§ Sir K. Joseph
I beg to move, in page 6, line 45, at the end to insert:on an application in writing made in accordance with the following provisions of this section.955(2) An application for permission under this section—
- (a) may not be made in the financial year in which the building society is incorporated or, unless it was incorporated on the first day of any year, in the financial year next following that in which it was incorporated; and
- (b) may not be made at any time in any financial year before the building society has, in accordance with the provisions of this Act, sent to the Chief Registrar its annual return (with the auditors' report annexed) for the last preceding financial year, and a copy of the corresponding balance sheet, including every document required by law to be annexed or attached thereto.(3) On an application under this section the Chief Registrar shall grant permission if all the requirements set out in the Schedule (Requirements to be met by a new society desiring to advertise) to this Act are fulfilled as regards the building society making the application".Would it be convenient with this Amendment to take the appropriate Schedule?
§ Sir K. Joseph
This insertion at the end of Clause 5 is in compliance with an undertaking given by the Economic Secretary in Committee. Hon. Members will remember that in Committee my hon. Friend did not find it possible to offer a right of appeal against the Chief Registrar's decision in several matters, including that dealt with in Clause 5, which is the authority to a new building society to begin advertising. But in substitution for a right of appeal my hon. Friend undertook to define the conditions under which the Chief Registrar would be obliged to give permission to a new building society to begin advertising, and it is the definition of those conditions which the insertion and the Schedule seek to set out.
The House will note that the Chief Registrar shall give permission to a building society to begin advertising subject to the conditions laid down in the addition to Clause 5. They are, roughly, that the applications shall not be made until after the society has been in operation for a year, and that there shall have been an annual return, together with an auditor's report. It shall also be necessary that every one of the conditions laid down in the Schedule—which deal, 956 roughly, with the limitation on special advances, the liquidity position, the absence of any advances to officers and other items connected with the good standing of both the funds and the officers—shall have been complied with.
It would be possible under this new arrangement for any building society which thought itself aggrieved to appeal to the courts against the decision of the Chief Registrar, in so far as that decision has been made on facts, and if the building society were to find that the Chief Registrar were delaying in his decision unjustifiably, I am advised that the building society could seek a writ of mandamus.
There is only one point to which I wish to draw particular attention. It is that it may be thought unreasonable that a building society should have to wait for what might be as long as twenty-four months for permission to advertise. It might be asked how could a building society carry out its function if it could not seek money from the public. The fact is that many building societies, for their first months, rely on the funds of the directors and friends or associates and the Building Societies Association itself does not consider that to be unreasonable. I therefore hope that the House will find this arrangement, suggested by my hon. Friend, acceptable.
§ Mr. Chapman
I am most grateful to the Government for producing the Amendment, which is part of a general response in this and subsequent Amendments to the points which were made by hon. Members on both sides of the Committee about the need for some right of appeal. It might be some consolation to those who specialise in writing to The Times about the dangers of delegated legislation and the growth of arbitrary power in this country to see the great lengths to which we are going in this very small and humble Bill to cover those very matters which have been so much discussed in recent years.
The Government have done us proud in this and later Amendments, and I think that we should be fairly pleased with the results which they have produced. As the Parliamentary Secretary said, the Amendment specifies conditions so that there can be appeals to the courts on matters of fact if the building 957 society is aggrieved. After all the discussions, which started in another place and continued here on Second Reading and in Committee, we have reached a fairly happy compromise on the whole situation and I am grateful for it.
§ Mr. Graham Page (Crosby)
Can the Parliamentary Secretary say whether it is the intention to keep any sort of register of these permissions which are to be given under the Amendment? The Amendment refers to the issue of advertisements by a building society, but there are other bodies concerned with the issue of an advertisement. It will probably go to advertising agents and thence to newspapers, periodicals and others. The people concerned may wish to check the permission of their client under this and Clause 7 and if some register is kept to which they can go without reference to the building society concerned, that will be of great assistance.
Mr. Glenvil Hall
Like my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) and other hon. Members, I am grateful to the Government for the way in which they have solved this difficulty, which appeared to many of us to be almost insoluble when we dealt with it earlier. I am not entirely clear whether, when a notice is served on a building society by the Chief Registrar, it comes into force straight away, although the society has at least fourteen days to make representations against it in more than one direction. If it does not, it seems to me that certain building societies—not the majority but those for whom we are legislating—may find a loophole which certain individuals, who want to do something which should not be done, would be able to use. I would be grateful to the hon. Member if he could relieve our doubts on that matter.
§ Sir K. Joseph
I am not clear whether the right hon. Gentleman is dealing with this Clause. Perhaps he will give me the reference.
§ Mr. Mitchison
I think that we on this side of the House all agree that if the very wide powers that were originally given to the Chief Registrar in the Bill can be limited or defined, that is a goad thing to do. On those grounds, I would welcome this Amendment and one or two others which seem to me to have the same intention.
There is, however, one point that puzzles me. I see the provisions in the new Schedule and the provisions in the Amendment itself, but there is nothing whatever about the size of the building society. Supposing that a building society is formed with a very small capital, these percentages, and so on, can of course be met, but I would have thought that there might have been a residual discretion vested in the Chief Registrar to refuse permission to a very small society with, say, a capital of £5 or something of that sort. It would comply with all this and could comply with it, I think, and I rather regret that that power to refuse in that case has disappeared, as it were, in the course of the Amendment.
I may be wrong; there may be some other provision somewhere else, but I have been unable to find it. This Bill originated in another place. I would not regard it as a contentious Bill or as one of the major Bills of the Session, but it is a Bill of some considerable importance. It has been amended a great deal not only in Committee but today, and there are further Amendments on the Notice Paper, many of which I feel sure we shall welcome.
This Government of all Governments are not immune from human error and the opportunities of rectifying it when so much has to be put in at a late stage are limited if the Bill has originated in another place. I hope that the Government will not do it again.
§ Sir K. Joseph
With the leave of the House, I should like to answer the two points raised. My hon. Friend the Member for Crosby (Mr. Graham Page) has made a very reasonable suggestion and I am glad to be able to assure him that the permissions will be on the file, which will be open for inspection at the Registry at a charge of 2s. 6d.
The hon. and learned Member for Kettering (Mr. Mitchison) has evidently 959 omitted to bear in mind that under Clause 4 the building society must have a capital of at least £5,000, and he will also notice in the Schedule the references by way of percentage are to such things as assets and advances and not only just to the capital.
§ Amendment agreed to.