Professional Qualifications Bill [HL]

Baroness Barker Excerpts

Committee stage
Monday 14th June 2021 Lords Chamber

[The Deputy Chairman of Committees (Baroness Barker) (LD)]

We now come to the group consisting of the question of whether Clause 4 should stand part of the Bill. Anyone wishing to press this to a Division should make that clear in debate.

Debate on whether Clause 4 should stand part of the Bill.

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Clause 4 agreed.

[The Deputy Chairman of Committees (Baroness Barker) (LD)]

We now come to the group consisting of Amendment 34. Anyone wishing to press this amendment to a Division must make that clear in debate.

Amendment 34

Moved by

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank all noble Lords for participating in this short debate, and I thank the noble Baroness, Lady Hayter, for the amendment and the noble Baroness, Lady Blake, for presenting it so ably. I welcome the opportunity to consider the important issue of mutual recognition of statutory audit qualifications in the UK and the audit qualifications in other jurisdictions.

The Companies Act 2006 provides that these may be agreed on a reciprocal basis by the Financial Reporting Council—FRC—on behalf of the UK Secretary of State, with the competent authority of an overseas jurisdiction. Amendment 34 would give the FRC the discretion to relax the standards of compliance that overseas qualifications must meet before they can be recognised in the UK. It would not compel the FRC to relax those standards but would enable it to do so where it considers this appropriate as part of a reciprocal agreement.

The UK’s audit sector is highly respected and valued both domestically and across the world. The Government are currently consulting on the White Paper Restoring Trust in Audit and Corporate Governance. These reforms are needed because there have been a number of examples of poor practice and poor standards in UK corporate audit that have risked the UK’s reputation as a safe and trusted place to do business—a number of noble Lords, including the noble Lord, Lord Palmer, have just mentioned this. We therefore need to be careful when considering the framework to allow individuals to undertake statutory audit in the UK to ensure that it is robust and maintains the UK’s high standards and reputation.

While this amendment would only provide the ability for the regulator to apply looser requirements to recognising other nations’ qualifications, it would open the door to concerns of loosening standards and reduced oversight. It would also expose the regulator to pressures to use the flexibilities provided in cases where this might not be in the best interest of the UK profession or its clients. The statutory audit profession in the UK has a comparatively strong reputation internationally for the standards that it maintains. The Government are working hard to maintain this reputation, and we would not wish either the UK’s standards or its reputation to be devalued.

The Government acknowledge that an essential part of maintaining our standards and reputation internationally is to seek to influence developments in corporate reporting and audit by building links to other regulators that are prepared to uphold comparable standards. The ability for UK auditors and those with comparable qualifications overseas to exchange and transfer experience is an important part of this.

The noble Baroness, Lady Blake, asked why the audit reform was not included in the Queen’s Speech. The reform of audit and corporate governance is a priority for Ministers. We have promised to legislate on an appropriate timetable, and the Government do not intend to add new requirements at a time when they would hold back businesses’ recovery from the pandemic. By the time of presenting proposals to Parliament, the Government want to be confident that they are effective and command broad support. Consultation on the Government’s White Paper is open until 8 July, and Ministers look forward to contributing to the BEIS Select Committee’s inquiry into the delivery of audit reform.

I believe that the regulator can already make agreements with international counterparts to this end, so I ask the noble Baroness to withdraw her amendment.

[The Deputy Chairman of Committees (Baroness Barker) (LD)]

I have received a message from the noble Baroness, Lady Noakes, who wishes to speak.

[Baroness Noakes (Con)]

Could my noble friend the Minister explain why, in Clause 1, which we know will be applied largely to the medical professions—we are therefore dealing with patient safety—it is adequate for medical professions if

“a specified regulator of the specified regulated profession has made a determination that the overseas qualifications … demonstrate substantially the same knowledge and skills”,

but, somehow, a different standard is implied when the much more mundane activity of auditing is involved? I do not quite understand how the Minister can have one view of the medical professions and another of what happens in the accounting profession. Can she explain that contradiction?

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Amendment 34 withdrawn.

[The Deputy Chairman of Committees (Baroness Barker) (LD)]

We now come to the group beginning with Amendment 34A. Anybody wishing to press this or anything else in this group to a Division must make that clear in debate.

Amendment 34A

Moved by

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Amendments 48 and 51, tabled by the noble Baroness, Lady Garden of Frognal, probe the use of the word “substantially” in Clauses 9 and 10 and are similar to amendments debated and withdrawn on the first day in Committee. As I set out in that debate, the use of the word “substantially” reflects the reality that professions do not exactly align across different jurisdictions’ regulatory systems and standards. For example, some countries do not make the same distinctions as others in how they define professions. As I have previously cited in your Lordships’ House, for example, England and Wales distinguish between barristers and solicitors, but this is not the case in other countries. These amendments would, therefore, require absolute parity between professions in different jurisdictions, which could impinge on regulators’ flexibility in exercising their discretion on this point, as well as opening them up to the potential for legal challenge. I therefore ask the noble Lord to withdraw his amendment, and I commend that Clause 7 continues to stand part of the Bill.

[The Deputy Chairman of Committees (Baroness Barker) (LD)]

I have received a request to speak after the Minister from the noble Lord, Lord Fox.

[Lord Fox (LD)]

I thank the Minister for her response. I am having trouble matching the words that she is using with the thing that she is describing. That is my problem. The words “a website run by two people” and “assistance centre” are not really the same, so are we talking about an assistance centre or a landing page? When I talked about a landing page the other Minister kind of nodded. It would help if the Government would clear up what this thing actually is and, in so doing, tell us how much they think it will cost.

The specific question I have is about data. The Minister seemed to suggest that in order for this centre/website to conform to existing data protection regulation it needed guidance in primary legislation. Is that because it will be asked to do more data protection, less data protection or the same amount? If it is the same amount of data protection, why does it need primary legislation to tell it what to do?