Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024
Debate between Lord Leong and Lord Jones(1 week, 2 days ago)
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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.
Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) (Extension to Switzerland etc.) Regulations 2024
Debate between Lord Leong and Lord Jones
Baroness Garden of Frognal (LD)
My Lords, in the absence of anybody else, I thank the Minister very much for setting out so clearly these regulations. Over the years, I have been involved in all manner of discussions about recognition of vocational and professional qualifications. I have never come across a regulation as clearly good as this one. It seems to be totally uncontroversial. It is broad, is it not? It covers Lords, pilots, osteoporosis people and all sorts of interesting professions. My briefing said that no speech was required but I cannot resist saying that we on these Benches fully support this measure.
Lord Jones (Lab)
My Lords, I thank the Minister for his informative remarks, made in the most clear and precise tones imaginable. I acknowledge also my appreciation of the manner in which these regulations have been drawn up and the helpfulness of the Explanatory Memorandum.
With regard to the Explanatory Memorandum, at paragraph 4.2 there is reference to aptitude tests. Do the Minister’s officials have any idea how many such aptitude tests are taken annually, and what has been the situation on those tests in Wales? Is there a record in the department?
Do these regulations particularly apply to medicine? It is clearly of importance when the NHS and private medicine are considered. What are the major professions that come under these regulations, not simply medicine?
I should like to ask about Wales specifically. At paragraph 4.5, I am looking at the “territorial scope” and it is clear that Wales is separate. Is that the case for other nations? How many regulations are undertaken by the Welsh Government? Is there assistance to Wales in the making of regulations of this kind and if there is, what is the nature of that assistance? Is it by officials only? Do Ministers meet face to face, from one Parliament to another? Is it otherwise down the line, or is it simply a set of regulations totally made in Wales by Welsh Senators and Welsh Ministers?
Lord Leong (Lab)
My Lords, I am grateful for the support from the noble Baroness, Lady Garden of Frognal, and for the contribution made by my noble friend Lord Jones. I will come to my noble friend’s questions. I will try to answer everything but if I do not cover all his questions, I will definitely write to him.
As regards the aptitude test, most of the regulators operate autonomously, so it is up to individual regulators to manage the various assessments. The aptitude test will be covered by the respective regulators themselves. Currently, these regulations cover over 200 profession but some of the royal-chartered professions, such as accountancy and engineering, are not covered by them. My noble friend Lord Jones asked how many people had taken the aptitude test in Wales and how they managed it. I am afraid I do not have the answer and will have to write to him.
As I have set out, the regulations implement the UK-Switzerland recognition of professional qualifications agreement. They require regulators to operate routes to recognition for comparable Swiss professional qualifications, in accordance with the agreement. They give powers to regulators to recognise comparable qualifications where necessary. The regulations provide certainty for professionals and UK service sectors, allowing them to continue to access smooth and transparent routes to recognition once the citizens’ rights agreement provisions expire at the end of this year. As Switzerland is also passing legislation requiring Swiss regulators to recognise UK qualifications, these benefits are reciprocal.
As I have emphasised, these regulations continue to uphold the principle of regulator autonomy as set out in the Professional Qualifications Act 2022. Departmental officials have also engaged extensively with regulators and the devolved Governments throughout the implementation of this agreement. I trust that noble Lords understand and recognise the need for these regulations and the benefits that they will bring to the UK’s services trade. Once again, I thank all noble Lords for their contributions, and commend these draft regulations to the Committee.