Standing Committee A
Tuesday 17 June 2003
(Morning)
[Mr. Alan Hurst in the Chair]
9.10 am
Clause 32
Customer information
Mr. Nick Hawkins (Surrey Heath): I beg to move amendment No. 146, in
clause 32, page 19, line 8, after 'him', insert 'on reasonable grounds'.
The Chairman: With this it will be convenient to discuss the following:
Amendment No. 147, in
Amendment No. 87A, in
clause 32, page 19, line 22, at end insert—
'( ) No customer information order shall be issued unless—
(a) the authority referred to in subsection (2) has included in its application a full explanation of its reasons behind the application, and
(b) the Secretary of State is satisfied that those reasons are sufficient to justify the issuing of the customer information order.'.
Mr. Hawkins: I welcome you back to the Chair, Mr. Hurst. May I give a particularly warm welcome to the new Minister, without wishing to leave out the long-serving Minister, the Under-Secretary of State for Transport, who is sitting next to her? I have personal knowledge that the newly appointed Minister, whom I congratulate warmly, is tactful and diplomatic. I am sure that all Committee members will benefit from her wisdom. She could show that by accepting Opposition amendments Nos. 146, 147 and 87A. [Hon. Members: Oh.] Well, it is always worth trying, Mr. Hurst.
We are seeking, in three different ways, to introduce a reasonableness test. Amendment No. 146 would introduce the requirement of such a test on the Secretary of State. Although I am not casting aspersions on any particular Secretary of State, they sometimes behave unreasonably. Some might say that the present Home Secretary has been unreasonable about judges. No doubt that was one of the things that led to the chaos of the reshuffle that was and was not, and which abolished the Lord Chancellor and then did not. It would be helpful if there were a requirement in the Bill for the Secretary of State to act reasonably. It surely cannot be unreasonable for a reasonableness test to be introduced into this chapter.
Amendment No. 147 would introduce a different sort of reasonableness test. The financial institution that may be affected would need reasonable notice that an order had been made. Amendment No. 87A accompanies Nos. 146 and 147 and backs up the
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requirement for the reasonableness, appropriateness and, in this instance, sufficiency, that should be included in the Bill. There is a need for a full explanation of the reasons for the application and for the Secretary of State to be satisfied that those reasons are sufficient to justify the order being made. In summary, the three amendments together will make clause 32 more reasonable and balanced.
Committee members will be aware, although perhaps the new Minister may not, that I was a banking lawyer before I entered the House of Commons. It is important to balance the needs of privacy in relation to customer information and those of the state. We will deal later with some of the more draconian measures that the Government are putting forward. The Minister will talk about the overriding need to tackle crime, which the Opposition Benches accept. However, a balance must be struck between the interests of financial institutions and their customers, the need for traditional confidentiality and privacy and the state's need to tackle crime. Our amendments will strike that balance more clearly and appropriately.
9.15 am
Mr. David Heath (Somerton and Frome): I welcome you to the Committee this morning, Mr. Hurst, and I extend a warm welcome to the new Minister. She has new responsibilities, and I hope that she will have the opportunity to read back over the previous sittings of this Committee because important questions were put to her predecessor that we were hoping for replies to: I hope that they will not get lost in the change-over, as they are crucial to the Bill's proceedings on Report. I ask her—through you, Mr. Hurst—that particular note be taken of the assurances that were given by the hon. Member for Coventry, North-East (Mr. Ainsworth), who is now Deputy Chief Whip and Treasurer of Her Majesty's Household, to consider particular aspects of what we have been discussing in the previous two sittings.
I return to the group of amendments that we are addressing. It is important that we establish what the procedure will be, because it is intrusive as it stands. I am sure that the tests of reasonableness are correct. The hon. Member for Surrey Heath (Mr. Hawkins) has not entirely persuaded me about amendment No. 146, which may be otiose in establishing whether the Secretary of State has acted reasonably in believing somebody to be subject to an investigation.
Amendment No. 87A is far more important because what is crucial is whether the authority that is issuing the request has given a full explanation for the reasons behind the application so that the Secretary of State can apply discretion properly. That was part of the framework agreement: it was expressly required as part of the procedures, but it is not in the Bill. The Minister may say that that is implicit in making a proper request: I disagree. The amendment of the hon. Member for Surrey Heath makes it much clearer what must accompany the request in terms of accessory information. The Minister might not be conducive to accepting amendment No. 146, but I hope that she will seriously consider amendment No. 87A and the form in which a request should be received under the framework in order to make it a legitimate request for
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an investigation that has civil rights implications and should only be done on clear authority and with clear justification.
Mr. Bill Wiggin (Leominster): I also welcome the Minister to her new post. It is sad that the brilliance of her appointment has been overshadowed by the negative headlines about others.
The addition of ''on reasonable grounds'' is not significantly different from the ambition of the Government when they added
''subject to an investigation by a participating country into serious criminal conduct.''
However, having worked in the banking environment, I am aware of the great pressure on people in that industry to produce information on customers. Such a competitive edge is required to compete in that industry that, unless the request for information was reasonable, it would be wrong to ignore this amendment. The information that is often asked of people in the banking sector can be trivial and it can be presented in such a way that it would appear to be used as evidence against the employee of the bank. Therefore, we must do everything that we can to avoid the pointless wasting of time that, unless the requests were reasonable, this could lead to.
There is also the issue of privacy and data protection. In this country, where data is carefully protected, it would not be so worrying to release information of a sensitive nature, particularly if it was constructive, in the way that I believe the Government would wish it to be, as that is written in the Bill. However, in countries that are less careful with their data, the problem would be worrying. It undermines the privacy of our banking sector. We need to approach the problem with great caution. There are many other reasons why ''reasonable'' would be a helpful, sensitive and sensible addition to the Bill.
The Parliamentary Under-Secretary of State for the Home Department (Caroline Flint): I welcome you to the Chair, Mr. Hurst. I hope that you treat me kindly. I thank Opposition Members for their kind words. Having served recently as a Back Bencher on the Committee that considered the Anti-social Behaviour Bill, I realise what a hard time some of us gave my predecessor. My hon. Friend the Member for Nottingham, East (Mr. Heppell) was the Whip in that Committee. I note that a few members of this Committee were members of that Committee, and I look forward to working with them during the next few sittings.
I wish to reassure members of the Committee, especially the hon. Member for Somerset and Frome (Mr. Heath), that more information will be forthcoming, as my predecessor said. The Bill is very much about tackling crime, how technology has advanced, and how crime can go beyond the boundaries of nations and continents. I understand that there is general agreement that those who pursue criminals must have access to information that will, we hope, lead to the conviction of those criminals.
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I shall deal first with amendments Nos. 146 and 87A, as they both relate to the Secretary of State's discretion to act on a request. Amendment No. 146 is unnecessary. Subsection (1) relates only to the initial decision whether the request is valid. By that, I mean that it is from an appropriate body, it is for customer information in relation to a person subject to an investigation of serious criminal conduct and it is from a participating country. It is the starting point. The clause applies only if those initial tests are met. If any of them are not met, the rest of the clause does not apply.
The grounds on which the Secretary of State will base his decision will be the content of the request itself. If that provides adequate grounds, the clause will apply and he will then use his discretion under subsection (3) about whether to assist in a particular case. If the request does not contain sufficient information for it to seem to him that there is such an investigation concerning the person, he will decline assistance. There is no added value in including ''on reasonable grounds'' under subsection (1). The grounds are simply that the request must meet the basic requirements that I have already explained.
Amendment No. 87A deals with the next step in the proceedings and would introduce an extra hurdle to subsection (4). By requiring a ''full explanation'' of the reasons behind the request, the amendment refers in general terms to the conditions in article 1(4) of the protocol. We are worried about the effect of the amendment and consider that the clause, as drafted, provides proper safeguards against inappropriate requests or fishing expeditions, while still enabling us to meet our international obligations.
When considering whether to accede to a request, the Secretary of State must initially be satisfied that the precondition in subsection (1) is met, as I explained when speaking to the previous amendment. If that condition is not met, subsection (4) does not apply; thus subsection (1) works as an enabling provision, the starting point in considering a request for customer information. At the next step, the Secretary of State has a general discretion whether to act in a particular case. The use of ''may'' in subsection (3) reinforces that point. Furthermore, a judge must be satisfied about all the matters set out in clause 33(1) before exercising his or her discretion to make an order. Those requirements are that the person specified in the application is subject to an investigation, that the investigation concerns serious criminal conduct, that it would constitute an offence here, and that the order is sought for the purposes of the investigation. The grounds on which an investigation for information will take place must be clearly stated.
The Secretary of State's discretion to act on a request from a European Union country will be exercised with the protocol requirements in mind. Our obligation to respond to requests for banking information extends only to requests from countries that have implemented the protocol themselves. That is yet another safeguard to ensure a level playing field for the standards that we expect for the protocol to be implemented. To be valid, requests must therefore comply with all of article 1 of the protocol. If the
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request is invalid, the Secretary of State will not act on it. We consider that the general discretion conferred on the Secretary of State in subsection (3) is preferable to a clause that explicitly states how the Secretary of State must act when a request is received in a particular form. It enables us to apply the article 1 conditions and to exercise a general discretion.
The requirement for
''a full explanation of its reasons''
could be interpreted as going beyond what we are entitled to demand from the requesting authority under article 1(4), and be considered a breach of our obligations under the protocol. Article 1(4) only lists certain requirements, and makes no requirement for a full explanation. We do not consider that explicitly listing article 1(4) conditions is appropriate. I am happy to stress that the Secretary of State's discretion will be exercised with the protocol requirements in mind when he is considering requests made by another EU country.
Amendment No. 147 would require a financial institution to provide information under a customer information order, subject to being given reasonable notice of the order. That is unnecessary. The financial institution is obliged to provide the information specified, in the manner and within the time required. Under clause 34(1), it is guilty of a penalty if it fails to comply without reasonable excuse. If an attempt was made to instigate proceedings against an institution that failed to comply with an order within a time scale that it considered unreasonable, it could cite that unreasonable deadline as a reasonable excuse for its non-compliance.
The time limit for compliance will vary from case to case. The person applying the order will take into account all relevant factors, such as the urgency of the request—for example, if a trial date has been set and the information constitutes key evidence—and the complexity of the order. It would also be open to them to take into account the size of the financial institution, if it considered that relevant to the case. Some financial institutions might be of a size that allows them to comply more quickly than others.
We do not consider that the amendment adds anything of substance to clause 32. We are satisfied that financial institutions are adequately protected against unreasonable demands. Finally, the drafting of subsection (5) is consistent with the approach in section 363(6) of the Proceeds of Crime Act 2002.
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