Clause 48.—(QUALIFICATIONS OF AUDITORS.) (Hansard, 22 July 1960)

§ Mr. Geoffrey Stevens (Portsmouth, Langstone)
I beg to move, in page 38, to leave out lines 29 to 31 and to insert: Provided that a person who is an auditor of a building society at the commencement of this Act shall, notwithstanding that he not art the time a member of any of the said bodies, be qualified for appointment or re-appointment as an auditor of that building society at any annual general meeting of the building society if he is at the time of the said meeting authorised under paragraph (b) of subsection (1) of the said section one hundred and sixty-one to be appointed as auditor of a company. Section 161 of the Companies Act, 1948, prescribes certain qualifications which a person must have if he is to be eligible for appointment as auditor of a public company, and subsection (1, b) goes on to say that if a person has a qualification of a similar kind, obtained outside the United Kingdom, he shall be eligible for such an appointment. The subsection continues further to say that if a person who is not himself a member of a body of accountants approved for the purposes of that Section has none the less obtained adequate knowledge and experience in the employment of a member of a recognised body of accountants, he, too, shall be eligible for appointment as auditor of a public company.
Membership of one of the bodies which have been approved for the purposes of Section 161 involves as passing of professional examinations. As a member of such a body but still speaking with due diffidence, I suggest that they are of the highest standard and that it is quite wrong to treat as the equal of a person who has passed difficult professional examinations a person who has not passed any such examinations, but who has merely had some years of experience in the service of a person who has done so.
Every Act which Parliament has passed in the last three years which has included a Section referring to the quail- 1008 fications of auditors has required that a person appointed as an auditor under that Act should be a member of one of the recognised bodies. I mention the New Towns Act, 1946, the Local Employment Act, 1960, the Horticulture Act, 1960. There were many other similar Acts, all of which included those requirements. It seems a pity, in a Bill which in broad terms has received a widespread welcome as a tightening up of the administration of building societies, that there should appear to be a lowering of the standard required of persons who are to be employed as auditors of building societies.
It may be that when in Committee my hon. Friend moved the Amendment to add the lines 29 to 31, he had in mind what I can call "sitting tenants." It may be that there are persons employed as auditors of building societies who are not members of a recognised body. It might be harsh if, by an Act of Parliament, we suddenly deprived those people of what in some cases might be a substantial part of their income.
The Amendment takes that situation and preserves the status quo for people now employed as auditors, but it maintains the standards for future persons to be appointed as auditors of building societies. For that reason, I very much hope that the Amendment will prove acceptable in the eyes of my hon. Friends.

§ Mr. Barter
In moving his Amendment, my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) has quite accurately forecast, or surmised, the reasons for which I moved an Amendment on the subject in Committee. While I should like to take him up on some of his observations, I do not think that this is either the time or the place to do so.
The essential difference between the Bill as at present drafted and the Amendment proposed is that under the Bill it would be open in future for any person not a member of any of the recognised bodies to compete with a member of a recognised body for the appointment as auditor of a building society.
Under my hon. Friend's Amendment, no such competition would be possible. It would merely offer the opportunity of 1009 continuation for, as he describes it, a "sitting tenant." Of course, I recognise that any undue competition would be most unwelcome to the institute which my hon. Friend represents. From my point of view, I am prepared to accept the Amendment.

§ Sir K. Joseph
Since the object of the Amendment is to avoid hardship while preserving standards, I hope that the House will accept it.

§ Mr. Mitchison
I wish simply to protest that I see no reason why a person qualified to act as auditor of a company should not be qualified to act as auditor of a building society. If the Govern-meat think that the qualifications for auditing the accounts of a company are too wide, then it is high time that they altered them.