Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024

Lord Jones Excerpts

Monday 13th January 2025 Grand Committee

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, these regulations were laid before the House on 22 May 2024. I shall speak also to the Unique Identifiers (Application of Company Law) Regulations 2024, which were laid before the House on 31 October 2024. These regulations form part of a programme to implement the Economic Crime and Corporate Transparency Act 2023, which I will refer to as the 2023 Act. The 2023 Act is a landmark piece of legislation which delivers the most significant reforms to Companies House in more than 180 years to protect the public from fraud and deliver real benefits to the business community.

There has already been much progress since the 2023 Act was passed, including the introduction of stricter rules and checks to help Companies House cleanse the register. The two sets of regulations we are debating today will help to implement perhaps the most important change to the UK’s company registration framework in the 2023 Act: requiring identity verification for those setting up, running and controlling companies. Through amendments to the Companies Act 2006, the 2023 Act establishes two ways in which an individual can verify their identity, either directly with Companies House or via an authorised corporate service provider—ACSP. These providers must be supervised for anti-money laundering purposes and be registered with Companies House.

I will set out specifically what the two instruments will do. The Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024 set up the legal framework that underpins identity verification. The identity-verification procedure involves an individual delivering specific information to the registrar or to an ACSP. This must include their name and date of birth and any other further information specified in the registrar’s rules, which are a form of tertiary legislation. Given the technical and increasingly evolving mechanisms for identity verification, it would be inappropriate to list in these regulations every single identity document that must be provided to the registrar or ACSP or every single step an individual must take. Instead, the registrar is enabled to specify the requirements in a more suitable format and to adapt or tweak the detail quickly where necessary. Companies House has published a draft version of the registrar’s rules, which have been shared with Members today. I hope they provide a useful example of what evidence and steps might be required from applicants. When the registrar or ACSP receives all the correct information from an applicant, they will grant the identify verification application if they are satisfied that the information provided is true.

That is the broad legal process for identity verification. In practice, Companies House will use the GOV.UK One Login platform to deliver the identity-verification service. One Login is a cross-departmental verification platform, enabling users to have a single login and verified identity for multiple government services. An individual will create an account and can verify their identity using a range of evidence, such as a passport or driving licence, or through knowledge-based verification questions based on their credit record or banking information. The process also includes checks to make sure that the individual matches the picture on their photo ID. For most people completing the purely digital route, the process will take a matter of minutes. Individuals can also complete the process in person at a post office.

If an individual decides to verify via an ACSP, the ACSP must follow the legal procedure established in these regulations and in the registrar’s rules. Companies House will issue guidance to ACSPs to explain how the procedure should be applied in practice and what checks they must perform on the information received. This will ensure that both routes achieve the same level of assurance in identity verification. Once an ACSP verifies an applicant’s identity, they will deliver a verification statement to Companies House to confirm that they have followed the correct procedure. The verification statement will be published alongside the applicant’s appointments on the register to maximise transparency. Alongside the verification statement, ACSPs must give the registrar information about the evidence they relied on to verify an individual’s identity. This means that Companies House will not lose access to crucial identity data if someone uses an ACSP, and will provide them with assurance that identity checks have been completed correctly.

The regulations add other checks and balances to the ACSP regime. ACSPs will be required to maintain records relating to identity verification for seven years from the date when they determined the identity-verification request. The registrar can suspend and deauthorise an ACSP if they consider that they are not fit and proper to carry out the functions of an ACSP. The registrar can perform spot checks on ACSPs and ask them to provide information about their identity-verification obligations. All those provisions combined ensure that Companies House has the tools at its disposal to ensure that the ACSP regime is as effective and robust as possible.

The second set of regulations, the Unique Identifiers (Application of Company Law) Regulations 2024, are technical and apply provisions on unique identifiers contained in the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024 to other entities. A key mechanism underpinning the operation of identity verification is the use of unique identifiers, or personal codes, that are used to identify individuals who have had their identity verified, as well as registered ACSPs. The first set of regulations will enable the allocation of unique identifiers to individuals associated with companies. These regulations give the registrar powers to allocate unique identifiers to ACSPs and individuals associated with other entities—namely, limited partnerships, limited liability partnerships, companies authorised to register, unregistered companies and Scottish qualifying partnerships. Identity-verification requirements will eventually apply to other entities registered at Companies House, so it is necessary that we make these regulations to ensure that the requirements can operate in practice.

I want to provide an update on the timings of identity verification. Companies House published its outline transition plan in October 2024, which confirmed that it aims to start requiring identity verification from autumn 2025. In a few weeks, ACSPs will be able to register, and individuals will be able to voluntarily verify their identity with Companies House, giving people lots of time to complete the process before legal requirements start. I beg to move.

[Lord Jones (Lab)]

My Lords, I rise on the principle that the Executive should be accountable. I shall be brief. I thank the Minister for shedding some light on these dense and complicated regulations. They are obviously of help to the department, to Ministers and to business, but I dare say the Chancellor of the Exchequer was not reading them on her recent outward journey to the People’s Republic of China.

I found the factsheet helpful, and I acknowledge the strong statements therein. It states that the requirements will

“make it challenging for individuals to create a fictitious identity, or fraudulently use another person’s identity, to set up or run a company”,

and talks about being

“registered with a UK supervisory body for anti-money-laundering purposes”.

As the Minister implied, economic crime is debilitating to the nation and, without a doubt, we have problems with it in Britain.

Who is the registrar and when was she or he appointed, for what term and at what salary? Is Companies House running smoothly, so as to cope with requests and approaches from directors and people with significant control? Are there bottlenecks or significant hold-ups, perhaps even labour disputes? Are there impediments to those who file? How many money laundering cases did the registrar take to court in 2023 and 2024? These questions are designed to be helpful. If they are not answered immediately, perhaps there might be a letter.

[Lord Fox (LD)]

My Lords, I thank the Minister for his explanation. For those of us who worked on the economic crime Bills, this is a welcome development. I am interested in the timeline, because it seems some time ago that we debated the Bill, which I believe has become an Act, and we find ourselves looking to the autumn of 2025 before some of these vital identity-verification processes will reach the statute book. I certainly do not blame the Minister, because he is new to this, but what is behind the delay and how many more statutory instruments are we due? I think there are still quite a few on the stocks. When can we expect them and what functions will they unlock? When we debated the original Bill, I think we all felt this to be a real and present issue that needed immediate, or near-immediate, attention. Clearly, things are dragging on and I wonder what is causing that.

Further to the noble Lord’s comments about the functioning of Companies House, we were absolutely clear that this would be a culture change for Companies House, which will cease to be a filing cabinet and start having to investigate and verify what is coming across its desk. The previous Minister was confident that funding was in place and that the process to create that new culture was under way. We would benefit from the new set of eyes from the Minister, if not now then perhaps in a separate meeting where we can review the functioning, including the future functioning, of Companies House—a follow-on from the meetings that were so helpful during the formulation of the Bill.