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Mr. Hawkins: I was slightly surprised not to hear the hon. Member for Somerton and Frome speak on the amendment, not least because his noble and learned Friend Lord Goodhart initiated some of the debates in another place. Perhaps the Liberal Democrats have decided this morning that they will not contribute.
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Mr. Heath: Is it not possible that the hon. Gentleman's argument was sufficiently adequate for it not to be necessary for me to speak?
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Mr. Hawkins: I am grateful to the hon. Gentleman, and if that is the case, I am flattered.
The Minister has reassured us. There has been quite a lot of debate on the matter, involving not only Lord Goodhart, but a number of my noble Friends, including Viscount Bridgeman and Lord Renton. There is an important point to be made, but I hear what the Minister says about the fact that we are discussing account monitoring of an already identified account. In the light of that, I do not seek to pursue the argument again today. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 36 ordered to stand part of the Bill.
Clauses 37 and 38 ordered to stand part of the Bill.
Clause 39
Offences
Mr. Hawkins: I beg to move amendment No. 148, in
clause 39, page 23, line 12, at end insert
'but
(c) for the avoidance of doubt, if a member of staff of the financial institution passes on a statement which turns out on later analysis to be false or to have given a misleading impression, but this has been caused merely by negligence or inadvertence the financial institution shall not be guilty of an offence'.
We have now reached the amendment that I mentioned when I spoke briefly in the stand part debate on clause 34, during what I suppose was almost a point of order. I reinforce the point that the amendment should probably apply to both clauses 34 and 39, but that is my fault.
The amendment would insert an avoidance of doubt provision into the Bill. It is clear that there could be grounds for a criminal offence if a financial institution or its staff deliberately tried to mislead the prosecuting authorities or acted recklessly by providing incorrect information. However, it is important to make it absolutely clear in the Bill that mere carelessness will not lead to criminal prosecutions of, in some cases, quite junior staff.
Stephen Hesford (Wirral, West) rose—
Mr. Hawkins: I will give way to the hon. Gentleman in a moment.
My hon. Friend the Member for Leominster and others who have worked in the banking industry as lawyers or in any other capacity will know that much of the gathering of information about individual accounts is necessarily undertaken by relatively junior staff. We do not want those people worrying about facing criminal prosecution if they make a genuine error. I am sure that the Minister will say, ''Of course we would not prosecute if it was simply an error.'' However, banking matters are complex, and it is often difficult to establish the basis for an error. Prosecution would be acceptable only if it could be established that someone had either deliberately set out to mislead or been reckless as to whether they did so.
Mr. Wiggin indicated assent.
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Mr. Hawkins: I am glad to see that my hon. Friend the Member for Leominster nods.
Stephen Hesford: The hon. Gentleman will recall, as I do, our consideration of the Proceeds of Crime Bill. He revisits the scene of a crime that we in Government thought that the Opposition were committing on that Bill. If clauses such as this had been inserted into the Proceeds of Crime Bill, which is now operating successfully, they would have sought to water down their effect. The current situation is the same—the amendment would water down the effect of the Bill, and I ask my hon. Friend the Minister to resist it.
Mr. Hawkins: The hon. Gentleman is right—he, I and others considered that Bill, including my hon. Friend the Member for Beaconsfield (Mr. Grieve) and the hon. Member for Glasgow, Pollok (Mr. Davidson), who enlivened the proceedings. He is right that we had similar discussions, but I did not agree with him then and I do not agree with him now. There must be a sense of balance. We are trying not to water down legislation, but to provide the sort of protection that is needed by relatively junior employees of banking institutions.
From the discussions that I have as deputy chairman of the all-party group on insurance and financial services, I know that there is great concern among those who lead the trade unions in the banking sector about such legislation. The cross-party officers of the all-party group recently held a working dinner with the leadership of all the unions in the sector, and all expressed concerns about the way in which legislation might affect relatively junior members of staff, if some sense of proportionality was not maintained. That is why I tabled the amendment.
The hon. Member for Wirral, West (Stephen Hesford) and I both have legal qualifications. When studying criminal law, he will have been taught about the difference between someone who has a criminal mind—mens rea—and someone who has not. One of the basic principles underlying most criminal law is that if someone is merely careless or negligent, they are not committing a criminal offence. For the purposes of most criminal offences, there must be deliberation or recklessness, although there are some exceptions.
We are discussing the introduction of new criminal offences that can affect financial institutions and members of their staff, and our contention is that a financial institution should not be convicted of a new criminal offence, if the mistake that has been made is careless or negligent, although we can accept prosecution if the action was deliberate or reckless. The provision goes too far. I do not think that we are watering the clause down. I hope that the Minister will reflect carefully on the fact that we are trying to introduce into the legislation the basic principles that underlie most of our criminal law.
Mr. Heath: Let me bring to bear all the legal ignorance that I can muster. The point that the hon. Gentleman made about negligence or inadvertence is a good one. On the face of it, that appears to be covered by the words that describe the offence, because subsection (3)(a) requires that the statement must be known
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''to be false or misleading in a material particular'',
or that it has been ''recklessly'' made.
My concern is the corporate offence that will be established by the clause. I want to know how one establishes mens rea in respect of an institution, and I hope that someone who is more of a legal mind than me can explain it. What is meant by ''the institution''? How does an institution, rather than a responsible individual in that institution, know that something is false or misleading? How is an institution ''reckless'' other than when the directors, the financial director or someone responsible for the offence are reckless?
That seems to be a more cogent problem in prosecuting the offence, and I would hate the clause to be meaningless. I am sure that the Minister has specific guidance at her disposal that says that I am barking up the wrong tree. Indeed, the hon. Member for Wirral, West can probably enlighten me in advance of any such advice.
Stephen Hesford: The hon. Gentleman is applying himself to the wrong issue and has answered his own question. The provision is attached to the guiding mind of the institution and the offences are designed to ensure that those who guide an institution—the directors, for example—have proper lines of supervision as well as procedures in place to prevent their staff from doing exactly what the offences are designed to prevent them from doing.
Mr. Heath: I understand the hon. Gentleman's point, but the institution, rather than an individual within it, which applies even to those who form its board of directors, will be guilty of an offence.
However, the hon. Gentleman's point partly answers that made by the hon. Member for Surrey Heath. For the purposes of prosecution, it will have to be shown that either a deliberate attempt to mislead or a reckless disregard for whether a statement is correct is the responsibility of a senior person in the organisation rather than a junior member of staff, to whom the hon. Gentleman referred, who may have made a statement in error.
I am still not entirely happy with that, as the responsibility is not explicit, but that may be because I do not know enough about corporate law to understand how the offences are normally framed. Either way, it would be helpful for the Minister to give some indication of how she expects the clause to be interpreted. That would go a long way towards allaying the concerns that the hon. Member for Surrey Heath has rightly raised about the position of a junior member of staff. In doing that, she may be upping the stakes with different institutions' structures and their responsibility to have in place systems that do not allow for the negligent error about which the hon. Gentleman is concerned.
I look forward to the Minister's comments. This may be a point to which we have to return in an attempt not to weaken the offence or the grounds for it, but to tighten its application and ensure that everyone understands their responsibilities.
Caroline Flint: We have had a useful debate, and I assure all Members that an institution, rather than an
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individual, will be liable under the clause and clause 34. The sanctions in those clauses will apply only to institutions and the provisions on offences match those in section 366 of the Proceeds of Crime Act 2002. The Government intend that the same circumstances should apply under both pieces of legislation, because they both require financial institutions to respond to customer information orders. The provisions should be identical to avoid any confusion or different interpretation of the two laws. I am satisfied that the clause makes that position clear.
Under subsection 3(a), a financial institution will be guilty of an offence if it makes a statement that it knows to be false or misleading—that is, it deliberately provides false or misleading information. That is straightforward. Under subsection 3(b), it will be guilty of an offence if it recklessly makes a statement that is false or misleading. If a financial institution complies with an order, following correct procedures and all legal requirements regarding verification of information, for example, yet it later transpires that, despite those measures, the information was false or misleading, it will not be guilty of an offence.
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We do not consider that there is any doubt about the effect of the clause or the circumstances in which financial institutions are guilty of an offence, so there is no need for an amendment. As my hon. Friend the Member for Wirral, West said, a company may be held liable by its directors. The prosecution would have to prove that the institution was acting recklessly. The same offence could apply to environmental protection, for example.
We are not establishing a new offence; it is covered by the Proceeds of Crime Act 2002. Given the nature of the debate and the banking industry's engagement with the Bill as well as the serious safeguards when pursuing a customer information order and, for that matter, an account monitoring order, there would be an onus on the banks to ensure that any information that they had passed on was not left to junior clerks, but that they had sufficient safeguards in their organisations to ensure that they could stand by the information they provided.
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