Bank of England and Financial Services Bill [Lords]

Debate between Charles Walker and Lord Jackson of Peterborough

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 19th April 2016 Commons Chamber

[Mr Walker]

The hon. Gentleman makes a valid point. Banks are de-risking very aggressively at the moment and we need to inject some proportionality into their actions. I believe that the new clause will go some way towards achieving that.

New clause 9 inserts into the Bill a process of adjudication. If a politically exposed person believes that they are being treated unfairly—being denied access to banking services—they can take their concern or complaint to the FCA, which can then adjudicate. The FCA can decide whether banks are interpreting the directive over-aggressively and, if they are, levy a fine on them for doing so. The new clause has nothing to do with reducing accountability; it is about increasing proportionality, which is the right thing to do.

Why is new clause 9 needed? It is needed because it is clear that in interpreting the fourth money laundering directive, banks are making no distinction, when determining who is a politically exposed person, between PEPs drawn from the corruption hotbeds of Nigeria, Russia and parts of the subcontinent, and those drawn from developed democracies such as ours that have high levels of scrutiny and accountability.

[Mr Stewart Jackson (Peterborough) (Con)]

May I put on record the thanks of all of us in the House to my hon. Friend for his diligence, focus and tenacity in bringing this massively important issue to the attention of the Government and for what we hope will be a satisfactory conclusion today? Does he agree that the collateral damage of some of the precipitous action of the banks has been a big impact on people’s families and, as a corollary, their future credit worthiness?

[Mr Walker]

My hon. Friend makes a good point. As I said, the banks have acted very aggressively, and I shall return to that point in a few moments.

May I thank the Economic Secretary for her time and patience in dealing with this matter? I have been speaking to her about it for four months, and I admit that I have got a little over-excited on occasions. However, she has always maintained high levels of good humour and patience, for which I thank her. It is important to put that on the record.

At this late stage, without the intervention of new clause 9, the directive risks blighting the lives of decent people. They are not just people working in public life and service but, as my hon. Friend the Member for Peterborough (Mr Jackson) pointed out, their partners, spouses, children, parents, siblings and in-laws. The directive is not proportionate.

Even more worryingly, the directive covers the close associates of politically exposed persons. I am aware that one such close associate is a member of the press lobby. He had some problems with an individual savings account and was subject to close questioning by his bank. When he asked the person on the other end of the phone why the bank was conducting itself in such a way, the response was, “Because we understand that you are an associate of the Prime Minister.” Even the media are caught up in this directive, or rather the banks’ de-risking in preparation for its introduction.

The Financial Action Task Force, whose guidance underpins the directive and is repeatedly referred to in it, states:

“For close associates, examples include”—

the House needs to listen carefully to this because it is quite an odd paragraph—

“the following types of relationships: (known) (sexual) partners outside the family unit (e.g. girlfriends, boyfriends, mistresses); prominent members of the same political party, civil organisation”—

that could be the National Trust—

“labour or employee union as the PEP; business partners or associates, especially those that share (beneficial) ownership of legal entities with the PEP, or who are otherwise connected”.

My fear is that, without clear Government-backed FCA guidance, as provided for in new clause 9, the banks, in their rush to de-risk, will continue to draw on the work of the Financial Action Task Force. The Financial Action Task Force states in paragraph 37 of its 2013 guidance:

“there should be awareness that middle ranking and more junior officials could act on behalf of a PEP to circumvent…controls. These less prominent public functions could be appropriately taken into account as customer risk factors in the framework of the overall assessment of risks”.

Notification of Arrest of Members

Debate between Charles Walker and Lord Jackson of Peterborough

Wednesday 10th February 2016 Commons Chamber

[Mr Charles Walker (Broxbourne) (Con)]

In the previous Parliament, the Procedure Committee was asked to look into the existing protocols around the arrest of Members of Parliament. We started preliminary inquiries in early 2015, and this work laid the foundation for the inquiry we launched shortly after the general election.

The findings of the inquiry were unanimously endorsed by the Committee, which reported to the House in December. I know that our moderate and proportionate recommendations relating to the arrest of Members have created a great deal of faux sound and fury in various quarters. On Monday morning, I had to smile at the assertion by Kevin O’Sullivan, a Mirror journalist, on Sky Television, that

“they should very much be named because everyone else is… that’s always been the system. Once you are arrested, you can be named”.

That was an enlightening observation for two reasons: first, because it was completely wrong, and secondly and more interestingly, because it gave a revealing insight into the conduct of too many national newsrooms and their own morality when it comes to obtaining information from public officials.

I accept that the media have a job to do, and that includes making our lives difficult, so my greatest disappointment in the reporting on the Committee’s proposals is reserved for Sir Alistair Graham, the former chair of the Committee on Standards in Public Life. From his pejorative comments about our report, it is clear either that he has not read it or, if he has read it, that he has no appreciation of, or regard for, the law. I know that Sir Alistair’s time in the chair from 2004 to 2007 was not a happy one. During his three years in office, he felt deeply aggrieved that at no stage did the then Prime Minister, Tony Blair, agree to his repeated requests for a meeting. I accept that the then PM was perhaps churlish in his refusal to meet him, but I gently ask Sir Alistair to pursue his grievance with the former Prime Minister, as opposed to taking his frustrations out on the House of Commons, which had no hand in his disappointment. On a personal note, it is sad to see a distinguished former public servant and knight of the realm allowing himself to be turned into little more than a misinformed talking head.

Let me be absolutely clear: the Procedure Committee is not asking for Members of Parliament to receive special treatment in the eyes of the law. Such a request, if made, would be alien to the values of our Committee and to the wishes of our constituents. All of us on the Committee believe that the law should be applied equally to all citizens of the United Kingdom, but currently that is not the case in this House, where, in matters of policing and public order, the point of public notification occurs not at the point of charge, as is the case with our constituents, but at the point of arrest.

That process of notification puts the police and the House at odds with the Data Protection Act and, potentially, article 8 of the European convention on human rights. Regardless of how people feel about the application of data protection and ECHR laws, that exposes both this House and the police to legal challenge by a named Member of Parliament.

[Mr Stewart Jackson (Peterborough) (Con)]

Is it not the truth that this practice is an historical anachronism arising from the period of the titanic struggle between the monarchy and the legislature, when, at a time when the King would arbitrarily arrest Members of Parliament, it was quite proper for Parliament to be so advised of that happening? It has no place in a modern Parliament and a modern democracy.

[Mr Walker]

My hon. Friend makes a valid point, which I shall now go on to answer.

In brief, the House has five choices. Option 1, as set out in our report, is to ensure that the law of the land is applied equally to Members of Parliament as it is to our constituents. Option 2 is for the House to retain the status quo, thereby knowingly putting itself and the police on the wrong side of the law. Option 3 is for the Home Secretary to amend schedule 3 of the Data Protection Act 1998 to specifically exempt Members of Parliament from its universal protections, which in itself would create a precedent for a two-tier system tier of justice—the very thing our constituents do not want.

Option 4 is to amend primary legislation, so that the names of all suspects are released by the police at the point of arrest, not at the point of charge. Of course, that would be welcomed by the press, as it would aid it in its pursuit of celebrities and other people of interest, but it would be devastating for those tens of thousands of people who are arrested but never charged with any crime.

Option 5 is for the House to abandon privilege in respect of our parliamentary duties in the hope that no future despot would want to detain us from them on trumped-up political charges. Of course, if we follow that route, tonight’s entire debate would be a dead letter.