Financial Services Bill — House of Lords, 2021-01-28
Topic: Law and Crime
Edward Garnier (Conservative, Centre-right): My Lords, this is a lengthy Bill, and although in some respects it is politically uncontroversial, there are many points of technical detail that the House will want to scrutinise closely. I can think of no better people to assist in our deliberations on the Bill than the two maiden speakers. My noble friend Lord Hammond of Runnymede made a superb speech. I hope that, having briefly sipped from the glass of independence in 2019 after nine years in the Cabinet, he will not lose the habit of free thinking, even though he has retaken the Conservative Party Whip. The noble Baroness, Lady Shafik, also made her maiden speech today. Her contribution to the study and practice of economics in a whole host of financial and academic institutions is inspiring, so I look forward to learning a good deal from her, as well as from my noble friend, in the future I am intervening in this debate to highlight a matter that is not in the Bill, but it ought to be. It is a subject that the noble Baroness, Lady Bowles of Berkhamsted, and the noble Lord, Lord Rooker, have touched on, and I gather that my noble friend Lord Hodgson of Astley Abbots may also speak about; namely, the need to expand the criminal law concept of failure to prevent crime, not least corporate financial crime. I have been thinking about the law on financial crime since the 2008 financial crash. I was the shadow Attorney-General for two years before the coalition Government came into office, and then the Solicitor-General in government. I developed the deferred prosecution agreement, or DPA regime. It was enacted through the Crime and Courts Act 2013. It is a regime that pragmatically and justly deals with corporate financial crime under the supervision of the courts. I will not go into the detail of the system now but, if I may say so, it works. I declare an interest not only as the Minister who introduced the system into this jurisdiction, but also as a practising barrister who, now long out of Government, appears in DPA cases DPAs are not, however, the end of the story. Financial crime is often thought of as the crime that does no real harm: no one gets killed, no bones are broken and there is no blood on the carpet. Equally, corporate offending is sometimes hard to visualise. But corporate crime and financial crime both cause great harm to people, to communities, to the economy and to our national reputation as a safe place to do business. Both are all too common and need to be investigated and dealt with effectively by the public authorities here and abroad. Financial crime is often, by the very nature of modern financial services, both international in its scope and committed electronically through corporate structures, albeit with a human mind and will behind it I hope, with other noble Lords, to expand on this theme in Committee, but for present purposes I shall say only this: Section 7 of the Bribery Act 2010 creates a corporate offence of failing to prevent bribery. It has been deployed successfully on several occasions and provides a model which can and should be replicated in other areas of financial crime. Furthermore, the Criminal Finances Act 2017 introduced corporate criminal offences of failure to prevent criminal facilitation of tax evasion. I suggest we should by this Bill expand the failure to prevent regime to cover at least some of the 50 or so financial or economic crimes that are available to be dealt with by DPAs listed in Schedule 17 to the Crime and Courts Act 2013 Finally, we must reform the law relating to corporate criminal liability. The noble Lord, Lord Hendy, is right and I profoundly agree with him. I have been writing and speaking about the need to do this for years. The concept of the directing mind and will as the basis for corporate criminal liability, which the Americans abandoned before the First World War, worked for the small family businesses of the 19th century, but is now long outdated. Today, companies can operate in many different countries with national, regional and global boards and with hundreds of thousands of employees engaging in multi-jurisdictional trade in goods and services. Locating the directing mind and will of these vast conglomerates is difficult, if not impossible, and the current law does not reflect the reality of modern business life. It is an affront to common sense and justice. As in the United States, we need to introduce vicarious liability into our corporate criminal law.