HC Deb 22 July 1960 vol 627 cc959-63
Mr. Barber

I beg to move, in page 8, line 21, to leave out from "and" to the end of line 27 and to insert: specifying the considerations which have led him to conclude that it would be in the interests of persons who have invested or deposited or may invest or deposit money with the building society to make the order, and shall also serve on every director of the building society a notice stating that he proposes to make an order; (b) the Chief Registrar shall consider any representations with respect to the notice made to him by the building society within such period (not being less than fourteen days) from the date on which the building society is served with the notice as the Chief Registrar may allow and, if the building society so requests, afford to the building society an opportunity of being heard by him within that period; (c) on making an order applying subsection (2) of this section the Chief Registrar shall serve on the building society, and on every director of the building society, a notice of the making of the order, and shall serve on the building society a notice specifying the considerations which have led him to conclude that it is expedient to make the order in the interests of persons who have invested or deposited or may invest or deposit money with the building society and the Chief Registrar shall not have power to make an order unless all of those considerations were those, or were among those, which were specified in a notice under paragraph (a) of this subsection; (d) a notice under this subsection may be served on a director of a building society by sending it by post to his address, or latest address, as notified to the Chief Registrar or registrar by the building society or the director, and failure to serve a notice under this section on a director shall not affect the validity of an order under this section. During our proceedings in Committee, I undertook to move on Report certain Amendments which would require the Chief Registrar to inform a building society of the reasons for his action both at the earlier stage when he serves notice of intention to make an order under either Clauses 6 or 7, and again, later, when he subsequently makes the order itself. I think it was agreed by everyone on the Committee that this would be in accordance with the broad principles of natural justice, that a person who is in any sense put on trial should know the charges against him.

I think it was accepted by the hon. and learned Member for Kettering (Mr. Mitchison) that this would go some way towards strengthening the procedure whereby a society might apply to the court for a writ of certiorari where the rules of natural justice had been disregarded. Later, the hon. and learned Gentleman raised a different point. He thought it desirable that the notice of intention to make an order, and, indeed, the order itself, should not only be served on the society but should be sent individually to each of the directors. He asked us to consider whether, in the particular financial and economic circumstances of today, we might be able to afford the necessary postage. We have given considerable thought to the suggestion which the hon. and learned Gentleman made and he will see that this Amendment covers both those points. Perhaps I might be allowed to say in passing that Amendment No. 27, Clause 7, page 9, line 40, really follows the same broad lines as the Amendment which we are discussing.

12.45 p.m.

Mr. Mitchison

Thanking the hon. Gentleman as I do for meeting us on some of the points which we raised in Committee and recalling with gratitude his clear undertaking that there is going to be no further increase in postal charges, I see no objection to the Amendment.

Mr. Glenvil Hall

May I raise on this Clause the point which I raised mistakenly on Clause 5, and may I again apologise for jumping from one Clause to the next and put to the Economic Secretary the question which I attempted to put to the Parliamentary Secretary to the Ministry of Housing and Local Government?

I think that I understand the Clause, but for the sake of the record perhaps the hon. Gentleman would be good enough to explain whether when a notice is served—and there are fourteen days during which the building society can raise objection and meet the Registrar—the order which the Registrar proposes to make or has made will be enforced, or is the position, as one way of reading the Clause would imply, that the order is not made until it has been definitely agreed between the parties or until the Registrar, failing to agree with the parties, decides to make the order any way?

Mr. Barber

As I understand the wording of the Clause, I find it difficult to see how the right hon. Gentleman's point arises. I should have thought it was clear that, in the first place, the Registrar gives notice by stating that he proposes to make an order and then there is a period, as laid down in this Amendment, during which he can consider representations from the society. If the society so wishes, he must afford it an opportunity of presenting its views to him and then, later, having satisfied the provisions of the Clause as to timing, he makes the order. If I may say so with respect, it is not until the Registrar makes the order that the order is made. Therefore, I do not think that there is any such difficulty as the right hon. Gentleman has in mind, always assuming that I have understood him aright.

Mr. Glenvil Hall

In that case, is not fourteen days rather a long time? The building society has received notice and it is fourteen days, in which much can happen. The society has been notified by the Chief Registrar and it knows what is going to happen to it. It may well be that it can hurry up knowing that within fourteen days, or thereabouts, an order is going to be made. As I say, a good deal can happen in that period.

In Committee we dealt with this point, and I thought then that it was generally agreed that fourteen days was too long a time. My reading of the Clause is the same as the Economic Secretary's, but I can scarcely believe, in view of what happened in Committee that that was the intention.

Mr. Chapman

May I recall to the memory of the Economic Secretary the discussion which we had in Committee when the Amendment which I moved about appeals to the court actually spec fled the words: provided that any such order shall remain operative pending an appeal by the court."? In Committee we were proceeding on the assumption that any order, once agreed upon and once it became clear to the Chief Registrar that it should be made, should be operative forthwith, whatever the rights of appeal and the procedure to be followed. I recall that in Committee the hon. Gentleman said several times that speed is the essence of the matter in all these things, once the Registrar feels that he has uncovered some malpractice.

In view of those circumstances, is he satisfied that my hon. Friend's point is covered? Fourteen days might be a little too long to leave for people to start arguing when damage may already have been done.

Mr. Barber

The reason why we thought it necessary to provide for a period of fourteen days was that the powers under the Clause are very considerable. The raising of money by a building society is part of the essence of its actions, and to suspend the raising of money by a society is a matter of great importance. I can assure the House that we considered this matter carefully. Under Section 11 of the Prevention of Fraud (Investments) Act the period is one month, and when we were considering the new provision we decided to halve that period, and came to the conclusion—based partly on past experience of the difficulties which, in a perfectly genuine case, a building society might have in responding to the original notice of the Registrar that he proposes to make an order—that a period of a fortnight was necessary.

Under Clause 7, which is not so drastic, there is power to control the advertising of the society. There the period is one week. Therefore, some action can be taken within a week. It is a matter of judgment whether, in this Clause, the period should be a fortnight, or longer or shorter. We came to the conclusion, based on experience, that this was the right period.

Mr. Glenvil Hall

Goodness knows why the Government have come to that conclusion.

Mr. Speaker

Order. The right hon. Gentleman has made one speech which was out of order and two which were in order. He requires at least the leave of the House to speak again.

Mr. Glenvil Hall

I should like to speak again, by leave of the House. I am quite dissatisfied with the explanation of the Economic Secretary. The Clause deals with the raising of money by a building society, and a society can raise a good deal of money in a fortnight. If there has to be a period of one week in one Clause and two weeks in another, I should have thought it would have been better to have it the other way round. Advertising is not so responsible a matter to undertake as is receiving money. If a building society wants to do something that it should not do it is quite wrong to give it a fortnight to collect such funds as it can under the Bill. In view of the arguments used in Committee, and, as we thought, the concurrence of the hon. Member, I am surprised that this Clause reads as it does.

Amendment agreed to.