CLAUSE 9. —(Provisions as to building societies.) (Hansard, 14 February 1939)

§ Mr. Stanley
I beg to move, in page 10, line 15, to leave out from the second "to," to "shall," in line 16, and to insert: acquire or offer to acquire any shares in the share capital of, or to lend or deposit money to or with, the society or any other person. This Amendment and that in the name of my hon. Friend the Member for North Kensington (Mr. Duncan) are exactly the same Amendments, applying to Clause 9, as have already been accepted.

§ The Solicitor-General
I beg to move, in page 10, line 26, at the end, to insert: Provided that, before deciding to make an order under this Sub-section with respect to any society, the Registrar shall serve on the society a written notice stating his intention to make the order, and shall consider any representations with respect to the proposed order made to him by the society within the period of one month from the date of the service of the notice, and, if the society so requests, afford it an opportunity of being heard by him within that period. The Clause enables the Registrar to prohibit building societies, with the approval of the Treasury, of course, inviting fresh capital. The Amendment is a further safeguard in the interests of the building societies. First of all the Clause 1618 provides that the approval of the Treasury must be obtained by the Registrar before deciding to make an order, and the Amendment provides that the Registrar must send a notice to the society and must consider any representations which the society may make, within the period of one month from the date of the notice. These safeguards are adequate in the view of the building society representatives.

§ Mr. C. S. Taylor
I beg to move, in page 10, line 26, at the end, to insert: (2) Any building society against which an order has been made under Sub-section (1) of this Section shall have a right of appeal to the tribunal against such order within a period of twenty-eight days of the order being made and the tribunal, after hearing evidence of the Registrar and the appellant building society, may either confirm or quash the order made by the Registrar. Obviously Clause 9 is good, in that it is designed to prevent the exploitation of building societies by undesirable persons, but if it goes through in its present form there will be a sort of bureaucratic control by Government Departments. From that control there will be no right of appeal whatsoever. The object of the Amendment is to make provision for that right of appeal against any order of the Registrar, that appeal to be made before the tribunal of inquiry set up under Clause 4. I would like to draw the attention of the House to the fact that, as at present worded, Clause 9, should the Registrar and the Treasury so desire, prevents all building societies throughout the country from appealing to the public for funds at all, and there will be no right of appeal by the building societies from that decision.

Mr. Johnston
I beg to second the Amendment.
I do so with the object of getting some explanation from the Government. When the right hon. Gentleman was dealing with provident societies he was on rather different ground, because a society registered under the Provident Societies Act can escape by converting itself into a limited company. A building society is in another category. It simply goes out of business if it is prohibited from raising further capital. As the Bill now stands there is no appeal. The Mover of the Amendment is asking only that any 1619 building society which feels it has a substantial grievance shall have a right of appeal to the tribunal appointed by the Lord Chancellor. The tribunal would see to it that there was no capricious cancellation of the building societies' rights of appealing for fresh money. It is in the interest of the administration of the law in this country that this House should not give the impression that in the removing of irregularities and swindles it is setting up an uncontrolled bureaucracy.
This Amendment should be reasonably considered by the President of the Board of Trade. The Registrar must not be placed in a position in which he might land himself, his Department, the Government of the day and the whole administration of this Act into disrepute. I am sure that any official will welcome baying taken away from him the power which is given in Clause 9, as it now stands, to stop the operation of any building society, and the President of the Board of Trade might be well advised to give any building society the right to go before the tribunal and to appeal. If the building society has no case it will not waste its time and money in going before the tribunal, but if it has a case, that case should be heard. No doubt there are cases in which building societies might have the effrontery to go before the tribunal, but if there be such cases it is not right that bona fide societies should be debarred by the arbitrary or unjust exercise of the powers conferred in the Clause.

§ The Solicitor-General
In every case in which an appeal lies from the Registrar, it lies to the court. It would be introducing a novelty in regard to the Registrar if we gave an appeal from a decision of his to a tribunal which had been set up ad hoc for a quite different purpose under the Bill. I believe that my hon. Friend and the right hon. Gentleman the Member for West Stirling (Mr. Johnston) will recognise that that is an important reason why this Amendment should not be accepted, at any rate, in its present form. We thought we had inserted adequate safeguards. First of all there is the safeguard of the Treasury having to give approval. Secondly, there is the Amendment which I have just moved, and which the House has just accepted, giving a 1620 society an opportunity of being heard and of making representations. The only effect of that in law, I am bound to say, would be to ensure something like a judicial hearing. Those safeguards have commended themselves to and have satisfied the Building Societies Association, which represents a capital of about £520,000,000, and it had been hoped that nothing more would be necessary.
My right hon. Friend, however, listening to the right hon. Gentleman opposite, was impressed by the contrast which he pointed out between the situation of an industrial and provident society and that of a building society under the Bill. In the case of the industrial and provident society it always has the loophole that it can convert itself into a limited company. A building society could do that also, but the administrative difficulties would be very considerable. That being the situation, my right hon. Friend authorises me to say that, while this Amendment, for the reasons I have given, would not be satisfactory, he will look into the whole position again with a view to seeing whether a safeguard of the kind aimed at cannot be inserted in the Bill while it is passing through the other House. With that assurance, I hope my hon. Friend will be able to see his way to withdraw the Amendment.

§ Mr. Taylor
In view of the assurance which the Solicitor-General has given, I beg to ask leave to withdraw the Amendment.

§ Mr. Stanley
I beg to move, in page 10, line 31, after "any," to insert "person who is or has been an."
This and the four following Amendments are all similar to those which we have already discussed and passed on Clause 8.