54. 7Side and the Association of Company Registration
Agents were concerned about a proposed 'citizen's company registration
service'. Currently an organisation can be incorporated:
- through an incorporation agent
by paper or electronically; or
- directly with Companies House by paper.
Incorporation agents are the only people who can
access the electronic incorporation service offered by Companies
House as to do so requires specific software: 90% of companies
incorporate this way.
55. A citizen's company registration service would
allow electronic incorporation of a company directly with Companies
House instead of going through an incorporation agent. The Association
of Company Registration Agents said:
The public could be seduced by a [Companies House]
service of providing new companies at a price no private service
provider could match, imagining that because it is government-backed
they will receive the company they need. But that may well not
be the case.
Mr Jones said that he has told the incorporation
agents that Companies House will not compete with them "in
terms of ongoing relationships with companies"
by, for example, advising a company on how it might be structured
and operate. However, he also said "I am not in business
to provide a living for incorporation agents, I am there to provide
a service to companies in the UK."
56. Companies House facilitates "do-it-yourself"
incorporation if paper is used: it is logical for it to offer
this service electronically as well. Here, again, the issue is
transparency for those who use the services of Companies House.
The advantages and disadvantages of using the service offered
by Companies House should be made clear.
57. The other issue highlighted by 7side is that
the Money Laundering Regulations 2007 oblige incorporation agents
to carry out "due diligence" when forming companies.
Companies House is not covered by this and 7side believe that
money launderers can therefore "go direct to source to form
their fraudulent company with no questions asked".
It also noted that the Money Laundering Regulations do not extend
to foreign company formation agents and, unless Companies House
precludes such organisations from registering companies, this
would also create a clear path for any potential money launderer
to abuse the system.
58. The Committee understands the frustrations
for incorporation agents of having to carry out "due diligence"
when incorporating when Companies House does not. Nonetheless
we do not believe that Companies House's role should be extended
to scrutinise the businesses they are incorporating. However the
register should show where an incorporation agent had been used
as opposed to an "off-the-shelf" incorporation and also
indicate the different levels of assurance that this provides.