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.