Economic Crime and Corporate Transparency Bill

Lord Fox Excerpts

Committee stage
Thursday 11th May 2023 Grand Committee

[The Lord Bishop of St Albans]

I am sorry I have been unable to engage more fully and consistently with this Bill, but this amendment prompted me to come here when I had a few minutes. I was recently speaking to someone I met at a social gathering. In the course of the evening, we were talking about a whole range of things, and he was talking about the fact that he had been defrauded of some money and how it is now materially affecting his retirement. His comment was: “I feel so embarrassed, because I’ve always tended to think it was simple people who didn’t understand financial matters who were likely to lose money. I’m highly literate, I’ve done all the right things, but I’ve been defrauded”. This is having a big effect.

Also, as we are becoming increasingly cashless and more and more transactions are online—it looks like that will be the trajectory for quite some while—there is far more potential for these sorts of frauds. For example, I note that fraud on lost and stolen cards had increased by 30% by 2022 and card ID theft, where a criminal opens or takes over a card account, had almost doubled in the previous year. In other words, this crime is getting worse.

It is in everybody’s interests that we encourage people to use what is, for most of us, a great convenience being able to pay with our cards—but we need to make sure that people have confidence. The statistic that the noble Lord, Lord Coaker, gave us—that one in 15 adults has been a victim—is particularly interesting. In other words, it is now widely assumed among groups of ordinary people chatting that this is a very real problem. There is a good side to that—hopefully, we are being far more cautious and savvy—but, nevertheless, that will not encourage people to invest and use some of the financial services that we might hope they will as they plan their retirements.

I just want to add my words of encouragement and ask the Government whether they can give us some idea about whether this amendment, or something similar, might be a way forward. It would give people confidence if they knew that there was clear and simple way to find redress when they were a victim of fraud. Also, could this be built on in some way, not least because the proceeds of property recovered under this future Act could then be directed towards compensation?

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Coaker, and the right reverend Prelate the Bishop of St Albans for their words. I am not going to try to add to the issue of individuals; instead, I note that we should remember that this also involves businesses. The Home Office survey said that one-fifth of businesses have been hit by fraud. Such fraud can be existential to those businesses—at the very least, it is a tax on growth because money that is stolen is not reinvested in that business—so this matters.

In earlier debates, we have talked about the other side of this: stemming the cause of fraud. We have talked about the failure to report as well as the facilitation issue. The Government seem much more interested in picking up on the failure to report side than on the facilitation side. I ask the Minister to go back and find a middle way between what was being proposed by the noble Baroness, Lady Morgan, and her committee and what we have now, which is nothing—that is, to find some sort of code of conduct with teeth that starts to address the facilitation issue. It is through facilitation that this fraud is happening, in many cases. At the same time as addressing questions about compensation, we must go back and find effective ways of preventing this happening.

With noble Lords’ indulgence, I will slightly broaden the scope of my speech because, over the course of the last day or so—since we debated this issue—the United States has repatriated seized assets to Ukraine. Can the Minister ask his officials to have a look at how that was achieved? Which international laws were used to facilitate that repatriation? In previous Committee debates, we have discussed freezing and seizing, so it would be very useful for your Lordships to know more about this before we get to Report; it is an issue that we remained concerned about. Although I realise that the United States is a different legal domain, it sits in the same international climate of law. Therefore, it would very much help our deliberations if the Minister was able to talk to the department’s officials and get some sort of readback as to how this seizure and repatriation to Ukraine was achieved.

Otherwise, Amendment 106D is a good way of trying to find out where the Government sit on compensation, although I would open it up to include business compensation as well. Perhaps there are also issues around the insurance industry that the Government should be thinking about.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, these government amendments concern commencement and cut across several clauses. Amendments 106F, 106H and 107A are consequential on the regulation-making powers introduced by the new clause headed, “Fraud offences: supplementary”, which is one of the Government’s new clauses introducing a failure to prevent fraud offence. Amendments 106G and 107B, and the proposed new clauses to be inserted by Amendments 109 and 110, replace Clause 191 with a new commencement clause and a separate transitional provision clause. The clauses are being separated into two to make the commencement provisions easier to follow and avoid having one long and complex commencement provision.

They include a number of small, technical changes to ensure that the commencement provisions in the Bill work as effectively as possible and bring the devolution aspects of the commencement powers into line with previous similar legislation. They also bring into force, on Royal Assent, procedures in the Bill about the codes of practice which will govern the strengthened information order powers. This will ensure that those powers can quickly start to be used. Certain money laundering reporting measures are also being commenced on Royal Assent: the exemption for “exiting and paying away” and the new defence against failure to report, which we debated earlier in Committee. That will give certainty to businesses about their reporting duties as soon as the Bill is passed.

I hope noble Lords will support these amendments. I beg to move.

[Lord Fox (LD)]

My Lords, I will speak very briefly—I am sure the Minister will be glad to know that. I am intrigued by Amendment 109 because it complicates the process of bringing the Bill into being quite a lot. There are a lot of moving parts set out in Amendments 109 and 110 for the Bill to start to be effective. The simple question is: from start to finish—from Royal Assent to when everything is working and all parts are moving—what is the Government’s estimate as to long it will take to fulfil all the steps set out in these amendments?

[Baroness Blake of Leeds (Lab)]

I too will speak very briefly. I note the comments about consultation with devolved authorities. Given concerns about the extent of consultation in other areas, can the Minister reassure us that it is adequate, and deemed adequate by the devolved authorities? That is a clear theme running through some of the legislation.

We have discussed—we will revisit it, I am sure—the issue of failure to prevent and the specific mention of large organisations. We understand that keeping it to large organisations will not capture a broad enough spectrum of the businesses that we are covering. Having said that, I recognise that this is a tidying-up exercise. With further amendments we might revisit some of the issues at a future stage, but I would be grateful if the Minister could respond to those comments.