Bank of England and Financial Services Bill [HL]

Lord Pannick Excerpts

Tuesday 15th December 2015 Lords Chamber

[Lord Brennan (Lab)]

My Lords, I support the amendment for three reasons, which I shall shortly state. First, there is a genuine and important public interest in the existing statutory system. Two years ago, this House enacted this system. It did so as the result of a government amendment, which was not opposed but agreed unanimously. The Minister speaking to the amendment, the noble Lord, Lord Newby, said that,

“the Government believe that it is in the long-term interest not only of bank customers but of the City of London that the highest possible standards are followed”.

He said that the system he was introducing,

“ensures that individuals are held to account when things go wrong”.—[Official Report, 15/10/13; col. 405.]

That is the genuine public interest that the present system protects.

Secondly, the reversal of the burden of proof is a well-recognised feature of our legal framework. It is subject to safeguards and appropriate standards, but it exists and has done for a long time. For example, the Health and Safety at Work Act covers employers large and small—a point was made about the size of credit unions—across the whole country. They have a duty to protect their workers. In fulfilling that duty they are required to show that they did all that was reasonably practicable to satisfy that duty. It is a statute that can send people, after a court hearing, to prison. That is for a crime punishable by jail; this is not that—this deals with misconduct and disciplinary proceedings. The people involved should know the system they are trying to justify and explain. The regulator is entitled to be able to run a sensible regime which does not subject his organisation and his staff to undue pressure. That is what the public want. I would ask the House this: are we seriously suggesting that that which we demand of employers for our citizens is too much to ask of bankers; namely, to protect their customers?

I turn to the third reason. Why make this change? Why have the Government, a different Government but with the same Treasury officials, committed a complete volte-face within two years and without any plausible justification, as the noble Lord, Lord Sharkey, pointed out? I suggest that, there being no plausible reason, the first thoughts of the House were the right ones and are what the public expect. We should do our best, on this kind of embarrassing occasion for the Treasury and the Government, to protect them from this intellectual disarray and to make sure that the House itself does not fall into the legislative embarrassment of telling the nation one year, “This is how we will protect you”, and two years later saying exactly the opposite. For these three reasons, this amendment should be carried.

[Lord Pannick (CB)]

My Lords, I think we all agree that to impose a reverse burden of proof on a person to establish their innocence of a disciplinary offence requires a strong justification. It is required not only by elementary fairness; it is also required by law, as the noble and learned Lord, Lord Brown, indicated. This is a criminal matter for Article 6 purposes because a disciplinary offence is regarded, by our courts and by Strasbourg, as a criminal matter if sanctions are imposed. So the question is this: what is the justification?

I have listened carefully to the debate to try to understand the justification being put forward, and it appears to amount to this. It will be difficult to prove a failure to comply with the new duty to take reasonable steps. That is the concern, but I do not understand it. The regulator has considerable investigative powers which enable it to obtain all the relevant evidence on whether a senior manager has complied with the new duty to take reasonable steps. If there is no document trail, which is the concern mentioned by the noble Lord, Lord Sharkey, in his contribution, the regulator will rely precisely on that in establishing a failure to take reasonable steps. The banker, even if he has the assistance of the noble Lord, Lord Grabiner, acting for him, will be found guilty of the disciplinary offence of failing to take reasonable steps, and rightly so. That is the appropriate way to change a culture—a matter to which the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Kramer, rightly referred. You change a culture by ensuring that the regulator brings a proper disciplinary charge; you do not change a culture by introducing an unfair regime.

The noble Lord, Lord Sharkey, said that the battle between the FCA and the bankers is unequal. This is a problem across the legal field in relation to prosecution authorities, but the answer is to ensure that the FCA has adequate resources; the answer is not to introduce an unfair regime. I do not think that the case for a reverse burden has come close to being made out. The strong justification has simply not been established.