Economic Crime and Corporate Transparency Bill

Baroness Bowles of Berkhamsted Excerpts

2nd reading
Wednesday 8th February 2023 Lords Chamber

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I thank the Government for reorganising business so that those of us who were engaged in the Financial Services and Markets Bill have an opportunity to speak. I am obviously a beneficiary of that. While I am thinking in economic terms, perhaps if we solved fraud, fraud enablers and fraud defenders and put their efforts to good use, we would not have a productivity gap, so there is a lot to be gained.

I welcome the Bill because it has measures in it that noble Lords on all sides have been flagging for some time. Perhaps inevitably, we are queuing up again to say, “Can we go rather further?”, and I will be offering encouragement to do that.

Companies House being a passive recipient of rather strange information—reliant upon many public eyes as scrutiny for correction, as Ministers have said in the past—has completely failed to result in correction, so changing it to a more active gatekeeper and custodian is welcome. Like other noble Lords, I hope it can live up to that promise and operate in a dynamic way, and that there will be adequate resources. Like others, I want to know what kind of fee increase the Government envisage. There is plenty of room to generate funds to do things properly so that we do not have to try to outsource it on the cheap but, rather, build up a true body of expertise.

There is also a need for sound procedures for correcting not just mistakes but fraud—for example, if someone has been wrongly registered as a company director or their address abused. Why are there no longer notifications telling you that someone has been registered at your address or that you have been registered as a director? These are vital pieces of information and useful protections for citizens.

Parallel to that, will the Government be doing anything about fraud in the Land Registry, where entries can be changed? It is hard to understand why it is necessary to register for notification of changes to entries, rather than it being the default situation if you own a property. There is protection if there is a mortgage, as the mortgager can ask for notice due to the registration of their interest, but people who have paid off their mortgages may be surprised to learn that their entry in the Land Registry can be changed without them ever finding out, yet they are clearly an interested party.

I accept that there have been compensation arrangements when fraud has been discovered but, again, surely some automatic notification of the change of entry would be a simple matter. If you can register for it, why can you not have it automatically? I am rather surprised that this is not done routinely by conveyancers; it was rather negligent for that not to have happened automatically.

I understand that the Government will introduce a failure to prevent fraud amendment and that there may be other offences. Like others, I await the text with interest. I too was on the Fraud Act 2006 and Digital Fraud Committee. We looked at this issue and strongly backed offences for both failure to prevent and failure to prevent facilitation, as has the Justice Committee. In the context of fraud, facilitation offences are essential to catch the enablers and, just as with tax evasion, there can be professional, systematic and systemic enablers. We singled out the telecoms companies as being particularly complacent, saying:

“The telecoms sector has no real incentive to prevent fraud and has allowed blame to be placed elsewhere for too long. It must do more to tackle phishing emails and smishing texts before they reach victims, and must prevent fraudsters from making spoof phone calls using easily accessible technology to manipulate vulnerable victims into thinking they are a trusted organisation”.


It is no coincidence that the conclusion saying

“The telecoms sector has for too long been allowed to stand by while fraud is facilitated via its services”


immediately precedes the section on corporate criminal liability. Such measures are long overdue.

The committee recommended corporate criminal offences for failure to prevent fraud and failure to prevent facilitation of fraud. But the committee was also taken with the idea of regulatory failure to prevent offences and regulatory-led strategies, so as to bring regulators more directly into fighting fraud in the sectors they regulate, including a duty to prevent the facilitation of fraud in the industries they regulate. On Monday, I was suggesting such measures for financial services regulators in Grand Committee on the Financial Services and Markets Bill, but realistically, why is that not just a fundamental duty of all regulators? Surely, issues such as prevention of fraud are as fundamental as competition: both seriously affect the economy and consumers. At the personal level, fraud is more devastating.

Of course, any regulator, like any person, can seek criminal prosecutions and they do not need a statute to do so. I say this as an extension of the R v Rollins Supreme Court decision concerning the FSA, but would it not be appropriate to establish powers in the Bill to give all regulators a duty to prevent facilitation of fraud, along with regulatory failure to prevent offences? Such on the spot oversight and fraud prevention measures would drive culture change, in addition to having more effective corporate criminal liability and breaking through the identification doctrine blockage. I shall also support amendments in that direction.

This is not just about stopping the dirty money. There should also be no place for dirty people to hide.