Economic Crime and Corporate Transparency Bill

Baroness Stowell of Beeston Excerpts

2nd reading
Wednesday 8th February 2023 Lords Chamber

[Baroness Stowell of Beeston (Con)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Cromwell. I will pick up on quite a bit of what he has just said but, like other noble Lords, I will attempt not to be repetitive—certainly not unhelpfully so. I should say from the outset that I recognise that this is a very important Bill and my noble friends on the Front Bench will have my full support in getting it on to the statute book.

I feel a little bit like an interloper. As noble Lords who have observed my interventions in this Chamber over the years will know, I would not normally be found participating in a deep dive into economic crime and issues of corporate transparency law. However, I come to this Bill with my role as chair of the Communications and Digital Select Committee very much to the fore, because of the topic the noble Lord, Lord Cromwell, clearly and ably gave us an account of, which is SLAPPs—in full, strategic lawsuits against public participation. I will not go through a detailed description of what this means because the noble Lord has already done that, but I will add a couple of things to what he said.

Although this practice came to public attention last year when it became apparent that it was often deployed by oligarchs, it is important to bear in mind that it is not just something that rich Russians use. It is widespread and used by powerful and wealthy individuals but also by institutions. They reach for it as a defence when they do not like legitimate scrutiny or have something to hide.

When my committee first looked into this matter a year ago, we established that what we were aware of about this practice represented just the tip of the iceberg. In fact, the deployment of SLAPPs or very aggressive lawfare is so successful in deterring scrutiny that many cases never get anywhere near a court. I should add, as a former chair of the Charity Commission, that this practice of aggressive lawfare is also sometimes deployed against regulatory bodies, not just journalists.

The Communications and Digital Select Committee recently held a follow-up session on SLAPPs and took evidence from the regulator, the Solicitors Regulation Authority, to find out what it is doing to identify, deter and punish British law firms that profit from facilitating these abuses of our legal system. I am pleased to say that the committee heard that it is now taking the issue seriously, but I was concerned to find that there are completely inadequate deterrents against lawyers taking on SLAPP cases. In a moment I will comment on what the noble Lord, Lord Cromwell, said as a more expansive solution to this issue, but two specific points stood out to me that are directly relevant to the Bill whether or not the Government support the noble Lord’s proposal to use the Bill to address the matter more comprehensively.

First, the regulator can fine wrongdoers up to £25,000. This has just been increased from £2,000. Noble Lords do not need me to point out just how ludicrously small that sum is; it probably amounts to a few hours in legal fees for the top law firms. I cannot imagine that many lawyers working for billionaire oligarchs or any other rich and powerful figure would live in fear of such a punishment.

The Bill provides a crucial opportunity to change that. It will give the regulator unlimited fining powers in relation to economic crime. That is welcome, but most lawfare cases would fall outside of that scope. I therefore recommend changing Clause 181 to allow the regulator to fine solicitors up to £250 million for pursuing SLAPP cases, whether they relate to economic crime or not. This amount is in line with what the SRA can fine other types of organisations, such as alternative business structures. To be clear, ABSs are law firms that are run by non-lawyers or whose partners are a mix of lawyers and non-lawyers. That means that the big accountancy firms qualify for this status, so in theory the SRA could fine those big accountancy firms that provide legal services up to £250 million but not the majority of law firms. I do not know about other noble Lords, but that strikes me as rather odd. In correspondence with me following my committee’s public hearing, the regulator confirmed that it supported this suggestion. The money this would generate could go into a defence fund for journalists and others facing such SLAPPs.

Secondly, I learned that payment for legal advice is not subject to the same type of money laundering regulation checks as other legal services. In addition, key parts of the Proceeds of Crime Act, which should require solicitors to report suspicious activity to the National Crime Agency, apparently do not apply to the conduct of litigation by lawyers. I accept that lawyers will need to represent individuals from all walks of life, including criminals, but that does not mean they should profit from dirty money. Again, this loophole is odd, to say the least, because it suggests a risk that dirty money can be used to pay lawyers to pursue abusive lawsuits aiming to silence journalists. That is particularly ironic, given that money laundering tends to be a key topic of interest for investigative journalists. Indeed, one of our witnesses made explicit allegations that the law firm pursuing a SLAPP case against her was working for someone using illegitimate funds. I recommend taking this opportunity to close that loophole and send a message that law firms should be doing everything in their power to uphold proper standards of due diligence.

The SRA has said it will write to lawyers about money laundering but, in all likelihood, the lawyers carrying out these cases know exactly what they are doing and how to game the system. The only way to stop them is with meaningful deterrents and sanctions. On that topic I have written to the Lord Chancellor and the Chancellor of the Exchequer. I hope my noble friends the Ministers will agree that these changes would be a valuable and proportionate contribution to the Government’s commitment to stamping out abuses of our legal system.

As the noble Lord, Lord Cromwell, said, we need to do more to stamp out the practice of SLAPPs and end London’s disreputable status as the best place for wealthy and powerful bad people to hide from legitimate scrutiny. If the noble Lord, Lord Cromwell, seeks to use this legislation to bring forward wider measures to tackle this—and I very much urge the Government to seize this opportunity to deal with this practice—it is possible that we will be able to achieve more than I had hoped we might in what I have covered today, which is quite modest and precise, in amendments that I propose to the Bill.

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[Lord Wallace of Saltaire (LD)]

My Lords, it is a pleasure to follow that fascinating speech. I think I need to read it again before I fully understand it. I had not heard it on the five previous occasions on which the noble and learned Lord, Lord Garnier, made it. Halfway through this debate, the noble Lord, Lord Agnew, commented that there seemed to be an extraordinary amount of consensus. That carried on through the rest of the debate. The question behind all the speeches is how serious are the Government about making sure that this Bill becomes an Act which successfully tackles economic crime, rather than one making another tiny step—a shuffle perhaps—in the direction of saying that it will, but not actually managing to implement it?

We have heard a range of arguments that the Government should accept amendments on several issues to strengthen the Bill, in so far as they can be fitted within its remit: SLAPPs, whistleblowers, greater transparency, asset seizures for reparations, tighter enforcement of the register of overseas entities and penalties for failure to prevent fraud or for assisting fraud actors and activities.

On the question of fees, we do not need that in the Bill, as the noble Lord, Lord Leigh, remarked. I disagree with him on whether Companies House needs more powers. It needs more powers, and for that it needs more resources. What we want is an assurance from the Government that they will substantially raise the fees. I sat thinking with amazement that the fees for Companies House are the way they are. With my wife, I am working through the process of downsizing our house after 45 years in one place. I gather that this is in line with the Government’s preferences and policy. They would like people our age to move out of their large houses into smaller flats so that housing problems are moderated. Yesterday, I sorted out how much it will cost me in stamp duty, conveyancing fees et cetera. In comparison with the fee for registering a company, there is rather a large gap.

We all know—I say this to our Conservative friends—that over the past 12 years a number of regulatory bodies have had their budgets slashed. The Environment Agency’s budget has been slashed by 80% and—surprise, surprise—it does not seem to have kept up with discharges of sewage by water companies. The Charity Commission, as the noble Baroness, Lady Stowell, will know, had its budget severely cut, and that badly affected some of the things it had previously done to regulate and advise charities.

[Baroness Stowell of Beeston (Con)]

Forgive me for interrupting. I am grateful to the noble Lord for giving way. I ought to make the point that the Charity Commission’s budget was very severely cut, but it has been increased. Its operating budget is now pretty healthy. It might not be healthy compared with a lot of other regulators, such as Ofcom, when you look at what is required of the Charity Commission, but it had a quite dramatic reversal of its fortunes in terms of its operating costs.

[Lord Wallace of Saltaire (LD)]

I take that correction happily. I was the Lords Minister responsible for charities from 2012 to 2015 and remember these arguments very painfully.

I hope that the Conservatives will say to those in their party, like our last Prime Minister, who say that the answer to every question is tax cuts and for that you have to cut spending wherever you can that there are some areas in which sufficient resources from whatever means—whether fees or taxes—provide very substantial public benefits and sometimes economic advantages as well. This is clearly one of them.

The noble Lord, Lord Clarke, added that greater accountability for Companies House is an important factor that we need to get into this Bill if we can. My career was in dealing with international issues. When I look at a Bill, I always start by asking where the international dimension is dealt with. The international dimension in this Bill is remarkably thin. I said to the noble Lord, Lord Clarke, that I could challenge him on Clause 190 when we get to it. The extent clause is always the one you have to start by looking at.

As the noble Lord, Lord Gold, said, a lot of economic crime is extraterritorial. When I briefly dealt with some police matters at the beginning of the coalition, I recall being taken around Yorkshire to discuss organised crime. The first statement that the chief constable made was, “There is no domestic organised crime”. All organised crime is cross-border—it is international—and, for that, one clearly needs international co-operation. The Conservative Peer who said in a debate here two years ago that we did not need Europol because we had Interpol and that that provided everything we needed did not understand the complexity of the co-operation one needs among national authorities. I, and I think many of us, would appreciate a briefing from the team on how the pursuit of economic crime will be managed in co-operation with other countries if the Government are going to be more serious about this. There is a brief reference to the Financial Action Task Force in the Explanatory Memorandum, but the whole ethos of coping with a massive transnational problem is almost absent from the Bill.

This leads me on to the question of the Crown dependencies and the overseas territories, which the noble Lord, Lord Faulks, raised. I have been interested in this for many years. The frustration is that they fall between the domestic and the international. One is usually assured that one does not have to legislate for them—indeed, that it is improper to do so—but we ask them to follow British domestic legislation. Three years later, we are told that most of them have not got round to doing so yet, but they will, soon. I recall going to one Crown dependency many years ago and gathering from the chief Minister’s enthusiastic briefing that their chief message to me was, “We are so much better than the other two”. That is not a good area. I strongly suggest that this House needs to consider a sessional committee to look at the relationship between the Crown dependencies, the overseas territories and the United Kingdom. It is always being pushed to one side. It is dealt with by a junior Minister in the Ministry of Justice or the FCDO, but some very knotty issues come with it.

The noble Lord, Lord Stevens, remarked that half the registered overseas entities come from the BVI. The largest numbers among the others, adding up to more than three-quarters, came from Jersey, the Isle of Man and Guernsey, and then, I think, Luxembourg. This leads me on to the other point made by the noble Lord, Lord Faulks: Luxembourg is of course also a tax haven and it has its own interests. I must look at that ECJ judgment. I am certainly for transparency against privacy when one draws the balance, and it sounds as though the ECJ has been persuaded on this occasion to support privacy against transparency. It seems to me that corporate privacy should be valued a great deal less than personal privacy, but I will look at the case. International co-operation is clearly an essential part of where we need to have this. The British Government’s deep reluctance to assert sovereignty over the overseas territories and Crown dependencies is very odd for a Government who have spent a lot of time saying that they want to take back control.

A number of noble Lords have talked about the role of enablers within our system, and I am a bit partisan on that issue. Liz Truss talked about the liberal establishment that blocked her radical reforms, but if one is to talk about the enablers who have assisted oligarchs and others—the Intelligence and Security Committee’s Russia report had some extremely strong language on that—one must acknowledge that they were at the heart of our financial, accountancy and legal establishment in the City and that they successfully penetrated the Conservative Party. That is a real problem for us, and we must do something much more strongly about it. When I criticised sleaze within the Government the other week, the noble Lord, Lord Clarke, said to me, “This is a different Government.” I say to him: to demonstrate that we now have a different Government, we need now to take some stronger action, with the Bill, on that problem.

The noble Lords, Lord Leigh and Lord Browne of Ladyton, my noble friend Lord Fox and others all praised the quality of debate on the Bill in the Commons, adding that the Ministers there were clearly listening to concerns and criticisms. I hope that the Ministers here will take very much the same attitude and accept that the Bill can be improved and strengthened, as everyone here has asked. I found it dispiriting, as others have, that on several Bills over the last two Sessions, Ministers here have been told to resist amendments as vigorously as they can. On one recent occasion, a Lords Minister told me that they had to go back on a concession made in the Lords because there was resistance to it from her party in the Commons.

This is a debate in which we have had remarkable consensus on all Benches. We are concerned with the quality and reputation of this country, and we think that the Bill can make a significant difference on that in a number of areas. Let us all pursue the further progress of the Bill with that in mind. I look forward to the conversations which I hope that the Ministers will offer us before we reach Committee, and then again between Committee and Report. Let us see what we can do to put on the statute book a strengthened and improved Act on economic crime and transparency.

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[Lord Sharpe of Epsom (Con)]

Yes, I can. I do not think that deregulating legitimate financial operations and going after economic crime deserve to be talked about in the same sentence. They are very different things.

I have endeavoured to address all the contributions made by noble Lords today. I look forward to further debate and discussion in Committee as the Bill continues its passage. I very much welcome the grit and determination of the noble Baroness, Lady Blake, and am very happy to continue engagement as we go forward.

[Baroness Stowell of Beeston (Con)]

My Lords, may I just take this opportunity briefly to ask the noble Lord, Lord Ponsonby, to relay to his noble friend Lord Sikka the House’s displeasure at his discourtesy, particularly if, as my noble friend Lord Leigh said, this is not the first time that he has not stayed until the end of a debate, and since his was the longest of the Back-Bench speeches in this debate? He took advantage of a full 15 minutes.

[Lord Ponsonby of Shulbrede (Lab)]

I assure the noble Baroness that I will refer the matter to our Chief Whip.

Economic Crime and Corporate Transparency Bill

Baroness Stowell of Beeston Excerpts

Committee stage
Tuesday 25th April 2023 Grand Committee

[Lord Garnier (Con)]

My Lords—

[Baroness Stowell of Beeston (Con)]

My Lords, I am grateful to my noble and learned friend Lord Garnier for allowing me to speak before him. I shall speak to the three amendments I have tabled in my name. I should declare that I chair the Communications and Digital Select Committee, and I have tabled those three amendments with the full authority of the committee, because they follow the work that we have done over the past year or so inquiring into the practice of SLAPPs. We have also been in correspondence with the Solicitors Regulation Authority, and that correspondence is available on the committee’s website. 

My amendments are Amendments 87, 88 and 89. I am very grateful to the noble Lord, Lord Cromwell, for signing all three of them and to my noble friend Lord Faulks and the right reverend Prelate the Bishop of St Albans for signing Amendments 87 and 88. I add, in a personal capacity, that I support the other amendments in this group, both that from the noble Lord, Lord Thomas, and the noble Lord, Lord Cromwell.

At Second Reading, we heard a comprehensive description of the impact of SLAPPs against journalists and public bodies, and the noble Lord, Lord Thomas, has given us a taste of that in his opening remarks, so I will not go over any of that again.

In very simple terms, looking at our different amendments, the noble Lord, Lord Thomas, is tackling this from the perspective of the rich and powerful who abuse the legal system; the noble Lord, Lord Cromwell, is seeking to introduce provisions that support journalists or public bodies in mounting a defence against that action; and, in my amendments, I am trying to deter and prevent solicitors from supporting anybody, normally the rich and powerful, in bringing forward this action in the first place.

In Amendments 87 and 88, I am trying to make it explicit that solicitors cannot accept clients who want to abuse the legal system and avoid and suppress information that could be relevant to economic crime, by giving the regulator clear power to fine and sanction solicitors who breach that rule. They also make it clear that dirty money cannot be accepted for fees when the purpose of the action could prevent someone being subject to the justice system.

To unpack that a little further and focus on those two amendments, at the moment the SRA can fine traditional law firms and solicitors up to £25,000—we know how small a sum that is for some of the very large and powerful legal firms involved. Strangely, the regulator can fine different types of law firms—what are known as alternative business structures—up to £250 million, but this applies only to that kind of category of firm. There is an odd discrepancy. The Solicitors Regulation Authority recently criticised the inadequacy of the £25,000 limit and called for it to be addressed.

My amendments are very much in line with the aims of the Bill, which already removes the regulator’s fining cap for a narrow set of economic crime transgressions but does not specify that this will be applicable to SLAPP cases relating to economic crime. The SRA has said that the Bill’s tests are tightly drawn and the numbers of relevant cases that will fall within them are limited. My Amendments 87 and 88 make it clear that measures to remove the fining cap for professional misconduct also apply specifically to cases that involve an abuse of the legal process to suppress legitimate reporting on economic crime. Not all SLAPPs are about economic crime but, importantly, the regulator says that around half of its current SLAPP investigations are linked to economic crime. Amendments 87 and 88 therefore provide a sensible and proportionate change that supports the spirit of the Bill and government policy to tackle SLAPPs.

Amendment 89 is about closing loopholes that allow the rich and powerful to abuse our legal system and use criminal funds to pay for it. Throughout our scrutiny of SLAPPs as a committee, I have learned that payment for legal advice is not subject to the same type of money laundering regulation checks as other legal services. The Proceeds of Crime Act apparently does not prevent lawyers accepting dirty money to pursue SLAPP cases or require them to report suspicious activity. We have held evidence sessions on this matter and our witnesses described it as a significant issue. Addressing this is complex because—I say this in a Committee of very distinguished lawyers—everyone should have a right to use our justice system and lawyers will need to be able to represent criminals without prejudicing confidentiality. I understand the argument that I expect lawyers to make on the need for criminals to be able to seek proper support and for questions not necessarily to be asked about money.

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[Lord Vaux of Harrowden (CB)]

My Lords, I am not sure whether I can speak to this, being neither a journalist nor a lawyer. I am very sympathetic to what these amendments are trying to do. It must be right to try to prevent the abuse going on. However, I confess to feeling some niggling doubts. Journalists do not get everything right, and there are those who are not above embellishment or exaggeration. The balance of power is not only one way. A small company or individual may well find themselves up against a large media organisation, for example. Whatever we do, we must not make it harder or more expensive for innocent parties to defend themselves from unfair reporting, pre-emptively if necessary.

There is a balance to be found, and I am not yet convinced that these amendments quite reach it. That said, I agree that there is a problem with the current situation. It is being abused, and we need action sooner rather than later. So let us have the discussion and get something into the Bill. If not now, when?

[Baroness Stowell of Beeston (Con)]

I shall just add briefly a comment before we get to the wind-ups, in response to something that my noble and learned friend Lord Garnier said when he urged us not to overstate the problem of SLAPPs. I just wanted to make two brief points.

One has been made by many people already, which is that in fact, when it comes to SLAPPs we do not really know the scale of this problem, because so many of these cases never make it to a court of law. I wanted to make a second point in response to what my noble and learned friend said about not seeking to overstate the problem, and his questioning my and others’ ingenuity in bringing forward amendments in the Bill. My understanding of the reason for the Bill is that economic crime is a real problem. So, if we are legislating because that is the real problem, and we are aware that some of the most significant perpetrators of economic crime have ways of preventing the evidence that would lead them to be potentially subject to the justice system because they operate in that kind of market, as it were, surely we ought to seek to close that gap. Whether or not the number of them that might qualify under that heading is large or small, there is a gap. As I say, the objective here is tackling economic crime, and our amendments are only about economic crime.

I understand very much that the broader question of SLAPPs will have to be returned to, because the whole issue of SLAPPs cannot be addressed in an economic crime Bill. However, my amendments and others in this group are trying to make sure, in the context of economic crime, that those who may be the most significant perpetrators of it on a large scale have nowhere to hide.

[Lord Fox (LD)]

My Lords, this has been a fantastic debate and I will not add any pearls of wisdom and substance, but I would just like to just say something about process in response to the noble Lord, Lord Agnew. In the event that the Government are unable to satisfy what I think is the strong view of your Lordships that something needs to be done, I think we can pledge that the noble Lord, Lord Thomas, and I will work well within our own group to make sure that the comments of the noble Lord, Lord Agnew, about pushing this further on Report will certainly have some legs from our point of view.

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[Lord Bellamy (Con)]

My Lords, perhaps I expressed myself a little loosely. Let me put it like this: in the Government’s view, this is not an area where we should introduce the criminal law, whether it is in relation to pre-litigation or in any other respect in terms of litigation. One is faced with a very basic question of when is something that is a robust and justifiable approach to litigation in a pre-action letter a threat. That is not straightforward, in the Government’s view. The Government’s view is that this is not a matter where the criminal law should intrude.

[Baroness Stowell of Beeston (Con)]

My Lords, I am sorry to interrupt my noble and learned friend, but his reference to the Solicitors Regulation Authority prompts me to ask him a couple of questions. He makes reference to access to justice and to the Government being nervous about legislating in a way that would call that into question. As I said at the start, the amendments that I have tabled, Amendments 87, 88 and 89, are directed at the Solicitors Regulation Authority. As my noble and learned friend has already said, it issued a notice recently to reinforce the fact that this kind of activity is unacceptable.

My amendments seek to codify that yet further and give it the power, which it does not feel it has sufficiently clearly in law, to act when a solicitor is conducting themselves in a way that could be supporting somebody trying to prevent proper inquiry into what could be economic crime. I am struggling because I understand the argument my noble and learned friend is making about parliamentary time and the Government wanting to legislate for this in the round, but I also know as a former business manager that it is very difficult for any individual government department to be confident, even if it wants and hopes to be able to legislate in the way he is indicating that he and his department do, because the timetable is not in its control.

There is frustration in this context because we know that this is about only economic crime and that we are proposing amendments that would tackle only economic crime, as the noble Lord, Lord Cromwell, has said several times—maybe this is a bigger issue than even the SRA is telling me. This would make a difference none the less. In my humble view—I am not a lawyer—I do not think we are proposing anything that would limit people’s access to justice. When my noble and learned friend goes back to his department, even if he cannot make any kind of commitment at the Dispatch Box today, which I understand, could he at least have a conversation with others that is a bit more open-minded than his colleagues seem to have been on this matter up to this point?

[Lord Bellamy (Con)]

I thank my noble friend for that intervention. I can certainly have that conversation. I do not want to give the impression that the Government are close-minded. We are very prepared to legislate and have said that we are willing; the question is finding the right vehicle. I will deal with my noble friend’s amendments in a moment. When I said a moment ago that there are issues around access to justice, I meant no more than that. We have to be very careful in talking about approaching a court and whether that is in some way unprofessional, subject to sanctions or otherwise criticisable.

As far as the Government can see—if I may think aloud—there are probably two essential mechanisms to deal with this, one of which is in part reflected in some of these amendments, although the Government would not entirely agree with how it is put. One is an early disposal mechanism and the other, critically, is a cost protection measure so that people are not exposed to costs. As has been said many times, the risk of having to pay the costs is the real imbalance. Those are two general thoughts that, I hope, illustrate that the Government are not closing their mind to this. We are thinking about it and hope to come forward with a comprehensive, balanced solution, but today I cannot say exactly when.

With that background, I will deal with the specific amendments, which the Government are sympathetic to but cannot accept. On Amendment 80 from the noble Lord, Lord Thomas, as I have already said, new criminal offences should be created with care. That is especially true when targeting professionals with responsibility for assisting persons to achieve access to justice. There is a risk of inadvertently undermining access to justice in that way and the Government’s view, as I have said, is that a criminal approach in this area is not correct and would in any case create quite a lot of difficulties around proof beyond reasonable doubt, the concept of reasonable excuse, et cetera. Criminal offences need to be clear and we are very reluctant to see a new criminal offence created. That is our position on Amendment 80—it is too far-reaching. On that basis, I ask the noble Lord, Lord Thomas, in due course to withdraw it.

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My noble friend’s intention to specifically target professional misconduct involving litigation and threats of litigation is one that the Government wholeheartedly support. However, the Government’s position is that that is already captured in the drafting of Clause 181.

[Baroness Stowell of Beeston (Con)]

Briefly, I urge my noble friend to look at the correspondence I have had with the SRA specifically about the Bill. The SRA makes it clear that what I am proposing by way of these amendments would give greater clarity to the fact that SLAPP cases which relate to economic crime would also not be subject to the current cap but would benefit from that cap being lifted, which the Government are seeking to do. To put it another way, my amendments are trying to make sure that the intention of what is already in the Bill is achieved in the way that the SRA is asking for.

[Lord Bellamy (Con)]

Indeed. I respectfully suggest to my noble friend that she may have copied the letter to which she refers to the Home Office and the Ministry of Justice recently.

[Baroness Stowell of Beeston (Con)]

It was also copied to the Minister’s office.

[Lord Bellamy (Con)]

Indeed. I suggest that I meet with my noble friend and we go through it with a fine-toothed comb. I am happy to meet with anybody else who wants to go through particular amendments with a fine-toothed comb and see where we are, because there is no point in arguing about things where we are ad idem.

The same point arises on Amendment 89, which relates to POCA—I pronounce it “poker”, but others pronounce it “pocker”—and Section 327 of that Act. Amendment 89 aims to stop corrupt claimants using their criminal property to pay their legal fees. Our view on Section 327 of POCA is that that is already effectively covered because it makes it a criminal offence for anyone to convert, conceal or transfer criminal property, so the payment for legal services using criminal property is already a crime. I am led to believe that the Solicitors Regulation Authority will shortly publish new guidance on the application of POCA in relation to solicitors’ responsibilities in that respect. So our position on our amendment is that it is already covered, but again, let us discuss this in detail so that we can get it right. Formally speaking, for those reasons I ask my noble friend in due course not to press her amendment today.

I am grateful to the noble Lord, Lord Cromwell, for his Amendments 105 and 106, and for the care and attention that he has devoted to this. Again, the Government’s position is that these amendments do not quite cut the mustard, if I may put it that way.

As drafted, Amendment 105, which seeks to create a new defence, would cut across several other areas of jurisprudence. There is a common law public interest defence for a breach of confidence, and a very careful balancing, in Section 4 of the Defamation Act 2013, as to when you can have a public interest defence in defamation cases. This kind of provision should not be rushed through without a careful examination of its side effects on other legislation and potential unintended consequences. Neither does the amendment quite attack what the Government would suggest is the main problem, which is not whether you have a defence but whether you have the money to fight it in the first place. You need some cost protection to be built into the SLAPPs framework.

The same point applies to Amendment 106 on the power to strike out. There are already powers to strike out, and the noble Lord makes it clear that we need to clarify those powers—but one cannot get away from the fact that, typically speaking, a strike-out application is very expensive and complicated, because you are trying to throttle a case at the beginning and the court is having to go through a great deal of work to get there. In the end, a strike-out will probably not be effective in achieving what the noble Lord seeks to achieve. We share the objective, but we are not sure that this is the right way to do it.

While we are sympathetic to the sentiment behind the amendments, from a technical point of view, the Government do not think that they are quite right. Unscrupulous claimants could exploit all this by ensuring that the process remains very complicated, long and burdensome. That is the Government’s position on these amendments. I repeat that I am very happy to engage so far as I can in a dialogue with noble Lords to see whether we can make further progress on the technicalities of this issue and look for a proper legislative vehicle in which to carry it forward.

Economic Crime and Corporate Transparency Bill

Baroness Stowell of Beeston Excerpts

Report stage
Tuesday 27th June 2023 Lords Chamber

I have been persuaded by the Government’s amendment, contrary to the arguments that I made in Grand Committee, and I hope that, collectively, we can let this thing move forward. What will be important is the detail of the rules under which the court will operate. I hope that the Government will be able to tell us today that those rules will come forward with all due speed.

[Baroness Stowell of Beeston (Con)]

My Lords, I am pleased to hear my noble and learned friend say that he has changed his position since we met in Grand Committee because I recall that, during those debates, he was strong in his view and mildly critical of those of us who had brought forward amendments.

I have two amendments in this group, Amendments 125H and 125J. I will speak to them but, before I do, I join my noble and learned friend Lord Garnier in welcoming the amendments tabled by my noble and learned friend the Minister. I am very pleased to see them; they go a long way to addressing the concerns that my committee—I declare my interest as chairman of the Communications and Digital Select Committee—has raised in our hearings on this topic over the past 12 months. As has been acknowledged, those amendments are confined to economic crime but that is because this is a Bill about economic crime, so I am happy to accept them as far as they go.

None the less, I want to highlight something that my amendments, the same amendments that I tabled in Committee, refer to—the power of deterrence with regard to the solicitors who represent those who bring forward these forms of legal action. I listened very carefully to my noble friend Lord Faulks introducing his amendment. Unlike my noble and learned friend Lord Garnier, I find his arguments quite compelling, but at this point I am pleased with what we have here. The importance of deterrence and the link between the Solicitors Regulation Authority’s new fining powers, the tactics employed by those who bring SLAPPs and the new dismissal mechanism are where I want to focus my comments.

As we have heard, the Government’s amendments bring much-needed legal clarity about the definition of a SLAPP case. The new strike-out clause includes a likelihood test but not a requirement for the case to be shown to have merit. That is a bit of a gap. It suggests that well-to-do law firms could still threaten journalists with a defamation case that has no merit and force the journalist to deal with huge legal costs. As we have already heard, as long as the lawyers toe the line and are not too aggressive in their tactics, they are unlikely to be thrown out under the early dismissal mechanism, but just because a case is not thrown out at the start, that does not mean everything is fine.

Most SLAPP cases never make it to a court, as we have heard. They succeed by intimidating critics into dropping their investigation at a very early stage. In these circumstances, the early dismissal test will not even come into play. One of the best defences probably lies with the solicitors’ regulator. The SRA needs to have confidence that these amendments tabled by my noble and learned friend the Minister will give it a sufficiently robust basis to penalise solicitors and law firms that pursue SLAPPs.

I understand that the SRA has powers to take action against individuals and law firms for misconduct or failing to comply with the rules. I would be grateful for clarification from my noble and learned friend the Minister that the SRA’s new unlimited fining powers, which are already in the Bill, could definitely be used to deter and punish law firms facilitating SLAPP cases, even if the case is not thrown out by the early dismissal test or does not make it to court. Let us not forget that the lawyers are making huge amounts of money from this. They know exactly what they are doing and can be very clever about getting away with it. We need confidence and assurances that the regulator will be able to take robust enforcement action, as we in Parliament need to be able to set a clear expectation of the regulators that they will be proactive in asking people to come forward with concerns, process complaints speedily and investigate high-risk firms to put them on notice.

Above all, the SRA needs to enforce the spirit of the law, not just the letter, by demonstrating zero tolerance for those profiting from flagrant abuses of our legal system. From my noble and learned friend the Minister, I am looking for clarity at the Dispatch Box that the fining powers that the SRA now has in the Bill and this new definition of SLAPPs empower it to act against law firms if it considers it appropriate to do so because they have breached its codes and so on. We are not looking for a situation in which it is possible for the SRA not to do what is properly expected of it just because it has not been spelled out in words of one syllable in the Bill.

In my view, it is really important for any regulator or regulated sector to understand that the members of it and those who are regulating it have a responsibility to uphold the reputation of that sector. That is done by the way in which they conduct their business. It is important that that is made very clear if the Government bring forward this definition of SLAPPs, as they have, to try to prevent further use of this aggressive and abusive form of legal action, which is doing so much to undermine the Government’s overall intention to reduce economic crime.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I am grateful to the Minister and I welcome the amendment he has put forward. I want to make three quick points.

First, it is clear that the will of the House is that something should be done quickly. The remedy should be speedy, inexpensive and flexible. This leads to my second point. The right course is to allow the rule committee to develop this, but the rules must be flexible and must allow for the development to be made judicially, rather than prescribed in rules. That, in my experience, has generally been the way forward; we have tried this in relation to other matters and know that it is impossible to lay down too many detailed things in rules. Thirdly, I hope that the Government will make available the necessary resources to the judiciary, so that this can be dealt with by a High Court or other senior judge. Speed, effectiveness and determination will show whether this is a means that will work or whether we will have to resort to that which was suggested by the first amendment that was debated.