons of that kind were given. When today we talk about physical things like tins of milk or packets of biscuits, we think it perfectly right that there is a framework of regulation which ensures that people are neither misled nor charged for things that are not what they claim to be. The difficulty is that, the moment we move into anything to do with financial matters, we find it hard to apply the same lessons we learnt to apply in the 19th century.

The reason why I beg my noble friend to take these points seriously is that the people now involved form a much larger group than had once been the case. In the past, this was the kind of issue which might have affected only people of substance, but the amendments brought forward by my noble friend would have a real effect on all those for whom this is a serious matter. I do not mean just those who are misled, but all the others who have to pay insurance premiums that have gone up because of those who were misled.

My noble friend knows how disappointed I was that she did not accept what I think was a reasonable amendment to insist that the cold calling which goes on in many of these areas should be made illegal. I know that she is hoping to find a way in which we might come back to the issue, and I hope she will, because the real truth is that these are popular measures. That is why I find it so difficult to understand why there is any pushback at all. It may be that the amendments are not quite right. Perhaps my noble friend Lord Hunt, brilliant though he is and being a lawyer of outstanding ability, has not quite got them right. However, the tenor or burden of the amendments is clearly right. It is important to put in place the Meccano which, although it may be a little out of date—my grandchildren are great putters-together of things, but they have moved on from Meccano—is an image that those of us of a certain age can recognise very clearly.

We should have in this Bill the ability to deal with these infringements of people’s decent rights, and above all, to deal with things that make people lie. The most unhappy aspect of the failure of this Bill to make these protections much more widespread is that they would guard against activities which, in the end, lead people to lie. We have accepted that on whiplash, but we know that the activities will move on. My noble friend has rightly said that we need to put in place something that can be used to stop yet another move by these unscrupulous people. This House has a duty to stop them because of the people who suffer. They are not only those who are led astray; they are the entire public who see prices increasing. There are going to be a lot of price increases because of the Government’s action on Brexit, so let us at least do something about the things that we can actually affect.

Financial Services Bill

Debate between Lord Deben and Lord Flight

Monday 15th October 2012 Lords Chamber

[Lord Flight]

My Lords, Amendments 183A and 187A seek to restore the existing 28-day period for representations for principal parties and third parties. I hope that the Government will not have a problem with accepting that as a small step towards ensuring that justice is done. Amendments 185A and 186 are rather more fundamental as they seek to limit the very wide powers that the Bill presently gives with regard to the publication of warning notices.

I am not sure why it has not been included in this group of amendments but subsequently we shall come to Amendment 187AA in the name of the noble Baroness, Lady Hayter, which potentially has the whole solution to the issue that I raise by providing for an independent judicial body and process for each regulator. At present, the amendment in the Bill to Section 391 will enable the PRA and FCA to publish details of their allegations immediately they are issued to individuals or firms, which seems to me to be unfair for two fundamental reasons. First, the allegations could be mistaken in fact and, if not mistaken, they could be one-sided. I think it is unfair for a regulator to publish such allegations when the individual or firm has no equally authoritative platform from which to respond. Secondly, there is the position of a senior manager; a business could become completely untenable where such a notice is issued.

Under FiSMA at present, the FSA is not able to publish its allegations against a firm or individual until they have had an opportunity to challenge them by meeting the FSA’s enforcement division. Effectively, that means appearing before the Regulatory Decisions Committee, which acts as a relatively independent judicial body. It seems wrong in principle for an individual or organisation to be publicly labelled guilty before there has been some form of independent judicial process to assess the matter. Stakeholders can also be unfairly affected. I cite the fall of 25% in Standard Chartered’s share price when something similar happened in the USA and the New York regulator gave advance notice of publicly alleged wrongdoings by Standard Chartered. It is not just the individuals or organisations that are affected but the pension funds and others who are shareholders.

The Treasury’s justification that:

“The new warning notices power is a good idea because it will increase transparency. This will mean that consumers will know at an earlier stage where things are going wrong with a firm or individual and the FCA is taking action”,

seems to me to ignore or to override the principles of natural justice and the wider interests of other stakeholders. It was particularly ironic that both the Chancellor of the Exchequer and the Governor of the Bank of England should have complained about the Standard Chartered case when the FSB contains very similar provisions which will enable the same sort of thing to happen in the UK. I grant that the positions are not absolutely analogous but they are pretty similar.

The protections in the Bill are also unlikely to be effective. While the regulator is obliged to consult with the person or organisation to whom a warning notice is given and not to publish such notices if they are deemed to be unfair or prejudicial to the interests of consumers or detrimental to the stability of the UK’s financial system, the Bill is not clear as to what are the requirements to consult and it is implicit that in the event of disagreement between the regulator and the recipient as to publication, the regulator will have the power to go ahead and publish. It would be analogous to introduce a power to publicise the stage in the process which otherwise remains private until after the regulatory decisions committee has decided whether or not to issue a decision notice. Also, unlike the USA regulators in the UK have statutory immunity and cannot be sued if they have wrongly caused a damaging impact on a business as a result of their actions.

The position of the regulatory decisions committee is crucial. It is not a creature of statute but rather the system which the FSA has evolved and adopted. There is no obligation under the Bill for the FSA or PRA to adopt the regulatory decisions committee model. The Government’s proposed amendment erodes the independence of the decision-making body. While the actual decision to publish must be taken by at least one person not directly involved in establishing the evidence on which a decision is based, other decision-makers can participate who have been directly involved in the underlying investigation. I fear that is not very far from the investigators taking the decision where the Government’s proposed amendments to the existing law appear to allow the existing safeguards to be substantially bypassed. This in turn throws up the risk that a decision made by a body which includes individuals who have been involved in gathering the evidence on which it is based could be challenged by an affected party as being contrary to the principles of natural justice that no man may be a judge in his own case. Parallels have also been made with bringing charges in criminal proceedings which are public, but the code for crown prosecutors imposes a far higher standard of proof that there is sufficient evidence to provide a realistic prospect of conviction than the much lower standard of proof for a regulator issuing a warning notice.

It seems that in focusing on the value of transparency, the Treasury has ignored the equally important issues both of natural justice and of third-party stakeholder interests in business. I hope the Standard Chartered case will serve to highlight the dangers of this approach and to change the Treasury’s mind here.

[Lord Deben]

My Lords, I declare an interest as a board member of a company which might be affected by this and also as chairman of the Association of Independent Financial Advisers. It means I know a bit about what is happening here and it concerns me very considerably. The proposal is that the public will know more but I do not think that they will. It has been shown that the public will assume that if no reference has been made, then everything must be all right. Recent examples have shown that the regulator has failed to know what is going on inside organisations. If a regulator says that there may be something wrong, the public will know that there may be, but the public will assume that if the regulator does not say that, everything is all right. So I am not at all sure that there is an extension of transparency.

There is a big problem for the Government. This Bill was introduced at the same time as the Civil Aviation Bill. I listened carefully to everything that the Minister said on the Civil Aviation Bill. Very simply, he said that they were introducing all kinds of ways in which people who were affected by the regulators would be able to appeal. They would be able to make sure that they were heard, and certainly they would not be criticised before evidence had been laid. All the arguments that my noble friend made were stated in defence of the changes in the Civil Aviation Bill—yet at precisely the same time we produce this Bill, which removes all the things that we put into the Civil Aviation Bill. The Government cannot have it both ways. Either it is right for the Civil Aviation Bill and for this Bill, or it is not right for either. This is why the House of Commons has asked us to be so careful about this. It is very concerned.

There is also a question of parallels in criminal proceedings. This is a very odd argument. The reason that the police announce publicly that they are proceeding to prosecution or considering prosecution is to protect the person who is being prosecuted, so that they do not suddenly disappear. It is done as a protection of the individual against whom an allegation is made. In many other systems it has been shown that if you do not do that, people get themselves into circumstances that no one else knows about. The police in this country have to be transparent not for the general public but for the individual concerned. The situation is wholly different for financial institutions with which we are dealing. If it is said in advance that the regulator is considering action, in the world in which we live people will make immediate assumptions; the pinks will be out immediately with all the comments that one would expect. Is this fair? I think not.

Certainly there are too many examples of regulators getting it wrong—as well as too many examples the other way round when they did not intervene and got it wrong. It is much better to have a system in which the regulator goes as far as he can to establish the truth before he makes public an allegation, particularly in a country where the regulator is protected by law. If we were in a country where the regulator could be sued, that would be different—but we are not. We have a system—I agree with it—in which the regulator is able to make such allegations without any fear. I do not think that that is acceptable. It is not acceptable in terms of natural law. Therefore, it is crucial that this House defends and protects people.

This argument comes from someone who has been more critical than most of the financial services industry, and who has been critical of regulators for not intervening rather than for intervening. Therefore I am on the right side, in terms of the Government, but one should not win these battles by shortcuts—and this is a shortcut. It does not achieve anything because if it is right that an investigation should take place and that somebody should be put on notice that they are to be investigated, that is done just as well in private hands as in public—and if the charge is true it will become public. If it turns out to be something that it is necessary for the world to know, it will be known. The idea that it should be known before one knows whether it is necessary or not is not an acceptable position.

Although I have declared an interest in this, my real interest is that I have fought in this House—as I did in the other House—for the rule of law. Part of the rule of law is that nobody shall be judged guilty until they are proved guilty. The problem with this change is that it is unparalleled and not applied in any other industry, and it ends up with people being assumed to be guilty until they can prove their innocence. The length of time that the regulator takes to work means that many people will never be able to prove their innocence because they will already have gone bust. We have not recognised how serious this measure would be for companies. It is not a fair way of proceeding and it is not justified. Frankly, the regulator has not given a single example of when having this power would have improved regulation. I asked but no answer came—all I got was a statement that it will be useful. That is not a satisfactory answer for the removal of a human right.

I very much hope that the Minister will understand there is very considerable unhappiness about this; it is unnecessary and it is to act here in a way that I have not seen in any—any—legislation brought before this House since this Government took office. I would therefore like to know why what is sauce for the goose is not sauce for this particular gander. Could we please have an absolute example—even one—of a case in recent years in which this power would have helped the cause of justice? If we cannot, it seems to me likely that the cause of justice will not be helped at all.

European Union Bill

Debate between Lord Deben and Lord Flight

Wednesday 13th July 2011 Lords Chamber

[Lord Deben]

My Lords, my problem with this amendment is that it seems to me to meet precisely what the Government want. The Government have been arguing that this clause would apply only to matters of constitutional value and that those who have worried about various aspects of it are worrying unnecessarily. We now have an amendment which specifically says that the Minister must say publicly that the referendum concerns a matter of constitutional or economic importance. That seems to me not an unreasonable thing to do when it is precisely what the Government say this clause is meant to do. Although I do not believe in referenda in any circumstances, I am not approaching this from that point of view. Frankly, I am trying to help the Government because it seems to me that they have not convinced all of us that their explanation of this clause is precisely right.

My noble friend Lord Blackwell is entirely wrong: this is not a wrecking amendment—unless the Government’s proposal is a wrecking amendment—in fact, it enhances what the Government have asked for. Your Lordships should say to yourselves, “Whether we are Eurosceptics or enthusiasts for Europe”—as I am—“whatever our view may be, it is not unreasonable to say that referenda should be held on matters of considerable importance, not ones which are not of considerable importance”. It is not unreasonable to put that in the Bill.

As regards the way in which we have approached this, I believe that there are real issues for our stance in the European Union. Those who are Eurosceptic ought to be just as concerned as those of us who are of a different opinion, because unless we are able to argue about minor matters with the freedom which a representative Government have, we will do ourselves down on many of the issues that have been raised. If this amendment merely allows for that freedom, it is important and valuable and certainly does not in any way wreck the proposal.

There is truth in the argument that says that we should watch any constitutional change of this magnitude with great care. I say to the noble Baroness behind me who spoke on the Liberal Democrat position that the more she read what the Constitution Committee of this House said, the more she made the case for the amendment, because the Constitution Committee said that if you are going to have referenda, you should make sure that they are on serious matters. Sometimes it is difficult to decide what are serious matters. We have produced an amendment which says to the Minister, “You have to make up your mind, you have to agree to it and you have to say that publicly”. After all, most of our Bills have a statement on the front that the relevant Minister knows that it accords with human rights. It is not unreasonable to ask Ministers to make that choice. I think that is what the Government want. Why, therefore, have they not accepted this amendment, or something like it?

I end with a plea to my noble friend. He knows that many of us are not entirely happy with the logic of saying that we have to have all this in order to reconnect with the public. Could he not move towards us just a little and be prepared to put in the Bill what he has told us is actually there? That would make us feel that the Government had listened to us and that there was a two-way discussion on this. If he does not do that, I am afraid that I cannot even begin to reach out to the concept that this Bill enhances our relationships and I shall begin to recede into a position of wondering whether it is not intended to make people like my noble friend happier. I am not sure that that is what we should be debating.

[Lord Flight]

My Lords, does the Minister agree that certain noble Lords are perhaps a bit out of touch with British public opinion? It is clear that the British public are against Governments surrendering any further sovereignty to the EU without the consent of the people. That was very much reflected in the attitude taken to the previous Government’s signing up to Lisbon, having promised a referendum and then having ratted on it. The whole point of the Bill, clumsy though it may be, is to provide a deterrent to stop Governments of any political hue giving away yet more sovereignty, and the British people not having a say in that. The noble Lord, Lord Hannay, gave the game away. He was arguing that he wanted a situation where Governments could fudge it and give away a bit more sovereignty and was very unhappy that they might be deterred from doing that through fear of losing a referendum. The whole point of the Bill is to provide an effective deterrent to Governments giving away sovereignty. This amendment would weaken that principle.

Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Bill

Debate between Lord Deben and Lord Flight

Wednesday 15th June 2011 Lords Chamber

[Lord Flight]

I should probably defer to the noble Lord, but I do not think that was a full answer to my mind to the points raised by the noble Lord, Lord Waddington, or to the whole issue of judges subsequently choosing to interpret the position with regard to the martyrs’ case. It seems perfectly possible in theory that there may be a House of Lords judgment which is perfectly valid and accepted at the time it is given, but subsequently manages to get twisted by the interpretation of particular judgments by noble Lords. I come back to the rather straightforward point, which is that from the point of view of those who wish to have this territory absolutely nailed, what is wrong with a belt and braces approach?

[Lord Deben]

I would not like it to be thought by your Lordships that those who were not lawyers disagreed with the lawyers. As a non-lawyer, it seems to me to be very clear that there is a good reason why we should not have the additional parts: it is misleading to have them. It suggests that the additional parts have the same validity and strength as the central issue of the 1972 Act. I would account it as the proudest moment of my parliamentary history when I voted for that Act—it was the moment when we achieved the thing that in all my young life I longed to achieve, which was the beginning of closer European unity, for which I have always stood. I do not want that Act to be removed from its pedestal place. It is the Act that says, very clearly, that the United Kingdom is a sovereign state, and from its sovereignty it grants this particular place for European legislation. Should at some future time a Government, in foolishness almost unimaginable, decide that they did not wish to continue with that Act this sovereign Parliament could, by repealing that Act, change the circumstances—and change them of its own strength, volition and powers.

This is a declaratory statement. I agree with the noble Lord, Lord Richard, that it is not necessary but given that it has been raised, it becomes necessary. Now that it is necessary it is crucial that it should be extremely clear. The noble and learned Lord, Lord Mackay of Clashfern, has given a great opportunity to this House to unite around something which should not divide those on either side of the European divide, or indeed those in the general mishmash in the middle. The worry which I have—this is why I have become less happy in the mean time—is the question which the noble Lord, Lord Kerr, raised earlier: if the Government do not accept this as a reasonable matter, what is it that is hidden in that alternative? For this must be right and if it is not, the rest is wrong.

I shall say one thing to the noble Lord, Lord Waddington. If his worry is a real one, he is worried by either of the statements before us. If his worry is a real one and the noble Lord, Lord Pannick, got it wrong, the fact is that he would be wrong about the Government’s formulation as well. Although I therefore have sympathy with the noble Lord, Lord Waddington, he cannot defeat his problem by preferring the one against the other. To defeat his problem, he would have to initiate some extra bit to the Act to make it clear. I do not believe that is necessary but his intervention, although admirable, is really not about the division between these two formulations, so I pray that your Lordships’ House will support the amendment.

However, I would like it even more if the Government were to say that they thought, on balance, it would be better to go with what is clearly a widely held feeling in all parts of the House and with those who are in favour and those who are against our membership of the European Union.

European Union Bill

Debate between Lord Deben and Lord Flight

Wednesday 8th June 2011 Lords Chamber

[Lord Flight]

My Lords, I voted on two occasions for the Rooker amendment on AV. It is tempting to join the noble Lord, Lord Lamont, in taking the position that there may be a similar argument for supporting here an amendment that requires a 40 per cent turnout. However, the position is not at all analogous. In this situation, the aim is to protect the people of this country from having the powers of their Parliament and Government further diluted and given away, as has sadly happened in the recent past, with Parliaments breaking their word to citizens and acting in a way contrary to that which they promised—I refer, for example, to the recent Lisbon treaty.

It is very clear that the Bill is there as a protection for the British people, and it would be made meaningless if we said to them, “We are going to give you this lock and protection, but if less than 40 per cent of people vote, we will give power back to the Government of the day who command a majority in the House of Commons”. It is not an analogous situation to changing the voting system, where there were powerful arguments requiring an adequate turnout. It is not a situation that Burke would have supported in the slightest; he would have been absolutely against giving away the powers of the British Government and Parliament to another organisation. Either we give citizens a meaningful lock or we do not. Therefore, I feel no discomfort in opposing these amendments, having supported the Rooker amendment on AV; it is the whole point of the Bill.

[Lord Deben]

My Lords, I find myself in disagreement with both my noble friend Lord Lamont and the noble Lord behind him. I am opposed to referenda in any case and do not think that we should judge referenda, even if we are in favour of them, by the particular amendment that is before us. We should judge referenda as referenda. Therefore, to vote for a 40 per cent division between compulsory and advisory on one subject and not to vote for it on another seems not to hang together. The issue is not about the European Union. Everyone knows where I stand on that. It is about an issue which comes from before that. Long before there were these debates on the European Union, there were debates about referenda. I enjoyed debating them and I have not changed my view on them.

The parliamentary democracy which we have is the greatest gift which we have been able to give to the world as a whole. Irrespective of the comments of my noble friend Lord Risby, parliamentary democracy and referenda do not go together, as a matter of fact. The one comes from a different tradition and I am not going to be one of those who besmirches the tradition by referring to the use of referenda by such people as Louis-Napoleon. That would be wrong. But referenda do come from that tradition and not from our parliamentary tradition.

Therefore, I was much enlightened by the reminder which the noble Lord, Lord Kerr, gave us of the great conservative thinker, Edmund Burke. He said that the embarrassing fact of being a parliamentarian is that you do have, in the end, to make up your own mind, even though the popular press, the women’s advisory committee of your association, the local doctors’ alliance and a whole range of other people tell you that you have got it wrong. I remind noble Lords of what happens if you take that away. It means that nobody with a strong view on abortion, for example, would be able to uphold his or her view in those circumstances. If he or she were to follow the views of the electorate, he or she would not be able to uphold what he or she thought was a moral position. The same would be true about capital punishment. No one would have voted against capital punishment if they had listened to the average elector over the past 30 or 40 years.

Let us not be too easily lulled into that simple concept of the referendum now being part of our democratic heritage. Referenda have always been used—I say this as a committed Conservative—in a way which has tended to favour those who take a very conservative attitude. My noble friend takes a very conservative attitude, so I am happy to give way to him.