HC Deb 04 December 1946 vol 431 cc460-5
Mr. Pickthorn

I beg to move, in page 9, line 31, to leave out "(whether directly or indirectly)."

The Amendment is intended to be merely exploratory. I was not in the least surprised that I had not fully understood these words, and those whose advice I have been able to seek, were not able to enlighten me. Therefore some of my hon. Friends thought that it was proper to put down this Amendment, which has a purely interrogatory purpose. We want to know what the words mean.

9.45 p.m.

The Solicitor-General

The object of the word "indirectly" is to bring in the case in which a certificate of title is held to the order of a particular individual but is held in the name of someone else. For example, it may be held under some subterfuge or camouflage, so that he can give directions in regard to it in some concealed way, either through a nominee or in some form or other. The object of including the word "indirectly" is to make sure that that type of case is brought within the ambit of the Subsection. Otherwise, if the Clause read: It shall be the duty of every person by whom or to whose order a certificate of title is held, it might be contended that in cases in which there was an intervention by some third person who held, as a nominee, secretly, for the individual concerned, that that type of circumstance would not be within the ambit of the Clause. To prevent that, we have used the word "indirectly" to make sure there is no loophole through the provisions of the Clause.

Mr. Howard

I do not want to press this matter unduly, but I would point out that the Subsection says: It shall be the duty of every person. This Clause imposes a definite duty. It is, therefore, important that persons on whom the duty is imposed, should know whether they have that duty to perform. How is a person to know that he has an indirect duty?

Mr. H. Strauss

If the case put forward by the Solicitor-General was the sole case, possibly the words "through an agent," instead of "indirectly," might meet the point which we and the Solicitor-General have in mind. Some words of that sort might meet our objections, without conflicting with the object which the Government have in mind.

The Solicitor-General

The hon. Member for St. George's, Westminster (Mr. Howard) was concerned about an indirect duty. But there is no question of an indirect duty. The question is whether there is an indirect holding. The hon. and learned Member for the Combined English Universities (Mr. H. Strauss) has suggested that we might use another form of wording, namely, the word "agent." I do not know, without studying it, whether that would be better, or worse. But the form we have used, after careful consideration, is one which, in our view, achieves the object we have in mind. It covers the case in which one man holds securities in the name of someone else, in order to camouflage the fact that he is the person who can really give directions in regard to the disposal of those securities. We feel, subject to any arguments which may be advanced by hon. Members opposite, that the word "indirectly" is apposite to include that class of case. Therefore, subject to what hon. Members opposite may still desire to say, we feel that the phrase is satisfactory as it stands.

Amendment negatived.

Mr. Birch

I beg to move, in page 10, line 43, at the end, to add: (8) For the purposes of this Part of the Act the expression "authorised depositary means any person who at the date when this Part of this Act comes into force is lawfully holding himself out as accepting on deposit by way of custody any security, certificate of title, coupon or secondary security as defined in section nineteen of this Act and in addition any such person as may for the time being be authorised by an order of the Treasury to act as an authorised depositary for the purposes of this Part of this Act.

The Chairman

I would point out that the expression "authorised depositary" also arises in the interpretation Clause.

Mr. Birch

In view of the lateness of the hour, I shall be very brief. This is very much the same point as that which was dealt with on the second Amendment discussed today, because the effect of this Clause again is to put it within the power of the Treasury to put anybody out of business who is, in the ordinary way, a banker—[HON. MEMBERS: "Hear, hear."]—I am grateful for the support from the opposite side of the Committee— because securities can only be deposited with an authorised depositary. If one looks at Clause 42, one finds that an authorised depositary is a person authorised, for the time being, by the Treasury. No definition of any sort is given. The object of moving this Amendment is to ensure that no arbitrary action is taken by the Treasury, and that no one is deprived of his livelihood unless he has committed some crime. We had an un-satistactory answer on this point previously, and we had to divide on it. I should have thought that it was easier to allow this definition of "authorised depositary", than it was in the case of an "authorised dealer." I am not entirely without hope that the Government may accept this Amendment, but if they do not I very much hope that I shall have the support of my hon. Friends in dividing against the Government.

Mr. Eccles

I wish to support the Amendment. The definition of "authorised depositary" is difficult. It is quite clear that those who undertake this duty will be put to a good deal of cost which they have not had to bear before. I wonder whether the Chancellor will not follow the precedent set in France, where, as I understand it, a similar Measure has resulted in the French Government having to set up a national depositary, because of the cost involved. I hope that that will not be the case here. If it is not to be the case here, then the Government will require to have a wide list of depositaries. It is stated in paragraph 16 of the White Paper: Arrangements will be made to meet the reasonable requirements of brokers, solicitors and others who may need temporarily to hold such documents I ask the Chancellor exactly what that sentence means. Does it mean that the time-honoured practice of a solicitor holding some securities for his client, or a stockbroker for his customer, is, after a short period, to end; and that, in fact, the intention of the Treasury is to concentrate on the big banks the duty of being depositing agents? I would like to know what the Chancellor has to say on that point.

The Solicitor-General

As the hon. Gentleman will have noticed, Clause 15 deals only with bearer certificates and certificates not registered on the United Kingdom register. I suppose that a great majority of persons already keep not only their registered certificates, but also such bearer certificates as they have and certificates on non-British registers, at their bank. In practice, little difference will take place, because the authorised depositary will again be the bank.

Mr. Stanley

Just the banks?

The Solicitor-General

Yes. In regard to the question about solicitors, in fact, in a large number of cases they retain custody of certificates on behalf of their clients. In the case of bearer certificates these will have to be deposited with banks, who will be the authorised depositaries. The Clause makes provision that solicitors and brokers can have temporary possession of the bearer and other certificates for various purposes—collecting dividends if required or effecting transfers, or similar normal business transactions. When the certificates have been deposited with the authorised depositary, there is nothing to prevent their being transferred from one owner to another, provided that the transfer is one which is permitted under Clauses 8, 9 and 10 of the Bill. That is to say, it will be permitted if it is a transfer between two resident owners. Therefore, a bearer certificate which is in the possession or custody of an authorised depositary, where it has been deposited by the transferor, can be transferred to another depositary which is the depositary of the transferee. But in practice it will work out, in the long run, that there will be very little difference from the present procedure. Normally, people keep their certificates at their bank, and they will go on keeping them there. The owner of the certificate is given the right to choose the authorised depositary. He can indicate what authorised depositary he wishes to be the custodian of his certificates. Therefore, there will be little change from the present position and the ordinary owner of certificates really will know very little about it. It is simply a device for keeping them in proper custody.

Mr. Birch

Why not accept the Amendment?

The Solicitor-General

The Amendment raises a completely different issue. The arguments relevant to the previous Amendments on these lines are also relevant in this case. It is not a question of depriving authorised depositaries of their business, or putting them out of business, and ruining them. What will be done is that the Treasury will nominate particular authorised depositaries who, in fact, will be the banks. Therefore, for the reason given before, it will be unsatisfactory if all banks who at present act as depositaries of certificates are automatically and for good authorised depositaries for the purpose of Clauses 15 and 16.

Lieut.-Commander Braithwaite

We are within three or four minutes of the time for adjourning the Debate. May I say in the very brief period of time at my disposal that I hope the hon. and learned Gentleman the Solicitor-General will look at this again? If he studies this Amendment again, I think he will see that the words we have put down will, in fact, be of value to him in the course which he has in mind. In view of the lateness of the hour, there is no time to press him on one other point, but I was surprised to hear him say that there is to be a kind of closed shop in this matter. He says it is going to be the banks and nobody else.

The Solicitor-General indicated dissent.

Lieut.-Commander Braithwaite

The hon. and learned Gentleman harped upon banks—the closed shop. There are to be no other authorised depositaries.

Mr. Piratin (Mile End)

The hon. and gallant Member would not like to see the Big Five as open shops, would he?

Lieut.-Commander Braithwaite

There is no time to deal with that latest futility from the Communist Party, which has arrived very late in the day. We are attempting to discuss this matter in a serious way. [Interruption.] None of those hon. Members who are interrupting have read the Bill, so what does it matter? I hope the hon. and learned Gentleman will have another look at this suggestion. I think he will see—and I am quite sure that the Chancellor will—that on consideration there are other perfectly suitable authorised depositaries for his purpose. It is not at all true to say that the average person leaves his bearer securities in the bank and nowhere else. Has the learned Solicitor-General never heard of the "City Safe Deposit" where hundreds of clients keep their securities and have kept them for many years, checking them from time to time? That is a perfectly respectable institution. If the hon. and learned Gentleman walks down Throgmorton Avenue he can inspect the premises for himself, so long as he knows the pass-word, which will be "Laski," or something of that sort, when this Bill becomes law. I suggest to the hon. and learned Gentleman that that perfectly normal procedure, by which people place their securities in safe custody, will be illegal under this Bill as it is at present drafted, and certainly in view of what the hon. and learned Gentleman said a few minutes ago in reply to this Amendment. If only for that reason, I suggest that it might be a good thing to have another look at this matter between now and the Report stage. Our form of words, like any other, may be capable of improvement. I was hoping that the hon. and learned Solicitor-General, who is now being suppressed by his right hon. Friend—

It being Ten o'Clock, the CHAIRMAN left the Chair to make his Report to the House.

Committee report Progress; to sit again Tomorrow.