Information Sharing (Disclosure by the Registrar) Regulations 2024

Lord Sharkey Excerpts

Tuesday 17th December 2024 Grand Committee

[Lord Leong (Lab)]

My Lords, in speaking to the information-sharing regulations, I shall also speak to the Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations 2024. These regulations are part of a series of statutory instruments designed to implement the reforms introduced by the Economic Crime and Corporate Transparency Act 2023, which I will refer to as the 2023 Act.

This Government are committed to holding accountable those who exploit our open economy. For instance, in the past few weeks, we have outlined our new anti-corruption agenda and our goal to make the UK a hostile environment for all forms of corruption. Corporate transparency is vital in tackling such corruption and economic crime. The 2023 Act enhances corporate transparency in the UK by reforming Companies House, granting it greater powers to verify information, tackle economic crime and improve the reliability of the companies register. At the same time, the Act introduces reforms to Companies House processes and increases protections for individuals at risk of fraud and other harms.

Work to implement the changes at Companies House is well under way. Since March, stronger checks on company information have allowed the organisation to cleanse the register of false and suspicious information. In parallel, Companies House is undergoing a significant organisational transformation to support the delivery of these reforms. Although considerable progress has been made, there is still much to do. We are here today to consider the next set of regulations to the Companies House reform programme. I will start with the Information Sharing (Disclosure by the Registrar) Regulations 2024.

The 2023 Act enhanced the registrar’s ability to share non-public information with enforcement agencies and other public authorities to support their functions. Additionally, the 2023 Act empowered the Secretary of State to make regulations enabling the registrar to share information with designated persons for specified purposes. For example, there may be situations where it would be advantageous for the registrar to share information with certain officeholders tasked with managing insolvency proceedings. These officeholders are typically insolvency practitioners but could also include the official receiver or, in Scotland, the Accountant in Bankruptcy.

While the Companies Act 2006 permits the registrar to share information with agencies when carrying out a public function, the work of these officeholders generally pertains to private matters. These include identifying and recovering assets during insolvency proceedings. Therefore, the registrar currently lacks the power to share information with officeholders for such purposes.

These responsibilities often extend beyond asset sales to legal actions. They could involve applying to the court to reverse transactions made before the insolvency took place that disadvantaged creditors. Where a director has allowed a company to continue trading while insolvent, this could also involve seeking an order making that director liable for the additional losses incurred by creditors. The information-sharing regulations will enable the registrar to share crucial information with insolvency officeholders, enhancing insolvency processes and helping to maximise returns for creditors.

I turn to the Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations 2024. It is key that individuals running companies and other entities register their details so that they can be held accountable for the entity’s affairs. However, having one’s personal information publicly displayed can increase the risk of harm, such as fraud, identity theft or cases of domestic abuse.

Currently, an individual can already apply to protect their residential address from the public register in certain cases. Protection means that the address is not publicly visible. However, the law does not allow protection of a residential address that was previously used as a company’s registered office address. Companies House regularly receives requests for protection of these residential addresses from many individuals. These include those at risk of harm because of the public availability of their residential address as a registered office address—for example, those in witness protection, judges and parliamentarians. These regulations are the first of several reforms to enhance the protection of personal information. They will allow applications to protect a residential address where it was previously used as a company’s registered office address.

The regulations also make specific provisions for the scenario of dissolved companies. There are a number of reasons why a party would want to apply to court to restore a dissolved company to the register: for instance, to claim assets or pursue legal claims. To do this, the applicant requires the company’s former registered office address. To support this, these regulations ensure that an application to protect a residential address that was a dissolved company’s last registered office address can be made only from six months after the company’s dissolution. The registrar will also be able to disclose a protected residential address to certain persons who require the dissolved company’s registered office address to make a restoration application.

Lastly, the instrument amends legislation that applies company law to limited liability partnerships, following changes to company law made by the 2023 Act and this instrument.

In conclusion, these regulations strike the right balance between privacy and transparency. Individuals will benefit from greater protection of their personal information, while protected information will be available for law enforcement, public authorities and others with a legitimate reason to access it. Together, these instruments build on the 2023 Act, strengthening our commitment to support legitimate business and tackle economic crime. I hope the regulations will be supported, and I beg to move.

[Lord Sharkey (LD)]

My Lords, we will support both of these instruments, and I will be brief. The first instrument is a straightforward and necessary increase in the disclosure powers of Companies House and, as the Minister has made clear, the SI extends disclosure powers to cover non-public organisations and specifies to whom information may be disclosed and under what circumstances. All this seems clear and with obvious benefits, although I confess that I am not at all clear what a “judicial factor”, mentioned in Regulation 3(g), is or does. Perhaps the Minister could enlighten us.

We are generally happy with measures that improve the utility or performance of Companies House. Appropriately increased and targeted disclosure powers are definitely a good thing, but arguably more important is the ID-checking regime at Companies House. In that context, it was good to see Companies House quoted in last Wednesday’s Times, saying:

“We take fraud seriously and all allegations are fully investigated. We are preparing to introduce compulsory identity verification checks. This will provide greater assurance about who is setting up, running, owning, and controlling companies”.


That is welcome news, if a little overdue. Can the Minister say when Parliament will see these new and obviously vital proposals?

The second SI essentially, as the Minister said, deals with the disclosure of residential addresses on the public companies register. It proposes new circumstances in which these addresses may be protected from exposure via Companies House registration details. Here, I declare a kind of interest: I have, for the past nine years, benefited from a Companies House exemption, under the existing regime, from disclosure of my residential address. The circumstances surrounding my exemption were clear and compelling enough to qualify for non-disclosure, but they would not serve to protect from exposure any address currently or formerly used as a company’s registered office.

This instrument will allow an application to protect a residential address when it was previously the registered address for the company, and this will apply, mutatis mutandis, to LLPs. There are appropriate protections against using this new power to frustrate challenges to the dissolution of a company, as the Minister mentioned. This all seems very sensible, and the EM notes in paragraph 5.8:

“Companies House has for a long time been inundated with requests for this kind of protection, as the previous law prevented many people from protecting publicly available address information that put them at risk, for example in cases of domestic abuse”.


In paragraph 6.5, the EM says:

“Further regulations will be made in due course to introduce additional measures preventing the abuse of personal information on the companies register”.


I encourage the Minister to make rapid progress on these new proposals. Companies House needs all the help it can get.

[Lord Sharpe of Epsom (Con)]

My Lords, I apologise for missing the first SI. I meant no discourtesy; it was an administrative error entirely of my own making, and I particularly apologise to the noble Lord, Lord Leong. However, I would have welcomed the regulations because, as Conservatives, we believe in good governance, personal responsibility and safeguarding our economy from exploitation. We believe that the measure delivers exactly that.

On information-sharing and companies, we welcome the Information Sharing (Disclosure by the Registrar) Regulations 2024. This legislation is a clear and necessary step in strengthening the integrity, transparency and security of our systems. At its core, these regulations empower the registrar to share critical information with designated bodies. This will enhance co-operation between government departments, regulatory agencies and enforcement authorities, ensuring a more joined-up approach to tackling crime, fraud and misconduct.

For too long, bad actors have exploited the gaps in our information-sharing framework, hiding behind outdated systems and fragmented oversight. The result has been criminal networks, fraudulent companies and rogue entities syphoning off resources, undermining fair competition and eroding public trust. We owe it to law-abiding businesses and citizens to level the playing field and close these loopholes.

Furthermore, these regulations are proportionate and pragmatic. They strike the right balance between enabling necessary disclosures and protecting sensitive data. Conservatives have always championed individual freedom and privacy, and this legislation respects those values while enhancing national security and economic resilience. This is not just a technical reform; it is about ensuring confidence in our institutions, trust in the free market and the rule of law. By empowering the registrar, we are sending a clear message that the UK will not be a haven for those who flout our laws and/or exploit our systems.

I also welcome the draft Companies and Limited Liability Partnerships (Protection and Disclosure of Information and Consequential Amendments) Regulations. This legislation marks an important step in safeguarding our economic landscape, while enhancing the transparency and integrity of our corporate structures. These regulations are critical for addressing two fundamental challenges: the protection of sensitive information and the facilitation of responsible disclosure.

By ensuring that data held by companies and limited liability partnerships is appropriately safeguarded, we are protecting businesses, individuals and the integrity of the UK’s economic infrastructure. At the same time, targeted and necessary disclosures will empower regulators, enforcement bodies and government agencies to act decisively in identifying wrongdoing and preventing abuse.

Criminal Finances Act 2017 and Economic Crime and Corporate Transparency Act 2023 (Consequential Amendments) Regulations 2024

Lord Sharkey Excerpts

Monday 11th November 2024 Grand Committee

[The Minister of State, Home Office (Lord Hanson of Flint) (Lab)]

It is a pleasure to be here today, with the interest in the instrument before us, and I am pleased to see members of the Front Benches here with us this afternoon.

I shall give a little background to the regulations, if possible. The Economic Crime and Corporate Transparency Act 2023 contained a wide range of measures of reforms to reduce economic crime and increase transparency over corporate entities conducting business in the United Kingdom. That included a range of measures enabling targeted information-sharing, tackling money laundering and removing reporting burdens on businesses. Additionally, the Act introduced new intelligence-gathering powers for law enforcement and reform of outdated criminal corporate liability laws. It also introduced reforms to unexplained wealth orders, corporate liability laws and targeted information-sharing, which are already in force.

More recently, guidance for the new offence of failure to prevent fraud was published last week, and I was pleased to support that on 6 November. The offence itself comes into effect in September 2025, helping to support fraud prevention measures before this offence comes into force. The Act also introduced the new regime to tackle criminal and terrorist crypto assets; this is relevant to the debate today. The use of crypto assets in illegal activity is sadly increasing and, when introducing and reviewing legislation, we want to consider the emerging technologies and how they can be harnessed by criminals to commit crime or indeed hide their illegal gains.

The previous Government introduced a bespoke regime to the Proceeds of Crime Act 2002, which allowed effective seizure of both criminal and terrorist crypto assets. This regime was introduced in the Economic Crime and Corporate Transparency Act 2023 to make it easier to confiscate crypto assets from criminals and to forfeit crypto assets obtained from, or indeed to be used in, crime or terrorism. On 26 April, the crypto assets measure that this debate relates to came into force. The powers are operational in England and Wales and, as of the end of October, over 80 cases have exercised the new powers, including crypto asset seizures or confiscation cases involving crypto assets.

I want briefly to outline the purpose of this instrument, however. The regulations here will make a set of amendments that are consequential on the Criminal Finances Act 2017 and on the Economic Crime and Corporate Transparency Act 2023. The regulations make consequential amendments to the Proceeds of Crime Act 2002 and will ensure that the investigative powers of that Act include, for example, reference to crypto asset investigations in all the necessary sections for the powers to function properly and in accordance with their policy intention.

This draft instrument is required to complete that commencement of the Economic Crime and Corporate Transparency Act 2023, and will ensure that all the necessary legislation is now in place and there is legal certainty about how cases will be dealt with. I hope that noble Lords will see that this is an important aspect in the fight against crime, and particularly in the use of crypto assets. I commend the statutory instrument to the Committee.

[Lord Sharkey (LD)]

We support this statutory instrument but have a few observations and questions. It is clear that more needs to be done to combat fraud, now our most frequent crime. Fraud accounts for around 40% of all crimes in England and Wales, with an estimated 3.2 million offences per year, and was said by the previous Government in February to cost society about £6.8 billion a year. There are, in fact, much larger estimates. The Annual Fraud Indicator estimated that UK annual losses to fraud could be £219 billion in total, with £8.3 billion coming from individuals.

It is also clear that our current armoury needs extending. Both POCA and the Economic Crime and Corporate Transparency Act are either defective or inadequate, or both. It is not surprising that POCA 2002 requires updating—22 years is an aeon when it comes to the more exotic and newer means of being scammed. However, it is rather surprising that the Economic Crime and Corporate Transparency Act 2023, which received Royal Assent on 26 October last year, did not incorporate some of the variations introduced by this SI. The Act did, after all, deal with the seizure of assets, including crypto assets, in its Schedule 8. The Explanatory Memorandum, at paragraph 5.1, says that,

“a huge rise in the use of digital technologies in crypto assets has provided new methods to conduct crime and deposit gains from criminality”.

Paragraph 5.3 says that,

“consequential amendments are required … so that search and seizure are exercisable and effective for the purpose of crypto asset investigations”.

Could the Minister expand on all this? Where were the provisions of the ECCT Act inadequate? What events or information triggered the realisation that the amendment was needed? The fact that the amendments were needed raises the question of what else was wrong or missing from POCA or the ECCT Act. What reassurance can the Minister give us that all the defects in these Acts are remedied by this SI? Do further aspects of either Act need at least an attempt at future-proofing?

I would be grateful for an explanation from the Minister of some of the detailed provisions in the SI. The term “substantial value” is used as a qualifier four times in Regulation 2(4); it is obviously an important qualification. What is the test for

“is likely to be of substantial value”,

and is it the same test—or tests—in all four appearances of the phrase in this instrument? Who decides what the threshold is in each case?

I have a couple more questions about interpretation. Regulation 2(4)(b) inserts new subsection (7G)(a), which refers to

“any other question as to its derivation”.

Does “derivation” here mean provenance, or has it some alternative meaning? The same question applies to the use of “derivation” in Regulation 2(6). Is not the phrase “any other question” in itself extremely wide in scope? What questions, if any, are excluded by this phrasing?

I was pleased to see the attempt at an impact assessment incorporated in the EM. I wondered, however, what weight to give to the assessment of benefits. The range offered is very large, even if the lower bound quoted in the EM, of £107.60, is a misprint of £107.6 million. The difficulty in assessing the usefulness and reliability of these estimates is exacerbated by the qualifying sentences in paragraph 9.2 of the EM, which say:

“The data and assumptions surrounding cryptoassets are limited due to the technology being relatively new and rapidly changing. It is also sensitive, and many figures and police data are not suitable for the public domain”.


This seems rather opaque. Can the Minister say whether enforcement authorities are significantly disadvantaged when it comes to dealing with likely crypto asset issues? Can he be a little less mysterious about that final sentence in paragraph 9.2 of the EM—in particular, is it reasonable to rely on unspecified and apparently secret data whose reliability we cannot estimate or properly qualify? After saying all that, I should repeat that we support this SI.

[Lord Murray of Blidworth (Con)]

My Lords, I apologise to the Committee for not attending promptly. I am glad to say that I welcome these regulations and I very much hope that they will allow the police to act decisively against criminals who abuse our corporate frameworks, ensuring that Britain remains an inhospitable environment for illicit financial activity.

The regulations extend two previous pieces of legislation designed to cover crypto asset investigations. Under the regulations, search and seizure powers will be able to be exercised for the purposes of investigating crypto assets. This is an entirely necessary move, born of the fact that many criminals use new and innovative ways to avoid detection in their illegal activities.

The National Crime Agency’s national asset centre estimates that illicit crypto transactions linked to the United Kingdom are likely to have reached at least £1.2 billion in 2021 and are surely even higher now. Recent figures from the law firm RPC and Action Fraud show that losses from crypto asset fraud increased 41% last year. Can the Minister provide the latest figures on the cost to the UK economy of crypto asset fraud and the number of illicit transactions estimated to be taking place?

Financial Fraud: Vulnerable People

Lord Sharkey Excerpts

Thursday 2nd December 2021 Grand Committee

Asked by

[Lord Sharkey]

To ask Her Majesty’s Government what steps they are taking to protect vulnerable people from financial fraud.

[Lord Sharkey (LD)]

My Lords, there do not appear to be any definite figures for the amount and extent of fraud in the UK. There is, however, general agreement that it is very, very large, that it is growing rapidly in volume and sophistication and that it can ruin people’s lives. The CPS reckons that fraud is now the most commonly experienced crime in England and Wales, with 5 million offences in the first half of this year. That is a rise of 32% on the same period last year—and all these figures, alarmingly large as they are, may well understate the case. The National Crime Agency says that fewer than 20% of cases of fraud are reported, with many victims too embarrassed to make a report and perhaps, in the financial sector, too fearful of damaging their reputation.

The question we are dealing with this afternoon asks what the Government are doing to protect vulnerable consumers from financial fraud. The FCA defines “vulnerable” as

“some-one who, due to their personal circumstances is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.”

The FCA also lists some of those circumstances. They include physical and mental health problems, financial problems, life events and the lack of capability and/or confidence when dealing with finances. In truth, the list probably covers most people at some point in their life. But it is clear that the young, the elderly and the digitally innocent will be at significant risk. Not surprisingly, these groups are the frequent targets of fraudsters.

Also not surprisingly, fraud has moved heavily online: some 85% of all fraud in the first half of last year was cyber-enabled and 50% of adults were exposed to fraudulent ads each month. Many of these ads are carried by social media and many promote investment scams. They often operate by mimicking a genuine website such as HMRC’s or a bank’s. They also operate by placing ads on online platforms. Last week the Times reported that TSB data showed that seven in 10 victims of investment scams were targeted through Instagram alone.

Of all the investment scams reported to TSB to the end of August this year, scams based on Instagram accounted for 62%, on Snapchat 11%, on Google 10% and on Facebook 8%. That is a 70% score for Mark Zuckerberg and Meta. Since then, Google has all but eliminated scam adverts on its search engine. It did this simply by introducing rules that required all financial advertisers to prove that they were authorised by the FCA. TSB has had no reports of people falling victim to fraud through Google since the end of August. Instagram and Facebook have not followed suit. Can the Minister say what pressure is being brought to bear on Meta by the Government? Why should Meta be allowed to profit from scam ads and expose its members to a direct risk of fraud?

It is clear that the Government understand the seriousness and scale of the problem of financial fraud, and they have made some very significant interventions. Last month they established the Joint Fraud Taskforce, a private and public sector partnership, to focus on issues considered too difficult for a single organisation to manage alone. It is to be hoped that the new organisation will be able to plot a clear course through the jungle of agencies and regulators with interests and responsibilities in the area. It might even be able to take a leading role, so perhaps the Minister could tell us a little more about the objectives and working methods of the new task force, what targets it has and to whom it is accountable?

The Home Office has also published three new fraud charters, for the retail banking, telecoms and accountancy sectors. The Payment Systems Regulator has published a voluntary code for the reimbursement of victims of authorised push-payment fraud. Not all banks have signed up to the code. As a consequence, the Government now plan to legislate to make reimbursement mandatory. All this is welcome, as is the new inclusion of online fraud measures in the Draft Online Safety Bill.

However, there is still considerable work to be done. One of the reasons for the establishment of the Joint Fraud Taskforce was the existence of many agencies and regulators with at least some responsibility in this area. I counted at least six, and there may be more. That excludes the gatekeeper, Action Fraud, which is a reporting system—the people you contact to report a fraud and who then pass on the report to other agencies so that they may take action.

Action Fraud is critical to the success of the whole system. However, in July 2019, the Times published the findings of its undercover investigation of the unit, which found that the failings of Action Fraud had been well known for years. Right from its hotline going live in 2013, Ministers had to admit that 2,500 online reports were not processed correctly due to a fault in the IT system. In 2015, the firm operating the Action Fraud call centre in Manchester went bust, leaving fraud victims waiting even longer to get through. In 2019, an undercover Times reporter exposed call handlers mocking victims as “morons” and misleading them into thinking their reports were being taken seriously when most were never looked at again.

As a result of the Times investigation, Sir Craig Mackey, a retired police chief, reviewed the organisation. He found that both Action Fraud and the National Fraud Intelligence Bureau were

“significantly hampered by an operating system that is not fully functional and their resourcing levels have not kept pace with increased reporting”.

He also found that Action Fraud failed to answer a third of the calls made to it. A year later, it was announced that steps would be taken to revamp the failed Action Fraud hotline. Police chiefs were looking for a new company to run it. That was a year ago. Can the Minister say why it took so long to take remedial action? Has a new contract been awarded and, if so, to whom?

Action Fraud, or some properly working equivalent, is vital to the fight against fraud, but as recently as this June, Martin Lewis described Action Fraud as “pointless” and said the organisation lacked the necessary funding to tackle criminals. Is Martin Lewis wrong? What reassurance can the Minister give that we now have in place an organisation that is properly run, properly funded and fit for purpose?

Reporting fraud is critical, but so is prevention. In this area, much needs to be done to rein in the social media platforms. As Martin Lewis said recently in evidence to the Joint Committee on the Draft Online Safety Bill:

“Don’t let them off the hook. We need to make big tech responsible”.


We could make a start by making Meta follow Google. We should make it ban ads for financial services by advertisers that cannot prove that they are authorised by the FCA.

India: Scam Call Centres

Lord Sharkey Excerpts

Tuesday 21st April 2020 Lords Chamber

[Baroness Williams of Trafford]

I thank the noble Baroness for that question. She is right to raise this. Local government is at the heart of some of that local awareness-raising and enforcement action. We have given a grant of £500,000 and an additional £600,000 for National Trading Standards scams teams to provide call-blocking technology to vulnerable people.

[Lord Sharkey (LD)]

My Lords, yesterday the Times reported the cybersecurity company Avast as saying that scammers have been targeting healthcare providers worldwide since the pandemic struck. Its CEO said:

“We’ve seen an increased number of attacks against hospitals and the NHS is one of the top targets right now.”


These attacks use ransomware and shut down NHS systems unless a ransom is paid. The last large ransomware attack on the NHS was in 2016 and led to disruption in at least a third of trusts. In 2018, the NHS published a lessons-learned report that made 22 recommendations to protect against future attacks. How many of those recommendations have been implemented, and how safe from ransomware attacks is the NHS at the moment?

[Baroness Williams of Trafford]

I hope the noble Lord will forgive me when I say that I do not have specific information to hand on the NHS. It is pretty disgusting how this exploitation takes place very quickly on the back of a vulnerable event. Counterfraud guidance is being circulated alongside further advice and guidance from cybercrime technical work, which consists of more than 100 police officers across the country with a focus on helping businesses and individuals to protect themselves from these sorts of crimes. The public sector is a huge part of national business as we know it. I have certainly had a lot of information on Covid-19 exploitation, such as selling people protective equipment that is absolutely fraudulent and tests that are absolutely fake. It is an appalling practice, but it is happening and we are working across agencies to try to combat it.

Criminal Finances Bill

Lord Sharkey Excerpts

3rd reading (Hansard): House of Lords & Report stage (Hansard): House of Lords
Tuesday 25th April 2017 Lords Chamber

Moved by

[Lord Sharkey]

13: Clause 19, page 79, line 6, at end insert—
“( ) After section 316 insert—“316A Duty of the Financial Conduct AuthorityWhere a financial penalty is awarded against a firm by the Financial Conduct Authority arising out of a Financial Conduct Authority investigation, the Financial Conduct Authority must withhold a proportion, to be determined at its sole discretion, of any discount to the penalty until it is satisfied that the firm which is a party to the settlement has completed any internal disciplinary actions agreed in the settlement.””

[Lord Sharkey (LD)]

My Lords, I should start by thanking the Minister and her officials for being so generous with their time over the last couple of days. I am extremely grateful for her courtesy and patience. I also want to acknowledge that this is not the ideal timing for debating an issue that has so many complex aspects. We had all expected to have more time to do this.

Amendment 13, which stands in my name and that of the noble Lord, Lord Mendelsohn, sets out to help the FCA. A key part of the FCA’s job is the detection and punishment of misconduct. Another key part of its job is instilling and incentivising a culture of fair treatment of clients and a respect for the regulations in both spirit and letter—in other words, trying to prevent cultures in which financial misconduct is winked at or incentivised. The amendment aims to help with both those tasks.

The FCA has certainly been very busy with the business of the detection and punishment of misconduct since it took on its current form and mandate in 2012. In the four years from 2013 to 2017, it has imposed penalties on 82 occasions. The fines on firms in this short period amounted to over £3 billion. The latest fine was £163 million, imposed in January on Deutsche Bank. In fact, the headline fine was £230 million, but the FCA awarded a discount of 30% for prompt settlement of its action against the bank, and that is an entirely typical arrangement. Sixty-six out of the 82 enforcement actions brought by the FCA were settled at the first stage of the enforcement process and received a 30% discount. Eight were settled at the second stage and received a 20% discount. Eight were contested and received no discount at all. In all, the FCA in four years has given firms early settlement discounts of almost £1 billion and the amendment simply proposes to put this gigantic sum of money to better, or at least additional, use.

When the FCA reaches a settlement, it will impose conditions, some of which may call for internal disciplinary proceedings to be taken against those responsible for the misconduct. The amendment would ensure that those disciplinary proceedings took place. It mandates the withholding of a proportion of the discount until the offending firm has demonstrated conclusively, and to the satisfaction of the FCA, that proper and proportionate disciplinary action has in fact taken place. The substantive burden here lies with the firms and not with the FCA. This mechanism will free the FCA from the cost and use of resource that any follow-up investigation of non-compliance would require. In any case, it is not clear whether substantive follow-up investigations are routinely undertaken.

The FCA mission statement, published last week, talks about revisiting cases. On page 15, under the heading “Evaluation”, it says that,

“post-implementation analysis is not cost free. Additionally, the dynamism and complexity of the market means it is often difficult to isolate the impact of our actions against other factors”.

It goes on to say:

“Where it is less cost-effective to conduct detailed analysis, we will monitor and publish key indicators that help to demonstrate the impact of our interventions”.


I entirely sympathise with that sensible and realistic approach. I have spoken in this Chamber before about my concerns that the FCA is underresourced, underpaid, undervalued and overburdened, and the amendment helps in that kind of situation. It effectively automates, or nearly automates, the process of compliance with settlement conditions. It removes the need for substantive reinvestigation by the FCA and, instead, places a burden on the offending firm to demonstrate compliance. It offers a powerful financial incentive for doing so at no additional cost to the FCA or to the taxpayer.

--- Later in debate ---

[Lord Sharkey]

I am very grateful for the Minister’s response. She will not be surprised or, I hope, offended when I say that I am still not entirely convinced by some aspects of the situation. However, I acknowledge that the issues raised are very complex and that there is certainly a need for further in-depth discussions. I very much welcome the Minister’s proposal to facilitate a meeting for further discussions with her, myself, the noble Lord, Lord Mendelsohn, and her team. As was mentioned, the FCA and the Treasury have very generously expressed an interest in joining those discussions, and we would welcome the Treasury’s presence. Under those circumstances, I beg leave to withdraw the amendment.

Amendment 13 withdrawn.

Criminal Finances Bill

Lord Sharkey Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 28th March 2017 Lords Chamber

[Lord Phillips of Worth Matravers (CB)]

My Lords, I speak in harmony with the previous two speakers. I have some experience of this area, having wrestled in a judicial capacity with more than one appeal in relation to the Proceeds of Crime Act, and I have also recently taken the chair of the board which supervises more draconian legislation than the Bill for the confiscation of unexplained wealth in Mauritius. These unexplained wealth orders are designed to deal with the very real difficulty of proving facts which are likely to be in the exclusive knowledge of the holder of wealth. It would be simply contrary to the policy to impose the criminal rather than the civil burden of proof in respect of matters such as the value of property in which a person has an interest or the very question of whether he has an interest in that property at all.

[Lord Sharkey (LD)]

My Lords, I will speak to Amendments 10, 13, 20 and 22 to 25 in this group, all of which are probing amendments. Amendment 10 modifies subsection (4) of the newly inserted Section 362B of the Proceeds of Crime Act 2002. The subsection sets out one of the three conditions that must be satisfied before an unexplained wealth order may be made:

“The High Court must be satisfied that … the respondent is a politically exposed person, or …there are reasonable grounds for suspecting that … the respondent is, or has been (whether in a part of the United Kingdom or elsewhere), or … a person connected with the respondent is, or has been, so involved”.


As I read it, it means that simply being a politically exposed person satisfies the condition. That is enough for the High Court: it does not need,

“the reasonable grounds for suspecting involvement in serious crime”,

to be satisfied as well. That seems unnecessarily and dangerously broad.

It is probably unnecessary to remind the Committee that we are all PEPs. So are our families and our close associates. As the Government have made clear, and as the FCA is about to say in guidelines, most Back-Benchers, their families and associates should not require additional due diligence. Given that, we or our equivalents abroad should not be exposed to a harsher, more extensive and more intrusive regime. By replacing “or” with “and”, and by qualifying the definition of PEPs by inserting,

“who merits additional due diligence according to Financial Conduct Authority guidelines”,

my amendment removes this harsh, special treatment of non-EEA PEPs. For the condition to be fulfilled, the amendment requires that the PEPs are not ordinary PEPs but merit this additional due diligence and that there should be reasonable grounds for suspecting involvement in serious crime.

Amendment 13 removes the exemption of UK and EEA PEPs from the conditions in subsection (4) of new Section 362B, in order to give the Minister the opportunity to explain why UK and EEA PEPs should not be treated exactly as all other PEPs.

Amendment 20 gives the Minister an opportunity to clear up an apparent anomaly. On page 5, subsection (2)(b) of the newly inserted Section 362E sets out the penalty for failure to respond properly to an unexplained wealth order. For summary conviction in England and Wales—and later, we see, in Scotland too—the penalty is imprisonment for a term not exceeding 12 months, or a fine, or both. However, on the very next page, in subsection (2)(c), the penalty on summary conviction in Northern Ireland for exactly the same offence is set at imprisonment for a term not exceeding six months, or a fine, or both. So in England and Wales and Scotland, you can go to prison for up to 12 months, but in Northern Ireland it is up to six months. Why? I would be grateful if the Minister could explain.

[Lord Faulks]

Before the noble Lord goes on to the next amendments, could he help the Committee with one point? He points to the position of PEPs and describes the potential vulnerability that quite ordinary people might have to these orders, but does he not think that subsection (3) of new Section 362B is a sufficient protection? It provides that the High Court,

“must be satisfied that there are reasonable grounds for suspecting that the known sources of the respondent’s lawfully obtained income would have been insufficient for the purposes of enabling the respondent to obtain the property”.

That provides a hurdle that has to be surmounted, as well as establishing that someone is a PEP.

[Lord Sharkey]

If it were absolutely clear that you cannot obtain an unexplained wealth order without satisfying that condition, I would be happy, but I am not entirely sure that it is, and I would welcome the Minister’s confirmation that the noble Lord is correct.

Amendments 22 to 25 will allow the Minister to point out—if other noble Lords do not do so beforehand—where I have entirely missed the point. They refer to page 7 and subsections (2), (3) and (4) of new Section 362H. These subsections allow rules of court to provide for the practice and procedure to be followed relating to unexplained wealth orders before the High Court in Northern Ireland. There are similar but not identical subsections later in the Bill dealing with the same matter in Scotland. However, the Bill seems to be silent on how these matters are to be dealt with in the English and Welsh courts. I am sure I have missed something obvious here and would be grateful for enlightenment from the Minister.

There is another apparent anomaly in the sections dealing with the variation or discharge of an unexplained wealth order. I notice that the provision in Scotland is significantly different from that in Northern Ireland. On page 18, line 43, to line 1 on page 19, the Bill allows applications for variation or discharge to be made by “Scottish Ministers” or by,

“any person affected by the order”.

That is not the case for Northern Ireland, where application can be made only by the enforcement authorities or the respondent. Why is there this difference between Scotland and Northern Ireland? My Amendment 24 makes the process in Northern Ireland the same as in Scotland but, again, what about England and Wales? I look to the Minister to put me right on all this.

[Lord Leigh of Hurley (Con)]

My Lords, I welcome the legislation on UWOs. I have a number of declarations of interest, and I own residential and commercial property in the UK. I do not think that I have any unexplained wealth, but I have some experience—admittedly, some 30 years ago—of working as a tax adviser. It was quite common in those days for the Inland Revenue, as it was then, to demand explanations of what it thought was unexplained wealth from various taxpayers. That was quite common practice, so the concept of the state seeking an explanation of wealth is not new in practice.

We have a situation where, certainly in central London, a shocking number of multimillion pound properties lie dormant and are owned by overseas parties. To the extent that this goes some way to change that situation, it must be very welcome. It would also be quite welcome if the Government were to take a more holistic approach, perhaps using this Bill to address that problem as well as considering other solutions, outwith this legislation, including penal rates for dormant properties owned by overseas people. None the less, the UWOs are likely to make a significant change in helping our law enforcement agencies to investigate money laundering in the London property market and, in particular, recovering proceeds of crime.

--- Later in debate ---

I hope that the Government will accept the amendment—or, if not, will put down one of their own with a similar objective. Parliament needs to be involved and, unfortunately, by accident or design, this will not be achieved through the legislation we are discussing today—and concerns have already been expressed today about the difficulty of finding time for legislation in the next two years. I hope that the Government will give a positive response and that we may receive some assurances on this—albeit that, with the closing date for comments of 26 April, I am probably being unrealistic in expressing the hope that the Government may come back on this matter by Report or Third Reading.

[Lord Sharkey]

My Lords, Amendment 108 seeks to help the FCA to ensure meaningful compliance and right behaviour in the banking sector, which has not been entirely a stranger to money laundering. Work done by the New City Agenda think tank, of which I am a director, has shown some progress in changing the culture within banks—but has also shown that there is still a need for much more change.

Last week's report by the Banking Standards Board also had interesting things to say about banks acting in an honest and ethical way. For example, its very comprehensive survey found that 12% of employees had seen instances where unethical behaviour had been rewarded; 13% saw it as difficult to get ahead in their careers without flexing ethical standards; and 18% had seen people in their organisation turning a blind eye to inappropriate behaviour.

Since the FCA under its previous chief executive abandoned its promised inquiry into the culture within banks, it has relied heavily on financial penalties to punish misbehaviour and as a control mechanism. Since 2013, the FCA has levied an absolutely staggering £3 billion in penalties on firms. The latest, which the Minister mentioned, was a settlement in January with Deutsche Bank. The proposed penalty was £230 million, which was discounted to £163 million. This was a settlement. In fact, almost all the penalties imposed have been settlements. Typically, the FCA proposes a financial penalty and then agrees a discount if the firm settles—as almost all do. The discount is normally 30%. Since 2013, that amounts to a total of £1.2 billion awarded in discounts.

My amendment proposes to put this gigantic discount mechanism to better use. It would enable the FCA to have direct sight of the improvements in process and behaviour agreed in any settlement. It would enable it to see that appropriate disciplinary action had been taken against those responsible for the transgressions. It would give the settling firms a powerful incentive to fulfil any settlement conditions. It would do this by making part of any discount withholdable until the settling firm had satisfied the FCA that all appropriate disciplinary actions had been taken. Only then would the full discount be realised.

This is a simple proposal. It would give the FCA more power, more say and more insight into how transgressors had modified their behaviour and addressed individual and structural culpability. It would give the firms involved a powerful incentive to take proper remedial action—which, unfortunately, still seems to be needed.

[Lord Hodgson of Astley Abbotts]

My Lords, I have Amendments 126 and 127 in this group. They impose duties on the National Crime Agency regarding the performance of its duties and the way it supervises the bodies that report to it. I tabled the amendments to address my concern that the country’s anti-money laundering regulations, which were and remain a critical part of the fight against financial crime, are not as effective as they should or could be.

There are three related issues. The first is that the regulations lack focus. Far too much unnecessary information is collected, which serves to distract rather than to illuminate the task of the regulator. We have heard tonight from my noble friends Lord Deben and Lord Leigh, and every Member of your Lordships’ House could produce evidence of the collection of superfluous information. They also lack effectiveness and follow-through. I was astonished to read in the debate on Second Reading in the House of Commons that Sir Edward Garnier, experienced lawyer that he is, said that many certification orders, having been granted, are never enforced. I therefore put down a Parliamentary Question—which is due for answer the day after tomorrow, sadly, but I am sure that my noble friend can chase up her officials—in which I asked,

“in each of the last three years for which figures are available, how many confiscation orders were … authorised by the courts … put into effect; and how much money was recovered”.

I hope that my noble friend will be able to give us those figures when she winds up.

However, it is not just about confiscation orders. My noble friend Lord Faulks talked about the report in the Times last week, according to which between 2007—when we introduced the last set of money-laundering regulations—and 2012, there were no convictions at all:

“There have been four convictions since and five more proceedings, according to a freedom of information request by the London law firm Howard Kennedy”.


Of course, as I said at Second Reading, the asset recovery by the NCA can only be described as trivial: £26.9 million for an agency that costs some half a billion pounds to run, and which tells us that billions of pounds of illegal money passes through London every year.

Lastly, and most importantly, the regulations do not enjoy general public confidence. Too many members of the public regard them as a paper-pushing exercise. As a result, they do not feel committed to their success or to ensuring that they work well. In my experience, having from time to time chaired risk and compliance committees, attempts to get the regulators to explain how valuable their work is are not greeted with great approval; they tend to say, “This is our business—you mind yours”. That is very different from the approach of the security services, which have publicly praised the public for their help.

At that point, some people may be tempted to say, “He works in the City, so he is a tainted witness”. However, I was interested to read the briefing from Transparency International—an NGO about which I know very little. It said:

“At the heart of the problem is the fact that”,


there are,

“27 Supervisory Bodies in relevant sectors … This leads to a fragmented approach:

...Failure to identify where the risks are and mitigate against those risks…The approach to enforcement is inconsistent and not transparent or effective…Many of the supervisors have serious conflicts of interest”—

we have already discussed that this evening—

“which we believe prohibits the bodies from doing a good job”.

I could hardly have put it better myself.

Compliance remains the great growth industry. Noel Coward may have said to Mrs Worthington,

“Don’t put your daughter on the stage”,


but you could do a great deal worse than putting her into compliance. Regulators seek more powers, so more returns are needed, compliance officers see a chance to build their empires, professional firms seek commercial opportunities in checking and rechecking the records, and Ministers can attend conferences and refer to all the efforts being made and the money being spent.

While the money being spent is considerable, both directly in maintaining the supervisory bodies, and by the firms who have to comply with their requirements, there is another cost which is much less frequently referred to: reputational cost, which arises from a process known as “de-risking”. When you de-risk, you remove from a group of people or a set of companies their financial ability to transact. Noble Lords will be aware of my interest in the charity and voluntary sector. Charities which operate in “difficult”—sensitive—areas find it almost impossible to get the financial services of British banks; it is not worth their time or trouble. It is not about borrowing money but just checking facilities—day-to-day operations—and the smaller the charity, the more difficult they find it. It affects not just organisations but individuals as well. Thirty years ago I worked in the City with a Pakistani who has a British passport and who is as Anglophile as you would like him to be. He worked in Hong Kong, and now lives in Lahore. He has just been told that all his bank accounts have been closed. Is there anything wrong with the accounts? There is nothing wrong with them—it has just been done. It is clear that the pressure on the banks to close down these accounts is coming from the regulators.

--- Later in debate ---

[Baroness Williams of Trafford]

My Lords, the amendments in this group have raised some important points around regulation and supervision of the regulated sector. I am also pleased to able to update noble Lords on some of the recent developments in this area.

Amendment 108, in the name of the noble Lord, Lord Sharkey, would require the FCA to withhold a proportion of any discount to a penalty applied to a financial firm until that firm has completed any internal disciplinary actions agreed in the settlement. We agree with the principle that such firms should be held accountable for their actions, or lack of them. The Government already have in place, through the FCA, powers to increase a penalty that it would otherwise impose on a firm in light of a range of potentially aggravating factors, including,

“disciplinary action against staff involved”.

A firm that had, by the time the FCA imposed its relevant penalty, failed to take such appropriate action, could therefore already have that penalty increased as a result.

The Financial Services and Markets Act 2000 allows the FCA to impose requirements on such firms. If the FCA considers that a firm needs to take disciplinary action—if appropriate and following all due employment process—after a penalty is imposed, the FCA can require that the firm properly and fully considers doing so. If the firm then fails to do so, that would become misconduct in respect of which the FCA could, subject to all other relevant factors, impose an additional penalty. Therefore, we believe that we already have in place powers to take action in the way the proposed amendment suggests.

[Lord Sharkey]

Does the Minister accept that there is a big difference between having the powers to do something in addition and having an automatic system of withholding, which makes it directly in the interests of the firms to take the action that they are supposed to take, rather than have the FCA make an assessment later and come back to discuss whether it ought to impose an additional penalty? One is automatic, giving an immediate incentive for the firms to do something, while the other requires additional supervision.

[Baroness Williams of Trafford]

I take the noble Lord’s point that one is perhaps much simpler, but of course each case is different. One firm might be a lot more compliant and it might not take much effort; another might take a lot more effort. However, I take his point.

I move on to Amendments 126 and 127 in the name of my noble friend Lord Hodgson of Astley Abbotts. These relate to the role of the NCA. The NCA leads, co-ordinates and supports the national law enforcement response to money laundering. The prosperity command of the NCA houses the UK Financial Intelligence Unit, or UKFIU, and receives suspicious activity reports, or SARs, from the regulated sector. The intelligence gathered from these is used to support investigations into both money laundering and the predicate offences.

The amendments seek to require the NCA to act in a regulatory manner by ensuring that the provisions of the Money Laundering Regulations, such as customer due diligence and monitoring of transactions, are implemented effectively, and to ensure that the NCA acts with regard to the principles of regulatory best practice. The NCA can and will act where there is criminal activity relating to money laundering. However, it does not have a regulatory remit, and to require it to have one would deflect it from its purpose of tackling serious and organised crime.

My noble friend also asked me for some figures on the moneys recovered. I can tell him that in 2015-16 £255 million was recovered under the Proceeds of Crime Act, of which £208 million was in confiscation. However, I will write to him with further details on that.

Finally, I turn to Amendment 70, moved by the noble Baroness, Lady Hamwee, and Amendment 73, tabled by the noble Lord, Lord Rosser.

EU: Justice Opt-outs

Lord Sharkey Excerpts

Thursday 4th December 2014 Lords Chamber

[Lord Bates]

The noble Lord is absolutely right. Let us imagine the process just in relation to the original Question and what it would mean for negotiations with the Republic of Ireland: we would be back to the bad old days of highly politicised extradition proceedings. We do not want to go down that route; that is why we have taken the decision that we have.

[Lord Sharkey (LD)]

Concerning the JHA opt-outs, can the Minister confirm that the Government will make an Oral Statement to the House on compliance with the House’s scrutiny reserve resolution, as requested by the EU Select Committee?

[Lord Bates]

The current plan is that in normal procedures on matters of this nature, we would issue a Written Ministerial Statement. It is of course up to Members of your Lordships’ House to seek further debate, should they wish it, but we have already had an extraordinary amount of debate on these issues. On 12 November there was a majority of 426 in the other place; they discussed it again on 20 November; we discussed and debated it on 19 November. I think that at some point, people need to say that we need to move on.

CEPOL Regulation: United Kingdom Opt-in

Lord Sharkey Excerpts

Monday 3rd November 2014 Lords Chamber

[Lord Sharkey (LD)]

My Lords, CEPOL is a good thing and our membership of it benefits the United Kingdom. Your Lordships’ EU Select Committee believes that to be the case for the reasons set out so clearly by our chair, the noble Baroness, Lady Prashar. The Government believe this also. It would be a bad thing if the UK were to cease to be a member of CEPOL. It would be completely absurd for the UK to be the only member state not to be part of CEPOL. As things stand, that is precisely what will happen if we do not opt into the new CEPOL regulation.

I know that the Government have some reservations about the current draft of this new regulation, and so does the committee. I think we share the view that the proposed regulation goes beyond the scope of the existing regulation in ways that are not desirable. In particular, the Government are rightly concerned that the new, broader mandate would extend CEPOL’s training function to police officers of all ranks, to Customs officers and to other, unspecified, agencies dealing with cross-border issues. There are other concerns as well, to do with the contribution to CEPOL’s work programmes and the establishing of a CEPOL scientific committee. However, these concerns are not ship-sinkers. They are eminently resolvable by the usual processes of negotiation. There is no reason to believe that the Government would find it unusually difficult to have their concerns addressed, nor to believe that, in the unlikely event that these concerns were not addressed, that would merit leaving CEPOL.

The fact is that there is, as there has always been, a very strong case for UK membership of CEPOL. The details of the draft regulation, amended though we would like them to be, do not change that position. I think the Government will accept, as the committee’s report suggests, that we will opt in to this new regulation at some stage. The question we are really debating is the not unfamiliar one of whether we should opt in now or after adoption and before entry into force. It does seem rather perverse to deny ourselves a position at the formal negotiating table when it is certain that we will opt in to a final regulation anyway. What is the benefit to the UK of doing that? What are the dangers to the UK in the new draft that cannot be negotiated away? What are the dangers that outweigh exclusion from CEPOL? If the Minister disagrees with opting in to the proposed regulation now, perhaps he can say why it is better to be outside formal negotiation if we will opt in later, as we surely must.

As the noble Baroness, Lady Prashar, has already mentioned, the committee’s report also notes that the Government have chosen not to opt in to the proposed new Europol regulation. The Government have excluded themselves from formal negotiations over the text and we see no benefit in this. Of course, if we eventually failed to opt in we would almost certainly find ourselves excluded from Europol, which is surely an entirely unthinkable outcome. The deadline for opting in to the proposed CEPOL regulation is in 21 days’ time, on November 24. The UK should, and would, benefit from being at the negotiating table while the text is being finalised. Since it is unthinkable, I hope, that we will not opt in eventually, that is where we should be now: at the negotiating table.

Of course, I accept that the whole topic of opting in—or not—to JHA measures has not been a simple one for the Government. The Government have, on occasion, been very slow in providing the House and its committees with the information necessary for proper scrutiny. In fact, they seem to have got into the habit of providing information very late and, sometimes, on the day of a debate. The noble Baroness, Lady Prashar, has already noted the latest example of this. I believe the Government provided, three hours ago, the explanatory memoranda—due on October 16—of the two draft Council decisions to do with the block opt-out and rejoins which need to be adopted before the end of this month. Will the Minister say why there has been such a delay?

All in all, the Government’s handling of the Protocol 36 block opt-outs and rejoins has generated very much more heat than light. However, I hope the Government will not allow their past, and perhaps present, difficulties in this area to colour their attitude to the Motion before us. In particular, I hope that the controversy over the European arrest warrant among some Tory Back-Bench MPs will have no influence on the Government’s decision on the CEPOL or Europol opt-ins. I wholeheartedly agree with the Home Secretary that the European arrest warrant is a vital and necessary law enforcement tool, but so is our participation in Europol and so is our participation in CEPOL. I urge the Government to accept today’s Motion. More than that, I urge the Government to opt in to the proposed CEPOL regulation without delay.

--- Later in debate ---

[Lord Bates]

I hear what the noble Lord says, but the advantage of having a debate at the present time is that the committee’s report and your Lordships’ contributions inform the Government’s position. That is beneficial, rather than coming to the House after a decision has been taken by Her Majesty's Government.

I also accept the noble Lord’s point about what is possible and what is impossible. I readily acknowledge that. It is not for us to decide whether it is possible or impossible: it is for the Commission and the other member states to determine whether they are willing to tolerate that or whether they wish to eject us from the process. That is further down the route.

[Lord Sharkey]

I am sorry, but I am not quite clear about whether the Government will bring back the issue to this House once they have made a decision on whether to opt in or not.

[Lord Bates]

The decisions that are made on these matters are ordinarily communicated by Written Ministerial Statement. If, through the usual channels, the business managers and the committee, there is scope for something more than that, of course we stand willing to comply with what the House requires and to show it due respect. But that is the normal course through which information is communicated on decisions of this nature.

However, if the Commission considers that UK non-participation makes CEPOL inoperable, it could seek to have us ejected from CEPOL, from the 2005 decision. The provisions in Article 4a(2) of the protocol clearly set this out. Clearly, this depends on a number of questions that are currently hypothetical: whether we opt in before 24 November; whether, if we do not opt in then, we do so post-adoption; and whether, if we do not, the Commission tries to trigger the ejection mechanism. But if things got that far, it would be important to note that the protocol sets what seems to be a very high threshold for ejection. It requires the measure to be “inoperable”, not merely inconvenient or difficult to operate, and it must be inoperable for the other member states, not just for the UK. These are tough tests for the Commission to meet. However, that is an argument to be had if and when we get to that stage. We are a long way from there at the moment.

With reference to the draft Europol regulation, as the committee is aware, we decided not to opt in at the outset, but committed to opting in post-adoption if certain conditions are met. I must stress that, at this stage, no decision to opt in has been made and no such decision will be made until negotiations are complete and the regulation is adopted. At that point, the full process for considering a post-adoption opt-in will be followed, which, as the committee is aware, can take several months. However, as mentioned above, and without pre-judging the final outcome, I can say that I am pleased with the current progress of the negotiations.

I realise that time is running out. I will deal with some of the matters raised and if I cannot deal with them all, I will of course respond in writing to the noble Baroness in the first instance and copy that letter to all other noble Lords who have contributed to the debate. Some specific points were raised by the noble Lord, Lord Sharkey, and my noble friend Lord Patten. My noble friend brings immense expertise to this having, in another place and in another guise, been a particularly fine Policing Minister in the Home Office. The particular issue of concern is the proposal for CEPOL to assess the impact of existing law enforcement training policies and initiatives and to promote the mutual recognition of law enforcement training in member states and related existing European quality standards.

We have a particular problem with this because, from the time between Bramshill closing and the CEPOL negotiations, we now have an excellent College of Policing, which is doing tremendous work among police forces in this country. To keep it in context—noble Lords asked about this—the attendance at CEPOL courses was typically around 100 officers per year at Bramshill. That has now gone. We are talking about the College of Policing, but also recognise that in Bramshill we have an asset, and there were associated running costs. That is going to front-line law enforcement in this country.

Other issues that were raised related to the timeliness of communications. The noble Baroness, Lady Prashar, and the noble Lord, Lord Judd, raised this in very serious terms. I will take it away and reflect on it. It is not always within our hands as to when we get documents and how to pass them on. However, I should like to sit down with the committee to understand how we can improve our performance, between officials at the Home Office, Ministers, and the committees, to ensure that committees are able to do their job of scrutiny in a proper way. I accept the reprimand, apologise and promise to look at that more closely.

Some Members, including the noble Lord, Lord Judd, referred to the Lisbon justice and home affairs opt-out. As I have said, that is an opt-out of the previous Government’s making. We are simply exercising our right to do it. It does not seem necessarily a bad thing that if you have a piece of regulation before you and you are not entirely happy with it, then you can undertake the genuine, sincere and vigorous negotiations happening at the present, and reserve judgment on whether you choose to opt into the final draft until you have seen the final text.

The noble Lord, Lord Patten, also referred to the fact that we need to work much better at cross-border co-operation in policing and serious crime. We recognise that that is a very important area. That is why we have taken the approach that we have towards Europol and the arrest warrant. We recognise, as the noble Baroness, Lady Smith, said in her remarks, that ensuring the safety and security of the people in this country is the first priority of every Government. We should do that, but we can do so not necessarily by signing up to everything, but by being discerning because we have been given the opportunity to do that.

I covered interdependence. We accept that we need to co-operate and that is an ongoing thing. I very much accept that we are in this together and that, as the noble Lord, Lord Judd, said, we need to co-operate. However, we can have meaningful input into the negotiations ongoing in Brussels with our position as it is. I do not think it is an ideological position. It is one that looks at different issues and treats them in different ways, raising legitimate concerns about CEPOL while recognising its very good work, taking a slightly different approach with Europol, and a different approach to the European arrest warrant. That is a balanced and broad approach. However, I assure your Lordships that we will take into account and re-read all the contributions made in the debate. Again, I thank the committee for the work it has prepared, which we can draw upon.

Justice and Home Affairs: United Kingdom Opt-Outs

Lord Sharkey Excerpts

Thursday 17th July 2014 Lords Chamber

[Lord Sharkey (LD)]

My Lords, I have the privilege of being a member of your Lordships’ EU sub-committee dealing with home affairs, health and education. The issue of the opt-out and opt-ins has been of concern to the committee and to the House for some time. I have lost count of the exact number of meetings, evidence sessions, witnesses, reports and debates that have addressed the issue of Protocol 36, but I do know that on 23 July last year this House debated and approved the Government’s then list of 35 JHA measures they proposed to rejoin. In our debate on the opt-out and opt-ins on 23 January this year, I repeated that I still thought that the Government’s selection of those 35 measures was both well chosen and coherent. I also repeated, as I do again now, that I thought that the whole exercise was completely unnecessary. In that debate, along with other noble Lords, I urged the Government to add a further four measures to the list of 35.

As has already been said by the noble Baroness, Lady Prashar, these were the framework decision on combating certain forms of expression of racism and xenophobia by means of criminal law, and rejoining the European Judicial Network, the European probation order and the international convention on driving disqualification. I also noted that there were other technical measures that the Government would probably have to rejoin in order to properly implement Europol council decisions.

While the set of rejoin measures before us today, as we have heard, is not the same set as we debated in January, there are still 35 measures on the list. However, this is a coincidence and it is mildly confusing. This is because, essentially, five measures from the original list have been dropped and five new measures have been added. At least, I think that that is the case. The documentation on all this is very far from straightforward. The Home Secretary herself, in the Commons debate last week, was momentarily uncertain about the status of certain measures.

Command Paper 8897 is not a lot of help. Other noble Lords have remarked on its lack of a table of contents, the lack of an index to the impact assessments, and to their apparently random ordering. Of the five new additions to the list, three appear to be technical measures necessary for continued participation in the Europol decision, which is what we expected. One new measure is also technical or quasi-technical, and this is to do with the requirements for the Schengen Information System II, and is wholly unobjectionable. In fact, it is welcome. The final new addition is the rejoining of the European Judicial Network. Your Lordships have argued strongly for this in the past, and I am very pleased to see it reappear.

Five rejoins were proposed in January which have now been dropped. They included two that have been “Lisbonised”, or in other words amended, repealed or replaced by post-Lisbon measures. One further missing measure is the setting up of a network of contact points in respect of persons responsible for genocide, crimes against humanity and war crimes. However, as the Minister has said, this has been replaced by the inclusion of the measure to join the European Judicial Network.

One final missing measure is the improvement of co-operation between special intervention units of member states in crisis situations. The Government wanted to rejoin this measure, but would not do so if this involved participating in the Prüm decisions, as the Commission asserted that it did. As the noble Lord, Lord Taylor of Holbeach, has already said, the Home Secretary made it clear in the House of Commons that we have neither the time nor the money to implement Prüm by 1 December. She said that it would be senseless for us to rejoin it now and risk being infracted. I agree with the last part of this, and I am glad that the Government have agreed to run a small-scale pilot to test the implications of running a fully Prüm-compliant system.

However, all this does raise a question. We wanted to rejoin the special intervention measures because we thought it was in the national interest, but now we are not going to. Can the Minister explain what we lose as a result? What is the damage or loss to our national interest as a result of not joining the measure which they set out to join? In this exchange of five measures in and five measures out, the Government have not included three out of the four additional measures recommended by our committees. They have not included the racism and xenophobia measure, nor the absolutely uncontroversial and very sensible international convention on driving license disqualification. Very disappointingly, they have also not included the European probation order.

In the debate in the Commons, the Justice Secretary repeated his commitment to looking again at the measure when there is enough evidence of it working, to see whether or not there would be benefits to the UK in taking part. He also committed to publishing an assessment of the potential impacts of taking part. This is not what the committee proposed, but at least it will keep the issue alive. The debate in the Commons is also instructive for other reasons. There were 23 speakers in all, 18 of whom were Conservatives. The debate reads very like the recording of a rather bitter family disagreement.

All this confirms my view that the whole enterprise has been a sad waste of time. The Government have provided no evidence that any of the measures they are opting out of is in the least harmful to the United Kingdom, and they have declined to produce impact assessments for any of these measures. That does raise the question of why they are bothering. Some commentators have said that the whole exercise has been designed to satisfy Tory Eurosceptics in the House of Commons, but if you read last week’s debate that certainly does not seem to have worked out very well.

It is not only the absence of any evidence of harm in the opt-outs that is disappointing. There is a new absence that is even stranger. In evidence to our committee, the Justice Secretary relied heavily on the possibility of unexpected judgments from the ECJ as a reason for opting out of the list of measures. I have carefully read the impact assessments in the Command Paper, and there is no mention anywhere in any of them of the possibility of adverse or unexpected rulings by the ECJ. Can the Minister explain why this rationale for opting out does not appear in the impact assessments? Do the Government now believe that the possibility of unexpected ECJ rulings is not a reason for opting out of the measures?

Finally, there has been sharp criticism today of the process the Government have adopted in dealing with Parliament on this whole matter of Protocol 36. I do not propose to repeat all that criticism—although I have already noted the unsatisfactory nature of the latest Command Paper—but I will say that I am glad to see the current list. I am glad to hear the Justice Secretary repeat his promise to the House of Commons of a vote on a finalised list. When the Minister replies, would he reassure us that that this commitment also extends to this House?

EU Police and Criminal Justice Measures: EUC Reports

Lord Sharkey Excerpts

Thursday 23rd January 2014 Lords Chamber

[Lord Sharkey (LD)]

My Lords, I congratulate the noble Lord, Lord Hannay, on his incisive and analytical opening speech. It is a privilege to serve under his chairmanship on your Lordships’ EU Sub-Committee F. I do not intend to dwell on the rather convoluted chronology of these two reports and the Government’s responses to them. I intend to focus my remarks on the second, rather than the first, report.

However, in dealing with the first report and the Government’s response to it, I simply remark that its conclusion that the Government had made no compelling case for opting out still seems very strong. The Government’s given reasons for opting out still seem unconvincing. I also note that the Government have been less than punctilious in their dealings with the House over the first report. In particular, I point to the extraordinary delay in producing the Explanatory Memoranda, and the fact that the Government’s response was produced one month late, and only hours before the debate on the government opt-out/opt back in Motion. The debate on that Motion on 23 July produced a kind of clarity. As I said in that debate, I thought that the Government’s selection of 35 items to opt back into was well chosen and coherent. I still think that that is the case, just as I still think that whole exercise was completely unnecessary.

The 95 items that the Government have chosen, for the moment, not to opt back into are all harmless, and some are of real value to the UK. As the noble Lord, Lord Hannay, said, the Government have presented no case that any of these items operates against our interest or does any damage. However, we are where we are, and I want to address the remainder of my remarks chiefly to the government response to the committee’s second report.

In particular, I want to focus on some of the measures that we recommended be added to the Government’s list of 35 opt-ins. There are four of these, which have already been mentioned by the noble Lord, Lord Hannay, and other speakers. The first is the framework decision on combating certain forms of expressions of racism and xenophobia by means of criminal law. The UK has long been a leader in this area. Failing to opt back in would abandon that leadership and would send out a completely wrong signal about our commitment in this area. The Government’s reasons for not opting back in, put simply, amount to, “I’m all right, Jack”, with no real acknowledgment of loss of leadership and reputation.

The second measure is the rejoining of the European judicial network. Everybody except the Government seems to think that we should rejoin. The Law Society of England and Wales, the Law Society of Scotland, the Lord Advocate and others all thought that it was a useful measure. The Government’s reasons for not rejoining amount to a recognition that the contact points the network provides are “undoubtedly helpful” but,

“it may be possible to maintain those contacts without formally participating in this Council Decision”.

Why leave a system that works and causes no harm in order to rely on an informal equivalent? It is not a very strong argument.

The third measure is the European probation order. Our report said that we believed that,

“this measure has potential to provide benefits for the management of offenders on a cross-border basis and that nothing is being gained by not implementing its provisions”.

The Government continue to decline to opt back in. Their reasons are to do with the implementation, and with allowing the ECJ to have jurisdiction. We are of the view that the first of these objections—implementation—could be overcome by negotiation at a European level, and the second amounted to an almost irrational fear of the ECJ.

The fourth measure is the convention on driving disqualifications. This enables member states essentially to prevent a driver banned in one member state from driving in another. As the Government acknowledged, our report contains strong evidence of the importance of this measure in supporting co-operation with the Republic of Ireland. However, that is apart from its clear, common-sense benefits in a more general way. Instead of rejoining the measure, the Government propose to establish a separate bilateral treaty with the Republic of Ireland. This is surely a very odd way to go about things when there is a perfectly satisfactory mechanism already on the table.

I have not included in this list of four measures the measures implementing Europol council decisions, which fall within the scope of the block opt-out. The Government still decline to opt back in to these, but in this case not very convincingly. It is reasonably clear that if they have to do so in order to pass the test of coherence, then they will in fact rejoin these measures. This makes it rather odd that they did not agree to do so in the first place.

I strongly urge the Minister to consider rejoining the four measures about which I have spoken. As part of that consideration, I urge him to publish the impact assessments of all the 130 measures which are at issue, as was said by the noble Baroness, Lady Corston. These impact assessments must surely already exist, and must have formed a part of the Government’s thinking. The Government should share them with Parliament without further delay. It is very important that we take forward discussion of the opt-in measures with all the evidence and assessments being made available to us here in Parliament. I hope that the Minister agrees.