Memorandum submitted by The Institute
of Chartered Secretaries and Administrators
The Institute of Chartered Secretaries and Administrators
(ICSA) is an international professional body with some 44,000
members and 28,000 students in over 70 countries worldwide fulfilling
a variety of roles in a wide range of different types and sizes
of organisations.
ICSA and its members would appreciate it if
the issue of Companies House performance as a whole became a subject
of a formal consultation with a three month response time allowing
for proper consultation of members to be undertaken. A very quick
straw poll on fraud and any issues in general has been undertaken
on this occasion and a surprising response, and is indicative
that there are probably more members with valid comments if they
could be canvassed properly.
Please find below our responses to the questions
raised in your request:
1. Experiences and examples of such fraud
There had been few examples of fraud amongst
members with the only fraud of this type being a change of registered
office. Several members quoted that there had been issues of identity
fraud, one respondent stated "we have had some instances
of identity fraud where information on forms 288 filed at Companies
House has been used by fraudsters to get loans, credit cards etc."
Although not an example of fraud, a weakness
was highlighted whereby "a newly appointed director signed
his own appointment form we had sent him (rather than just the
consent box as we had meant) and returned it direct to Cos House.
Cos House then accepted this `self-appointment'".
One respondent also detailed their experience
with Companies House when a fraudulent document was filed. "It
was not what you could call well focused attack as the client
was only at most guilty by association—It was alleged they
were into animal testing which they were not—had never been
but were sometime ago hived off an entity that had been involved
in the past in such activities—we had to get a court order
to remove the doc. It came to light on a Friday afternoon (flexi-time)—it
took us until Wednesday to straighten it out—get the Court
order—Initially Companies House were not responsive but
by Monday Afternoon they were."
2. Views as to how high this risk is
Most of the respondents felt the risk was fairly
low of a company being hijacked. However some perceived weaknesses
of the system were revealed.
"I consider it to be a very real risk. Companies
House have no mechanism of checking that the signatures are those
of the individuals they purport to be. With advances in technology
perhaps this should now be possible
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. I wonder if signatures are checked
by Companies House."
"We have not (yet) experienced any cases
of fraud against us as a company, however we do use the monitoring
service provided by Companies House and I feel that this at least
lets us know if any documents have been filed by someone other
than our company."
3. Whether electronic filing and the filing
alert system which companies can register for has reduced this
risk to a manageable level
E-filing has been positively received and there
general consensus was that it has reduced the risk of fraud. However,
the inability to file certain documents is a hindrance.
"(i) Electronic filing seems to reduce
the risk.
(ii) The down side is that there is no formal
process in place for directors to consent to documents being filed
electronically—whilst a pin has been set up for each director,
the information used to create the pin can effectively be made
up. As a company we have a process in place to gain a directors
confirmation but this still does not stop the potential fraud.
(iii) The alert system helps as a company
can immediately confirm the forms filed.
(iv) It is the companies that have to pay
to monitor the filing of forms on their company.
(v) The number and type of forms that can
be filed electronically is still very limited and even some annual
returns cannot be filed in this way eg where there is a share
class authorised but no shares of that class have been issued.
(vi) I believe the rules are changing but
even if a company finds that something has been incorrectly filed
there is no easy way of rectifying it except at great cost to
the company"
"I suspect the problem was fairly small
to begin with so any reduction in risk also likely to be very
small."
"Whilst I believe electronic filing and
the alerts from Companies House help I understand that it is still
relatively easy for someone to file bogus forms since no checks
are made as to signatures nor the providence of the person making
the filing. It would also help if the cost of the alerts was reduced.
I also note that registrars now often send an anti fraud letter
to the old address and new address where a shareholder changes
their details—is this feasible for Companies House? If not
could there be put in pace a flag system at Companies House when
the registered office is changed and new directors appointed within
a time period (day/week/month)? In addition could a notification
go to the company when a charge is registered?"
"I think this probably has reduced the risk
to an acceptable level".
4. Any other comments regarding companies
house
"Companies House does not seem to read the
covering letters sent to them—why is this? Are the forms
sent to the Doc examination branch and the letter automatically
binned?
It was disappointing that their systems would
not be ready for 2008 implementation of the Companies Act but
it was hardly as surprise despite this being in gestation for
years. Have they confirmed that they will be ready for 2009—have
BERR been updated as to progress? Are we in danger of it slipping
to 2010?
How good is the training provided to the call
centre staff—they didn't used to be very good and often
gave conflicting advice if you spoke to more than one person.
On a positive note, I have found that the London
satellite office is efficient, particularly where documents are
needed the same day."
"(i) Whilst one appreciates the volume
that Companies House deal with, it is still disappointing the
number of errors made in processing. It always seems to be down
to companies themselves to constantly check.
(ii) Sending more than one item in an envelope
still causes problems, I have experienced AGM resolutions which
include Article changes being separated from the amended Articles
so that one or both are rejected by different departments.
(iii) We had cause to change the electronic
filing codes for certain of our companies as we demerged from
another company and wanted to ensure that the former parent could
not file after completion. In itself this was a simple task but
the letters issued by Companies House confirming the new numbers
did not in fact detail the new numbers (they were blank). This
poor administration is frustrating and time consuming."
"(i) Inconsistency. One can be completing
a form in what you think is the correct way for years and suddenly
(usually when it's a crucial transaction) Companies House will
reject it with no warning because a member of staff has decided
it should be done a different way; and
(ii) Their point-blank refusal to correct
mistakes that are blatantly their own. I find it really annoying
that you are required to submit a form to correct their mistake!"
"Companies House provides a generally very
good service. The online systems are incredibly helpful. Also,
the Customer Care Manager programme is excellent and our contact,
Louise Fudge, has been extremely helpful to us over recent years.
(i) The scramble to shoe-horn people into
e-filing has caused some bemusement and some of the sneaky techniques
employed such as quietly withdrawing the downloadable paper Form
363s have not been well received. The risk of paper-based fraud
has been overplayed and almost seems designed to scare people
into e-filing. Companies House has been set very high e-commerce
targets to hit by the gov't and everyone knows this.
(ii) The Contact Centre's staff clear new
brief to prevent you speaking to a senior person on more involved
issues is extremely frustrating. This means that we probably end
up bothering Louise Fudge and her colleagues more than we otherwise
might."
"Generally I find it very good. The one
thing that frustrates me is that companies with a large number
of present and past directors are barred from submitting their
annual returns online. I recognise that our corporate structure
is unusual but it is frustrating to have to use the paper forms.
Particularly since we are charged more for the paper form even
though it is Companies House that forces us to file this way against
our wishes".
"I would therefore suggest that where there
is the same signature on any appointment firm for both the authority
to appoint and the consent that Cos House should institute a procedure
in that specific case of writing to the registered office to confirm
the appointment and saying that the co should contact them immediately
if it is not correct".
March 2008
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