Mr.
McFadden: The amendments and clause 40 are important
because the clause sets out in detail how the fixed monetary penalties
that we were discussing will be applied. There is a great deal of
detail in the clause—for example, the issuing of a notice of
intent under subsection (2)(a). A person may make written
representations to the regulator in relation to that and they may
ultimately appeal against the final decision, as we have
discussed. The
amendments would intervene in the area of a notice of intent before a
sanction has been imposed—that is their focus. We already know
that there will be an appeal to an independent tribunal when a sanction
is imposed. The amendments would add a second appeal earlier in the
process when a notice of intent has been issued. They cover similar
territory to the amendments discussed at length in the other place, but
they are slightly different. I am still not entirely clear about who
the independent person referred to in the amendment might be. My
broader concern is that if the amendments were accepted, further
provision would need to be made for that in the Bill. Details would
have to be given about the powers of the person and the procedure for
considering representations and so
on. Let
us remember where we started: the recommendations from Professor
Macrory that there should be greater simplicity and speed, and that
there should be a greater variety of options available to regulators to
ensure compliance. My worry is that the amendments will make the system
over-complex by giving us two different
appeal processes—one where a notice of intent is issued and one
where a sanction is imposed, as already in the
Bill. The Bill
provides a right of appeal to an independent and impartial tribunal on
the final decision, as I have said. An appeal would be able to consider
matters such as whether the regulator had unreasonably dismissed the
objections referred to in the clause under subsection
(2)(c)—objections raised to the sanction after the notice of
intent. The
issue is whether we need two rights to have the case heard by two
different persons, both before and after a sanction is imposed. The
amendment would add a further level of bureaucracy and additional
resources would be needed to set up and maintain a body that would hear
all the representations. The process of imposing a sanction would be
made much more lengthy and cumbersome. The amendment might actually
take us back to the problem we are trying to resolve, which is how to
give greater flexibility to regulators and have a variety of options in
relation to the kind of offences we are talking
about. During
the debates in the other place, my noble Friend Baroness Vadera
addressed similar issues on similar amendments. She agreed that there
was a need for high quality decision making by regulators, and we made
changes to the guidance to the Bill to strengthen that. The guidance
states
that “the
regulator should have arrangements in place to review or monitor
individual decisions. This will ensure that there is confidence in the
regulatory
system”. We
want to ensure that there is some quality in the decisions, but it is
important to remember that there is a right of appeal against the final
decision. The question before us is whether we need two rights of
appeal in the process. I hope the Committee agrees that the right of
appeal to an independent tribunal covers the issue of one regulator
being judge and jury together, so we would not need the additional
right of appeal at the earlier stage, around the notice of
intent.
Mr.
Prisk: The debate has been useful. I fully recognise that
there are weaknesses in the amendments, but the central issue is that
all that is available to someone who has a sanction placed against them
at the moment is an appeal to disprove their guilt—in other
words, we have an appeal process after the event. The purpose behind
the amendments was to find out how we could establish a means by which
a person who has been accused is able to correct something or to
challenge the process with someone who is not making the notice in the
first place. The amendment is not necessarily about its own merits, but
about highlighting a weakness in the existing system. Of course, if we
are to have a civil procedure, it needs to be reasonably unbureaucratic
and reasonably efficient. If it is to have the confidence of the
community that it is trying to police, there needs to be confidence in
an element of fairness. I am not confident that the procedure has that
appropriate
balance. In
a moment I will seek to withdraw the amendments, Mr. Chope,
but I do so on that basis, which I hope the Minister will consider too.
I will continue to see if there is a way through. Again I highlight the
fact that we are talking about a regulated person, who may be a sole
trader or an individual, who would look at the system, feel intimidated
about going back to a regulator and
therefore feel that they should just pay the fine and get on with it. I
want to make sure that we have done everything that we possibly can to
get the right balance between efficiency and fairness. I am not sure
that it has been achieved so far—indeed, I am reasonably
confident that it has not. I am not sure that the balance is
appropriate. I have not found the magic answer, but the purpose of my
amendments was to see whether there was a degree of reason. I hope that
the Minister can indicate from a sedentary position that the Government
are open to such
suggestions. Mr.
McFadden: Always
reasonable.
Mr.
Prisk: Always reasonable, always open. I am pleased that
the Minister is happy to say that from a sedentary position. It is
important that we can find some way forward, to make sure that there is
confidence in the system. The danger, I suspect, is that there will not
be, as currently constituted. On that basis, I beg to ask leave to
withdraw the
amendment. Amendment,
by leave,
withdrawn.
Lorely
Burt: I beg to move amendment No. 53, in
clause 40, page 18, line 16, at
end insert ‘may require
the regulator to withdraw the notice and pursue the matter as a
criminal offence under the relevant
provisions’.
The
Chairman: With this it will be convenient to discuss the
following amendments: No. 54, in
clause 43, page 20, line 24, at
end insert ‘and may
require the regulator to withdraw the notice and pursue the matter as a
criminal offence under the relevant
provisions’. No.
55, in
clause 47, page 23, line 24, at
end insert ‘and may by
notice require the regulator to withdraw the notice and pursue the
matter as a criminal offence under the relevant
provisions’.
Lorely
Burt: The amendments all have the same purpose. The
provisions would enable the business to opt for court action, if
preferred, even though it could face the prospect of a criminal
conviction as a result, thereby ensuring that the option was available
at the request not only of the regulator but also of the company.
Businesses should not have to face the risk of unsubstantiated damage
to their reputations until and unless they have been proved guilty. For
many businesses, the risk to loss of reputation is worse than the cost
of the appeal. Consequently, many businesses would take the sanctioning
decision to appeal, and they should have the option of taking the
decision through a criminal court, if they so
wish.
Mr.
McFadden: In a sense, the amendments are not too
dissimilar from those that we discussed previously. They are coming at
the issue from a slightly different angle, but I suspect that they are
motivated by a similar concern. The hon. Lady said that the
client—or the accused, whatever phrase we use—should have
the choice, and the amendments would apply the choice to fixed monetary
penalties, discretionary requirements or stop
notices.
5.45
pm The
new sanctions under the clause and following clauses are an alternative
to criminal prosecution. They will be imposed only when a regulator is,
as I have said, satisfied beyond reasonable doubt with the criminal
standard of proof that a criminal offence has been committed. The
regulator will have undergone a thorough and rigorous investigation
and, at the end of the process, will have determined that a person is
liable for the offence. The important question to be answered is
whether we think that, after that process, it should be for the person,
the business concerned or the regulator to decide what route the
sanction
takes.
Lorely
Burt: I am interested in the route that the Minister is
taking. He seems to be implying that, if a case is considered strong,
the judge and jury have already gone out, come back and decided that
the company is guilty. Given what he has said, I am even more concerned
about pressing my
case.
Mr.
McFadden: I do not know whether what I have to say will
ease the hon. Lady’s concern. The alternative set out in the
amendments could leave the system open to abuse. For example, it could
give someone who was accused of an offence a mechanism to delay the
enforcement process by opting for a criminal prosecution and thus
requiring the regulator to undergo another process after it has gone
through the process of setting out its case and presenting all its
evidence. There is a right of appeal to an independent tribunal but, as
I said in respect of the previous amendments, we want a system that
does not have to go through the same processes over and over
again. Allowing
a person to choose which route to go down would not be in keeping with
the Macrory review. In a proportionate sanctioning regime, criminal
prosecution should be reserved for the most serious cases. That remains
a weapon for serious breaches of the law. We are not saying that the
new sanctions should replace that system entirely, but that they should
replace it in some circumstances, and that can be assessed by the
regulator only in view of all the cases before
it. The
choice between civil and criminal sanctions should remain at the
discretion of the regulator, not the person who is accused of the
offence. We understand the concerns that members of the Committee might
have about the new sanction powers being
misused.
Ann
McKechin: Can my hon. Friend confirm that, in Scotland,
such measures would be inappropriate, as the decision whether to
prosecute is in the hands of the procurator fiscal who takes the action
on behalf of the regulatory authority? The regulatory authority does
not have the discretion in that
regard.
Mr.
McFadden: The principle to which my hon. Friend referred
is right. It is not for the accused to choose their route, which would
be the result of the amendments. For both fixed monetary penalties and
discretionary requirements, there will be an opportunity for a person
to make representations to the regulator before the sanction is
imposed. It will enable the person to raise defences and challenge the
case against him or her and to challenge the evidence relied on by the
regulator.
The ultimate
appeal will be referred to an impartial, independent tribunal. The
tribunal will also have the power to overturn or reduce the level of
the penalty imposed by the regulator or take any other steps that the
regulator could have taken in relation to the incidents of regulatory
non-compliance. The Bill contains broader safeguards in the form of the
review clauses that we referred to earlier—such as that relating
to part 3—and suspension provisions, which we discussed in
relation to parts 1 and 2.
Mr.
Prisk: It is a peculiar argument that, if someone is
allowed the option of choosing the criminal path, that will somehow
lead to a flood of cases. The truth is that an individual would choose
that path under only the most exceptional circumstances. Does the
Minister recognise that it would be a tiny number? Clearly, most
businesses would not wish to go down that path. It is a thin
argument.
Mr.
McFadden: The hon. Gentleman allows me to turn again to
the impact assessment. That states that from the Bill’s overall
estimated benefit to business—which comes to an annual sum of
£200 million—the biggest proportion will probably come
through this part of the Bill due to savings made from fewer court
appearances for businesses and fewer lengthy legal costs in criminal
prosecution cases. Those are significant savings to business.
Mr.
Prisk: It is a fascinating extract, I am sure, but it does
not answer the point. The idea that having that option available will
suddenly regularly increase the burden to business is not right. This
will affect a tiny handful, a very small proportion of businesses. It
is about ensuring, where there are no other options and no independent
person to appeal to before being found guilty, that this option exists
should a business feel that it would like to have its day in court and
stand before the law. That is why it would exercise it and that is why
it is an important principle.
Mr.
McFadden: In the end it comes down to a judgment about the
safeguards in the Bill. We had this discussion on the previous set of
amendments that were moved by the hon. Gentleman and this is a similar
matter. The Government’s view is that there should be the right
to make representations to the regulator on the basis of a notice of
intent being issued—something set out in the clauses that the
amendments seek to change. The notice of intent must include the
grounds for the proposal and set out the right to make such
representations, objections and so on. There is also the right of an
independent appeal to the tribunal, which is independent, impartial and
separate from the regulator. As I said, should we judge that the powers
are not being used properly after the enactment of the Bill, the wider
review and suspension provisions provide adequate safeguards. In the
end, it is also a judgment about whether the person accused or the
regulator should decide the path of its
function.
Ann
McKechin: Does the Minister agree that we should stick to
the general principle that prosecutions should be taken if they are in
the public interest, not because of personal requirements? I am
disappointed
that the Opposition do not recognise that prosecutions should be taken
in the public interest. There is a general principle that should be
applied here and that is what the Bill tries to put in
place.
Mr.
McFadden: I agree with my hon. Friend, and I am happy to
confirm to her that officials did consult the office of the procurator
fiscal on the measures.
Lorely
Burt: I was interested to listen not only to the Minister
but to the hon. Lady. I do not agree that public interest should
override individual fairness. I have listened carefully to the Minister
when he talked about people who might try to exploit the system and
delay the process for their own financial ends. Even so, if justice is
done then in the end these individual companies will be punished. The
delay in punishment of a few rogue traders should not be at a loss to
everyone else, particularly companies that are innocent or that value
greatly the loss of their reputation, which is an extremely serious
consequence for them. I do not believe that the regulator or anybody
else should take that right away from them.
To use an
analogy from civilian life, a person might be accused of stealing a
loaf of bread, but they have the option of electing to go before a
jury, not because of the value of the loaf of bread but because of the
value of their individual reputation. I do not believe that that option
should be taken from companies. I therefore wish to press the
amendment.
Question
put, That the amendment be
made:— The
Committee divided: Ayes 6, Noes
8.
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