COMPULSORY ELECTRONIC FILING?
46. The potential for abuse is increased through
the dual use of paper and electronic filing at Companies House.
Although electronic filing can be protected, paper filing cannot,
other than through the use of signatures. A member of the Institute
of Chartered Secretaries and Administrators said that:
I am not surprised when fraudulent acts take
place as it seems to me that it would be very easy to "hijack"
a company. It would be easy to obtain a sample of a current directors
signature from already filed documents, and then to file new forms
to replace existing directors.
Although PROOF goes some way towards mitigating this
risk, only 6% of companies have signed up for it.
The APPG suggested that PROOF should be made compulsory. Mr Jones
told the Committee that "the key to making PROOF compulsory
is to make e-filing compulsory for these documents. PROOF is a
scheme that requires the agreement of the company and therefore
making it mandatory is not a practical aim. A better approach
is to broaden the use of PROOF as a first step and ultimately
mandate electronic filing of company information".
47. We were told that:
- in January 2009 Companies House
will be consulting with their customers on a strategy for electronic
- in June 2009 a revised electronic PROOF service
will be launched accompanied by a marketing campaign warning of
the dangers of not signing up; and
- depending on the outcome of consultation, Companies
House will make further progress towards 100% electronic filing
of basic form types (i.e. PROOF-related documents) and, subsequently,
all filingsdetailed timings to be considered post consultation,
but 2011 would be feasible for the first stage.
This action is encouraging, and we do not wish to
disrupt it. However, we would have liked to have seen more
urgency in increasing take-up of electronic filing, considering
the targets have never been met. We are disappointed that there
is no new campaign to encourage electronic filing until June 2009.
48. As this chapter shows, there are difficulties
in balancing the need to provide an accessible, efficient, open
register of companies details at a reasonable cost and the need
to have systems to reduce the opportunities for crime. The evidence
presented suggests that there could be merit in a review to assess
whether Companies House could do more to prevent crime without
compromising its core functions. Such a review could include a
risk assessment to identify whether particular types or sizes
of companies are more vulnerable to fraud, or more commonly used
as vehicles for fraud, than others and if so whether there are
cost effective targeted interventions which could reduce the risks
such as by asking for annual verification of information submitted.