Clause 2.—(GENERAL RESTRICTION OF ADVERTISEMENTS FOR DEPOSITS.)

HC Deb 27 March 1963 vol 674 cc1351-405

Mr. Mitchison

Since the Government appear to have no immediate intention of resigning, I beg to move, in page 2, line 16, to leave out from "company" to "or" in line 17 and to insert: appearing in a list of such companies published from time to time by the Board of Trade". We have now come to Clause 2 of the Bill which, in subsection (1), contains this general prohibition of advertisements and then proceeds to make various exceptions. The first exception is in subsection (2) and it includes the case that we are now considering— any advertisement with respect to deposits of any description to be made with any banking or discount company within the meaning of paragraph 23 of Schedule 8 to the Companies Act 1948". It is those words: within the meaning of paragraph 23 of Schedule 8 to the Companies Act 1948 which we seek to leave out.

This is one of those cases where one thinks that one really will get a definition on looking at paragraph 23, and then finds that one gets nothing of the sort. All that this would mean is that the companies which are entitled to hide certain matters, or shall we say not to disclose them in their accounts, are banking and discount companies for this purpose. There is no secret about the existence of this statutory provision. The Jenkins Committee, in the course of its deliberations, stated the number of the companies concerned and indicated the classes into which they fall.

They are, broadly speaking, joint stock banks, foreign banks trading here, discount houses, and so on. I need not go into the detail, but there is such a list, and the list is kept up and from time to time altered one way or another. I should not think that it varied very much. But it is a list for an entirely different purpose from that for which this Clause in intended.

Subsection (1) is intended to exempt certain banking or discount companies. Whenever anybody asks, as was asked in connection with the Jenkins Committee, for a definition of "banking and discount companies" they never get it. In substance "banking" is capable of a good many different meanings. Therefore, it is necessary to have lists of this kind when dealing with some special provision relating to banking or discount companies, and one would expect the lists to vary in different cases. If, however, the Clause stands as it is, the list will be the list for the purposes of the accounts provisions of the Companies Act. It cannot be any other list.

I am now going to show that the Minister gave a clear undertaking in Committee to publish that list. I do not think that is either right or necessary. He was at once met by objections from both sides of the Committee to the publication of that list, and I must say that I see the point of the objections. I never asked him to do so. All I asked him to do was to publish a list of the companies which are to be exempted under this subsection, and that is what I am still asking him to do. That is what I hoped he would do as a result of what was said in Committee.

I must now refer the House to what was said about this, because this is a case of carrying out a ministerial under- taking, and ministerial undertakings in connection with a Bill are not carried out by saying in the House afterwards, "I am going to publish it all right, but when, how, in what form and for what purpose I publish it must rest, in the first instance, with me and, in the next instance, with my successor in office whom I expect shortly after the next General Election." That is not good enough. We want something in the Bill. It is perfectly clear what is intended: there cannot be any doubt about it.

Let us take the statements of the Minister of State—I do not suppose he will dispute them—and make quite clear exactly what he said. He started by making a curious statement: If the hon. and learned Gentleman will withdraw the Amendment"— that was an Amendment about this list— I should like to consider the debate a little further. I was prepared instantly to give an undertaking to publish. I can see very good reasons indeed why we should. I would crave the Committee's indulgence to consider the debate a little further and return to this matter, as I promise to do, at a later stage of the Bill, if this indulgence can be conceded to me. I note the words, return to this matter, as I promise to do, at a later stage of the Bill …". That means, as I see it, putting down an Amendment or something of the sort, which would enable consideration to be given to it. I had been talking to the Committee on this matter, and I ended up in this way: If the Minister can see his way to saying that he will accept in principle the question of publication, while reserving the question of whether there should or should not be a difference between the lists"— that is the list under this Bill and the list under the Companies Act— and reserving any other question which he likes to reserve, I will certainly agree to withdraw the Amendment if he goes as far as that. That would leave the wording of the Clause entirely to the Minister. If its main object were publication, I should be slow to quibble about the wording. I repeat what I shall probably say half a dozen times more before I finish: that I am under no illusion that I can draft as well as the Parliamentary draftsman. I know quite well that I cannot. That will be the seventh time that I said that. The Minister replied: I am grateful to the hon. and learned Member. While I accept that inexperience on my part caused me to put my reply in an unfortunate way, I am grateful to the hon. and learned Member for taking up the real point that I wanted to put. I certainly undertake in principle to publish". I then said: I thank the hon. Gentleman and beg to ask leave to withdraw the Amendment"—[OFFICIAL REPORT, Standing Committee A, 20th December, 1962; c. 80, 84 and 85.] But it did not turn out that way, because three hon. Members felt that this was a matter for further comment. Indeed—this I think is really rather significant—there was some pressure on the Minister not to publish; pressure from one of his own hon. Friends who rose immediately and said, "I am sad about this", and so on. I think that although his hon. Friend was referring to the list under the Companies Act, and that was not necessarily the list in question, it showed that there was a little bank-bench discontent. We all know how sensitive the present Tory Government are to bank-bench discontent; it is the only thing that makes them do anything. In this instance, unfortunately, it had the opposite effect and prevented them from doing anything. Anyone who looks at the record of the proceedings and what the Minister said in the first place, consider the debate a little further and return to this matter, as I promise to do, at a later stage of the Bill and what I said afterwards, on withdrawing the Amendment, would certainly suppose that the hon. Gentleman was going to put down an Amendment.

When the Bill came out without any such Amendment, I said to myself, "What's all this? How are we to be provided the opportunity that we have been promised to consider this matter at a later stage? Does it mean that the hon. Gentleman, having failed to provide the opportunity himself as he promised to do, expects me to find it for him?" I cannot appreciate that. I made it perfectly clear to him that I expected him to put down an Amendment. I repeat the words again. I said that if he would accept in principle, while reserving this question and any other question he liked to reserve, I would certainly agree to withdraw the Amendment. The next sentence was: That would leave the wording of the Clause entirely to the Minister. I left it to him, and he knew perfectly well what I was saying. When we then find that there is no Amendment in the name of the Minister on the Order Paper and we ourselves have to put one down language is apt to become a little stronger than, perhaps, it ought to be on such a highly technical matter.

The hon. Gentleman, as I understand it, not only promised in principle to publish, but he gave me to understand that he knew that I understood that he was going to put down an Amendment to indicate the form in which he was prepared to publish.

Mr. Green

indicated dissent.

Mr. Mitchison

I see the hon. Gentleman shaking his head, but I have read the words used in Committee, and if he is saying that they mean something else, he is saying that they mean something contrary to their natural and ordinary meaning. If the Ministers in charge of a Bill are going to let the Opposition withdraw Amendments, knowing perfectly well what the Opposition think they promised—and, in fact, I say, did promise—and then come here and shake their heads when reminded what they did promise, they are not treating the Committee, or the Opposition, or the House properly in this matter.

5.15 p.m.

I say, therefore, that in this case, whatever the merits of the matter, I am entitled to say to the hon. Gentleman, "Here is the Amendment you promised. If it is not in the language or form you want it, that is entirely your own fault". I am entitled to say that to him and I do say it. In these circumstances, if he is now going to refuse the Amendment and say that he is going to do something else, or publish something else, or may do something at some other time because he is too frightened to put it into the Bill, having been terrorised by his back benchers by what happened in the 1922 Committee or wherever it is that they discuss these things, then all I can say is "Have a heart and a little bit of courage and carry out the promise which I understand to have been made in Committee".

Mr. H. Lever

I am perturbed at the state we have reached on this matter. It seems to me that the Minister has in mind to implement by assurance the undertaking that he gave to the Committee that he will publish a list of these companies exempt from Clause 2 by reason of the fact that they are on the list kept by the Board of Trade under the Eighth Schedule of the Companies Act.

There was serious objection to that list being published by many people, including hon. Friends of the Minister who are most experienced in this sort of matter.

Mr. Green

One.

Mr. Lever

The Minister says "one". There was one hon. Friend of his, and experienced in these matters, in Committee, apart from the hon. Member, who will, I hope, forgive me saying so, had a connection with a company which was itself on the list, without doubt kept by the Board of Trade, and who has not the least objection to having it advertised that his company figures on that distinguished list. Therefore, I do not think that the Minister should ignore the points that have been made.

First, my hon. and learned Friend the Member for Kettering (Mr. Mitchison) and hon. Members on this side of the House have reasonably asked for something quite different from what the Minister has offered to give. They have asked that if a company is exempt from the provisions of Clause 2, it should go on a list, it should be an inspectable list, and the public should know which companies by reason of their status by being on this list are exempt from the obligation to seek deposits. My hon. and learned Friend did not ask for, and there are serious objections to the Minister giving, the list of companies which would be exempt if the Clause remained in an unamended form.

I have made more than one reference to the hurried, ill-considered nature of the drafting of the Bill. Instead of saying, as he should have done, that it is a reasonable principle that when restricting advertisements, certain companies could fairly be exempted from those restrictions because of their solidity and soundness and that a list of those companies will be kept and published, the Minister has for convenience seized upon a list which is already at the Board of Trade for a totally different purpose and in which totally different considerations apply. It is a list, broadly speaking, to give exemption to those companies from certain requirements of the Companies Act which enabled them to have secret and inner reserves. Why the Minister, except for idleness, haste and lack of proper consideration in a matter of this kind, should use that list for this purpose, I know not.

My hon. and learned Friend has asked that the Board of Trade should look at companies which want exemption and which are reasonably entitled to it because they are banks of unquestionable status and that if they want it and are granted it, they should go on the list. My hon. and learned Friend rightly says that, if there is such a list of companies which are so exempt, the public are entitled to know about it.

What the Minister has said in haste is that since he has drawn the Bill hastily, he will give a hasty undertaking to disclose the details of a list which is compiled for a totally different purpose, without realising that there may be weighty considerations against giving the names on that list. I believe that there are weighty considerations. The Minister should think again.

I do not know how the hon. Gentleman will extricate himself from his difficulty. He has given a pledge, unfortunately, to my hon. and learned Friend that he will publish the list of exempt companies. I do not see how he can get out of that. As the Bill is drafted, he can fulfil that pledge only if he makes public a list which every one of his predecessors saw good reason to keep private, namely, the list kept under the Eighth Schedule to the Companies Act.

An off-the-cuff undertaking of that kind without proper consideration looks like landing us in publication of a list for which nobody on this side has asked and of which nobody, except one hon. Member who is connected with a firm which is on the list, approves and of which weighty opinion on the Minister's side of the House seriously disapproves.

The Minister has no right to do this. By one means or another, he must fulfil his undertaking to my hon. and learned Friend in the reasonable way in which his demand has always been couched, namely, that we want a list of companies which are exempt from certain restrictive provisions of the Bill. What we do not ask for, and what certainly should not be given, is a list, which is kept for a totally different purpose, of banking companies which are entitled to create secret reserves and not comply with certain other provisions of the Companies Act.

If the Minister now publishes a list of such banking companies, whether he likes it or not there is not the faintest doubt that he will be creating two classes of banking companies: those who are grade I and who are approved at the Board of Trade, and those which, for one reason or another, will be thought by the public to be grade 2 because they are not on the list. That would be to give a false and misleading impression, utterly unfair to those, in many cases, perfectly reputable banking houses which are left off the list. It will give this impression by reason of a hasty reaction of the Minister which will be very damaging, to people carrying on their business lawfully and reputably.

Let me give an illustration of the kind of thing that is liable to happen. The list was started a long time ago. Long before the Companies Act, 1948, there was a similiar list at the Board of Trade and a similar exemption, not only for banks, but for shipping companies, which did not want to have to comply with all the details of disclosing reserves out of their profits as demanded by the Companies Act. For reasons which were of some importance in those days, but which have very little importance today, the Government of the day rightly thought that they should be given the right to create secret reserves.

Today, opinion is very much divided as to whether anybody should be entitled to create these secret reserves. Most people who create them like to do so, first, because of the natural secretiveness of human nature, especially that slice of it which is frequently engaged in large-scale financial transactions, and secondly, because of fear of their shareholders, which was not the original reason for this relief being granted to companies. The relief was given for totally different reasons and it is maintained by most companies either out of natural secretiveness or from a desire that their shareholders should not know too much about the profits of the company or that somebody who may want to make a take-over bid should not know too much about it.

If people who set up or bring into England a banking company hear that there is such a list which entitles it to conceal its secret reserves, quite a lot of reasonable, honourable, reputable and solid concerns would say, "Why should we conceal our secret reserves? Why should we want this privilege? Why waste our time going to the Board of Trade and arguing that we should be put on this celebrated list?" Anybody who has been trading in the City of London since the year dot is automatically on the list, so what might be called the City Establishment figures largely on the list. But many, if not most, of the new arrivals are not specially secretive by disposition or noticeably afraid of their shareholders. Therefore, they see no reason why they should waste time getting themselves on to this precious list. If, however, it is published, they will have every reason to regret the commonsense attitude which they have adopted.

If the list is published, the Minister will be for the first time creating two classes of banking houses: those who appear to enjoy the trust and approval of the Board of Trade, and those who are not in that enviable and distinguished category. It is very much resented, I understand, and reasonably so, by some of the merchant banking houses which are not on the list, many of which, for the reasons which I have given, did not want to bother to be on the list.

What appals me about the whole matter is the ill-considered way in which it appears so far to have been dealt with. Why does the Minister do this injury by a side-wind gratuitously to perfectly reputable firms? He points at my hon. and learned Friend. My hon. and learned Friend does not want this famous Eighth Schedule list to be published. He wants a somewhat different standard to be set. He wants such banking houses as are on the list to be exempted. He wants the Board of Trade to say which of the companies should be exempted and, having said so, to keep a list of them in case they forget it and also for the convenience of the public, who can find out who is or who is not on the list. What my hon. and learned Friend has never asked for, and does not ask for now, is publication of the list kept under the Eighth Schedule to the Companies Act.

I do not want to do what my hon. and learned Friend, with his much greater ability, hesitated to do, but as the Minister has not done the necessary drafting himself, I must suggest clumsily what is required. If he is to implement his undertaking and to give what is asked by, and promised to, my hon. and learned Friend without doing this clumsy, unwanted and eccentric novel disclosure of the list which is kept for a different purpose, and which has been kept confidential for so long, what the Minister must do is somehow, by manuscript Amendment or otherwise, to amend the Clause to state that the banking company is a banking company on the list kept by the Minister for this purpose, in the words roughly of my hon. and learned Friend's Amendment, which the Minister must accept. If it is not exactly in the right form, he had better do some quick thinking to get it right.

If, on his own account and off the cuff, although never pressed by anybody in Committee to do it, the Minister discloses the list which is kept at the Board of Trade under the Eighth Schedule, he will be doing wrong to many firms in the City, many of whom I had never heard of before, who have written to me and said how deeply they resent any such publication. It would affect their credit, particularly with foreign banks and foreign concerns, who come to deposit money with merchant bankers in the City and have dealt with them for years. They have had no reason to doubt their honourable status and reliability. When, however, a list is published, they will find to their horror that the firm which they have been trusting with large sums of money for half a century now appears as a grade 2 firm, which does not want the public to know the full facts about it, and is not on the grade 1 list. It is a strange grade 1, but that, apparently, is the list of companies which do not want to publish the full facts about themselves. That is quite understandable, and I take no objection to it. I have not the least doubt that every company on the list is one of high honour and reputation. But they have no right to be advertised as being grade 1 outfits by the Minister. This has arisen from the Minister's failure to comprehend what it was that my hon. and learned Friend asked for.

5.30 p.m.

I beg the Minister not to do this injustice, not to break the long-preserved confidential character of this list and not to create two classes of banking houses in the City, those who are approved of or disapproved of, or those who are grade 1 and those who appear to be of a secondary grade. The Minister will no doubt say that he particularly favours this idea of exempting certain banking companies from fulfilling the rigmarole under the Bill because it is a waste of time and does not reflect on any company which is not on the list. Of course, many companies will not have applied to go on the list, companies which have not solicited deposits from the public and therefore do not want to claim this exemption. If the Minister publishes this list he will be creating an invidious distinction between grade 1 firms and other firms.

In all these circumstances, I ask the Minister what he is going to do about his promise to my hon. and learned Friend. The Minister is a man of honour and he will keep his word, but he must do so in a way which makes sense. He must not give my hon. and learned Friend more than he has asked for or more than he asked for which will injure people affected in a way that I have explained. I am particularly perturbed at the slipshod way in which the thing has been done. If the people concerned had been the victims of an injury of this kind because the Government, the Treasury and the Board of Trade had thought the matter out and said, "We have had this list a long time. It has been created for a long time, and because we recognise the manifest injury which would result from its publication and because it is now 1963 and we are living in a different era we have thought the matter over and think that the list should be published in private", maybe there could be something to be said for it. It is no good the Minister nodding as though that is something that he had thought of. It is manifestly not so.

What will happen will be that those injured by the Minister's negligence will know it. No decision was arrived at by the Government and no thought was given to it. No one sat down, not even the present Government in their last stages of degeneration, and gave a thought to the matter and said it is high time to publish this list. It is not true; it did not happen that way. The people injured will know that they are the victims of the impetuosity of the Government, that when my hon. and learned Friend proposed one thing the Minister hastily promised another and that, instead of putting the matter right on Report, he has left it in a position where it is difficult to remedy it.

What the Government did not say was that they thought that the list of the companies exempted should be published now. They have never said that. The Government have used that definition wholesale and have said that companies on that list can, if they wish, solicit deposits without complying with the restrictions of the Act, and, as a side wind since they were pressed, they now say, "We will publish the secret list". No thought has been given to the merits of the matter by any Government Department or by any Minister.

All the thought that has been given to it is whether what my hon. and learned Friend demanded was justified, namely, whether the list of those seeking to borrow without complying with the provisions of the Clause shall be published. I venture to say that this list was always confidential and ought to continue to be confidential. If this breach of the confidential character of the list is contemplated, thus injuring many reputable houses for the first time after all these years, it ought to be done by a deliberate decision on the merits of the matter and not as a result of a haphazard side wind.

I register the most forceful protest either at the last being published at all or at it being published without proper consideration being given to the matter, and I urge the Minister, even at this late stage, to find some means of giving my hon. and learned Friend what he asks for, which is not the publication of the list.

Mr. F. M. Bennett (Torquay)

I have listened with great attention to what the hon. Member for Manchester, Cheetham (Mr. H. Lever) has been saying. I must confess that my recollection of the two major discussions which took place in Committee are wholly different from his, and I look forward to the Minister's reply in which, I hope, he will recall some of the facts of those deliberations in Committee.

It seems to me that the hon. Gentleman has been seeking in supporting his hon. and learned Friend's Amendment—he admitted this in his last few words—to go back to the contention which he put forward on both stages of the Committee deliberations that no list should be published at all. He let the cat out of the bag in the last few words of his speech, when he said that he wanted no list at all. I think that if he thinks the matter over he will appreciate that even if his hon. and learned Friend's Amendment is accepted it will not meet his own point of view, which is that no publication should take place at all.

Mr. H. Lever

I used no words whatever about the publication of this list, that is, the list of firms exempted from complying with these provisions. What I have always protested about is the publication of the Eighth Schedule list. I have never said anything more than that.

Mr. Bennett

I will leave it to HANSARD in the morning. The hon. Gentleman said that he was against the publication of any list at all. That is the matter to which I am referring.

Mr. Lever

I did not say that.

Mr. Bennett

We shall have to leave the matter to be resolved by HANSARD.

If the hon. Gentleman is now saying that he does not mind the list referred to by his hon. and learned Friend being published, but he does mind the Minister's list being published, I would point out to him that as the two lists will deal with precisely the same concerns we shall be back to where we started, and that, therefore, it does not carry his point of view any further.

Now as to the other aspect which has been raised for the third time by the bon. Gentleman. We had it twice in Committee, but it did not get any support from either side. It is the aspect that the publication of the list would divide people into sheep and goats. This is not really so, and if the hon. Gentleman wishes to protect the companies to which he has been referring he really will not be doing them any service by continuing to suggest that if they are not in the list they are second-rate companies. By giving publicity to what I believe to be a false analogy the hon. Gentleman is doing nothing to help those who, he says, have written to him.

It was made perfectly clear over and over again by the Minister on both occasions in Committee that this list did not imply sheep and goats but was simply a list of companies carrying on a particular business and which, for reasons accepted by the Jenkins Committee and others, were exempted from certain provisions of the Act.

Mr. Mitchison

Which Act?

Mr. Bennett

I did not use the word "Act".

Mr. Mitchison

The hon. Gentleman said companies which were "exempted from certain provisions of the Act". Since the Bill was brought in after the Jenkins Committee, my recollection was that the reference was to another list under the Companies Act.

Mr. Bennett

If I used the word "Act", I am sorry. I am talking about the Bill.

The suggestion was made that certain companies should be exempted for certain purposes, of which the hon. Gentleman is perfectly well aware, and this list is precisely the same list again. I repeat, to get the record straight on this matter, that I do not think he is right that because this list is published it should cast any slur at all on companies which are not on it. It is a matter of publishing a list of companies which, for particular reasons, are exempt from the provisions of the Bill. It does not cast any reflection on the reputability of companies not on the list.

We had this discussion twice in Committee and the Minister gave a perfectly firm undertaking that a list of these companies should be published. I know that there are certain difficulties about implementing his decision. Personally, I do not mind whether the hon. and learned Gentleman's Amendment is accepted or the Minister's, because I think that it should be common ground between us that there will be almost or even precisely the same number of companies and the same firms to be exempt. There cannot be any real substantial difference. Why it should be thought to be a slur to be on one sort of list and not on the other when they will be precisely the same companies, I, for one, fail to understand.

Mr. John Morris (Aberavon)

I did not have the privilege to serve on Standing Committee A which dealt with this Bill and this matter, but, as I understand the position, the Minister seems to be hoist with his own petard by giving certain assurances to the Committee and not giving effect to those assurances by way of amending the Bill in the way in which my hon. Friends seek to do it at the moment.

I am concerned, first, that the Minister seems from laziness, as my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever) so ably said, to be adopting for the purposes of this Bill the list under the Companies Act, though that list is there for certain purposes. I submit that hardship may be caused by publication of that list, but further to that, hardship may be caused by publication of the list for a purpose for which it was not originally conceived. I hope the Minister has gone into this matter.

I should be quite out of order if I were to go into the merits of the Bill as a whole, but the Bill does a good deal to protect the public, and I think that, on the whole, it has been welcomed, although anything my hon. Friends seek to do to strengthen the Bill I certainly support. But fears have been expressed as to what might result from publication of the Board of Trade's secret list, if it were published in accordance with what the Minister has said.

I read with great interest the observations made in Committee by my hon. Friend the Member for Cheetham, and perhaps the House will permit me to read exactly what he said on this matter, because he said it so much better than I could ever do: We now come to the question of the Board of Trade list. There is a list kept, and as far as I know it is a secret list. I think it is desirable that it should remain secret for this reason, This list is kept at the Board of Trade of persons who are not obliged to make the full disclosure provided by the Companies Act of their accounts. Assuming that the practice is still to continue, whereby banks keep great reserves, then, if we publish that list, it will seriously affect the persons not on that list, perfectly reputable businesses." [OFFICIAL REPORT, Standing Committee A, 20th December, 1962; c. 71.] That is where the doubts, fears and anxieties arise about what may happen if this list is published. I understand that there are over 100 banks and discount houses in the home field and in the foreign field which enjoy the fact of being on this list at the moment. There is a possibility of injustice by the off-the-cuff decision of the Minister to publish this list—that injustice will occur by the mere fact of publication; and it will occur to those who are not on that list, and who, as my hon. Friend the Member for Cheetham said, may be perfectly reputable and honourable people who for many years have traded without being on the list or trying to be on it, and who, by the mere fact of publication of the list, may find themselves being regarded as persons of the second grade or second category.

5.45 p.m.

However laudable the purposes of publishing a list of this nature may be, it would be quite wrong, and, indeed, the Minister by his decision could be rendering an injustice in this way to those people who were not to find themselves on the list. They do great work; they provide money where it is needed in the several spheres of our economic life; and they operate very delicate financial machinery. It would be quite wrong to cast doubt on these firms, and, indeed, it could be very dangerous to upset the machinery which they operate.

As I understand it, the list of 100 or so firms on the Board of Trade secret list are, in the main, the larger institutions. My hon. Friend the Member for Cheetham inferred that they belong to the Establishment. They have been there a long time, while those companies not on the list are frequently the smaller ones which have come recently into this particular business. There is a fear which is felt particularly by those who are bankers and have the common law right to call themselves bankers. As I understand it, to call oneself a bona fide common law banker one has to have a certain proportion in current accounts as compared with deposit accounts. The fear of some bankers and discount houses is that if the list is published they may have no right to call themselves bankers or to enjoy this common law right which they have, and which they partly may lose because of intervention of this Bill, and that by a side wind doubt about their status will result.

If a list is published, either in the terms of the assurances which have been made and given by the Minister to the Committee at various stages, or accord- ing to the terms of the Amendment, and if it is thought desirable to publish that list in all the circumstances, then I ask that it should be made perfectly clear what that list is made up of, and that by no means should there be, by way of the drafting of the list, any suggestion or inference at all that perfectly reputable businesses performing very valuable services do not enjoy the right or title to call themselves bankers.

I appreciate the difficulty in which the Minister finds himself, and how he is going to get out of his difficulty I do not know, but I ask him that when he finds himself in the position of deciding that he intends to publish the list he should make it perfectly clear that those not on the list shall not suffer in any way by the mere fact of publication and that it shall in no way cast any aspersion on their right to call themselves bankers, having regard to the extremely valuable work which they do in this field. I hope the Minister will be very careful indeed about the manner in which he considers this matter of publication of the list.

Mr. J. T. Price (Westhoughton)

With the utmost respect, from what has been said by some of my hon. Friends and an hon. Gentleman opposite, I beg to differ, because I think that this debate has got off the rails a bit.

Mr. Cyril Bence (Dunbartonshire, East)

Are there any left?

Mr. Price

"Rails" today is, perhaps, a rather unfortunate figure of speech. However, I want to keep strictly in order and I do not want to be deflected from what I want to say in the few minutes that I shall be on my feet.

I hope that I may be allowed to remind the House that this is a Bill to protect depositors—the man in the street—against the activities of unscrupulous advertisers who filch money from the public by all kinds of ruses and fraudulent devices. I put it as strongly as I can, but, I hope, not unfairly, in view of the past history of some of these firms which advertise for money at high rates of interest.

Having sat through and, occasionally, even enjoyed what were sometimes the long, tortuous and technical debates on the Bill at an earlier stage, I should have thought that it was sufficiently clear why the Minister is in trouble tonight. Right from the start when we had our earlier debates on the Bill, we on this side put forward the conception that, if we were to do anything to protect the public against fraudulent advertisers who use the columns of the provincial newspapers to attract the money of people who have no more sense than to put it into these concerns, the best way to do it would be to make the requirement positive, not negative.

I intended to convey—what I said is on record, though I do not like to regurgitate my words, or burn midnight oil looking them up—to the Committee and the Minister that, in my opinion, and in that of some of my hon. Friends, the right way to do this if we wanted to tidy it up properly, with a real intention to protect the public, would be to have a licensing system for financial institutions which would have to pass a rigid test to show whether they were solvent enough to advertise inviting the public to deposit money with them.

My hon. Friend the Member for Aberavon (Mr. Morris) has just expressed some doubt about the use of the word "bank". I very seriously differ from him on this. The word "bank" has been used frivolously and dangerously by many people, but I like to think that it has a connotation of reliability, integrity and ability to meet liabilities. The use of the word in its very loose modern form has meant admitting to the world of high and lesser finance all kinds of people who are not really bankers at all. I would not give any support in this matter to those "bankers" who have no real title to that label. Perhaps we can talk about labels on some other occasion.

If the Minister and those who advise him had taken their courage in their hands and said. "We will have a thorough-going licensing system, and only those who pass a test shall be allowed to advertise for people's money", it would have been a different tale that the Minister had to answer today. But he did not do that. Why was that? It was because he thought that, once having set up such a system, it would be invidious to leave certain people out.

Now the Minister takes refuge in the secret list. Even if no one else in the House says it, I intend to say that I strongly object to secret lists of any kind. I hope that I am not being unnecessarily pernickety about this, but I object to secret lists which may be of high commercial value to those whose names are on them. If we are enacting legislation which imposes very heavy penalties on those who transgress its provisions, but are excluding from the Bill's sanctions those who are on the secret list, we are not doing justice to the generality of the British people. This may be a theoretical question on which I could talk for a long time. If I wanted to block the Bill I could make a long speech on it, and I would hope that I should talk sense most of the time.

However, the Minister has given an undertaking. I have always regarded him—I am sure he will not be embarrassed by what I say—as a man of the highest integrity. We have believed that his word could be relied upon even if we disagreed with his policy and outlook on all sorts of things. If he gave a promise, we always thought that he would carry it out. He has given an undertaking to have a list and to publish it. I am all in favour of publication—"Publish and be damned", as Fleet Street used to say. That was before the Vassall Tribunal. However, I do not want to get into trouble with the Chair. If we start talking about Dr. Beeching and Vassall together tonight, it will mean a long debate, and it would not be fair to the Minister.

I want to expedite the passage of the Bill, for what it is worth; it is a very poor Bill. The Clause has no teeth in it, and the Bill has none, either. If we are legislating as serious men, trying to put before the public that we are doing our job properly and saying that we will protect the public against frauds and swindlers advertising for their money, we should do it thoroughly and not in the half-hearted, mealy-mouthed fashion of the Bill.

It will be gathered that I am supporting what my hon. and learned Friend the Member for Kettering (Mr. Mitchison) said in his opening remarks. Listening to some of the other speeches, I wondered who was supporting and who was opposing the proposal. I am in favour of a list and having the brightest lights of publicity in the dark corners of high finance. If we get that, we can proceed in a happier frame of mind with the next Clause and assist the Minister to get the Bill. If not, we shall want a more definite assurance than we have had so far, and I hope that the Minister is now prepared to give it.

Mr. Bence

Like my hon. Friends the Members for Aberavon (Mr. Morris) and Westhoughton (Mr. J. T. Price), I was not a member of the Standing Committee, but when Bills come to the House after their proceedings in Standing Committee I consider it my duty to attend on Report to see what has been going on upstairs.

We have heard this afternoon from my hon. and learned Friend the Member for Kettering (Mr. Mitchison) what went on upstairs. A number of promises were made, not for the first time. From what I have heard of the debate on this Amendment, the Minister gave certain pledges. Apparently—I gather this from the way he shook his head on various occasions and from what was said by his hon. Friend the Member for Torquay (Mr. F. M. Bennett)—the promises have not been kept and he has no intention of keeping them. I do not know; I am just assuming—

Mr. F. M. Bennett

I certainly did not say that the Minister was not keeping his pledges. What I said was the contrary, that he has kept them as a result of his Amendment. I said that I hoped he would not be deterred from keeping his pledges by other speeches.

Mr. Gordon Walker (Smethwick)

Which Amendment?

Mr. Bennett

They both do the same thing.

Mr. Green

Perhaps I might help. It does not require an Amendment to the Bill for me to keep the pledge which I gave, which I shall certainly honour.

Mr. Bence

That is why I rose. I wanted to question this and get right on Report the impressions I gained arising from the proceedings in Committee.

We have heard a great deal about the Board of Trade list. I represent a Scottish constituency, and in Scotland we have some of the most notable banking institutions in the world. It was a Scotsman who founded the Bank of England—Patterson—and it was another Scotsman—Richard Law—who went to France in the Napoleonic period and tried to establish a central bank in France—

Mr. Gordon Walker

It cost a great deal of money.

Mr. Bence

—but failed. This modern system of banking which came into being after the revolution of 1668 was a Scottish conception. I want to be assured that all Scottish commercial and banking institutions will be at the head of the Board of Trade list because the conception of central banking started with Patterson in Scotland.

May I have an assurance from the Parliamentary Secretary that our Scottish institutions will be well in the forefront of the list? It has been suggested that if one is not on the list one is a second-class institution. I hope that it will not go from this House tonight that the Government, who have been in power for eleven years, have a list at the Board of Trade and the connotation is that if Scottish commercial and financial institutions are not on it they must be looked upon as second-rate. That would be an insult to Scotland which I am sure Scottish hon. Members in particular and Scottish people generally would resist as vigorously as they possibly could.

I therefore trust that I can have from the Parliamentary Secretary an assurance that Scottish banks and commercial houses are in the forefront of the list.

6.0 p.m.

Mr. Green

I very much regret that the hon. and learned Member for Kettering (Mr. Mitchison) presented his Amendment in such a confused and confusing fashion that he confused many hon. Members on his side of the House. He very nearly confused me at one time. I say that in no spirit of harsh jeering, but it is the kindliest thing that I can say about the introduction of his Amendment. He has referred to the pledge about publication which I gave in Committee after considerable hesitation.

As hon. Members who sat on the Committee will remember, at the moment of hesitation I was complimented—for the first time, I believe, in public—by the hon. Member for Manchester, Cheetham (Mr. H. Lever), because, it seemed, I showed him that by my hesitation I was really trying to think about the arguments advanced. However, the hon. Member has assailed me vigorously this afternoon. But his accusation of hasty and ill-considered judgment, after his praise of me for thinking on my feet, is a charge that should not really stick.

The hon. and learned Member for Kettering asserted, I understand, that I bad given him an undertaking to publish a list different in kind from that contained in the Eighth Schedule of the Companies Act, 1948.

Mr. Mitchison

indicated dissent.

Mr. Green

If the hon. and learned Member did not say that, then I fail to follow a great deal of his original reasoning in moving the Amendment. I remind him of his own words when we discussed this matter of publication in Committee. He said: To put the matter shortly, the whole object of the Amendment is not to interfere with the use of existing lists in the way proposed"— the only list existing is in the Eighth Schedule of the Companies Act— but to ensure that the lists are published.… All I want is a Statutory Instrument containing the lists of the Companies which are treated as banks or discount houses for the purposes of the Companies Act, 1948…'—[OFFICIAL REPORT, Standing Committee A, 20th December, 1962; c. 59.] I think that this establishes beyond doubt that what we were talking about were the words in the Bill, the list under the Eighth Schedule of the Companies Act.

Mr. Mitchison

It is perfectly correct that the Amendment as put down in Committee referred to what I will call the Companies Act list. But there was a good deal of discussion in Committee and, like the hon. Member, I pay attention to what is said. I made it clear as we went on with the discussion that I did not mind which list it was. I have quoted this passage, and I am going to quote it again and refer to another thing in column 86. I said: It is for that sort of reason that I expressly left the door open to the Government on the question of whether the two lists should be identical. My hon. Friend"— that was my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever)— will, no doubt, recollect that the language of the Bill provides for identical lists, but it may well be that if the effective list has to be published it will be for up to, say, 100 bodies, identical, but for the remainder not identical. That was not my point. I am on the question of whether the list of exempted people should be published. Surely, it ought to be."—[OFFICIAL REPORT, Standing Committee A, 20th December, 1962; c. 86.] I will not repeat all that I read out earlier. I want it to be clear that I left it to the Minister of State to decide whether it should be the Companies Act list or—as I personally favoured—a list of people exempted under this Clause. This Amendment is perfectly clear. It relates to the list of people exempted under this Clause. If the Bill is left as it is, the only thing the hon. Gentleman will be able to publish will be another list—the list under the Companies Act. I do not know whether he wants me to do it now., but at some time, if the House will allow me, I should like to deal with the suggestion—if he makes it—that he never undertook to put anything in the Bill. He did.

Mr. Green

The hon. and learned Member is, I think, agreeing with me that at the stage we were talking about he said that all he wanted was the Companies Act list. I think that it will be within the recollection of all hon. Members who were on the Committee that that was what we were talking about.

Mr. Mitchison

I am very sorry—

Mr. Green

I am taking this stage by stage, if the hon. and learned Member will permit me. I am trying to establish the first point.

Mr. Mitchison

I am sorry to interrupt the hon. Gentleman again, but this is more than a matter of recollection. It is perfectly clear what happened.

Mr. Deputy-Speaker (Sir William Anstruther-Gray)

Order. The hon. and learned Member should remember that we are not in Committee but on the Report stage. I hope that further interventions by the hon. and learned Gentleman, who has already exhausted his right to speak, will be short.

Mr. Mitchison

I hope that this one will be, Mr. Deputy-Speaker. The point is that I left this matter entirely to the hon. Gentleman's discretion. I quoted the relevant passage once and I will not do so again.

Mr. Green

I accept that. At a later stage in our discussions, my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) was amongst those who strongly objected to the publication of this list. I listened to his argument with great attention. My hon. Friend referred to this again later in more specific terms and to the Eighth Schedule list in the Companies Act. I replied: … I undertook to publish the list of these companies. I must keep that undertaking."—[OFFICIAL REPORT, Standing Committee A, 26th February, 1963; c. 552.] It is exactly that undertaking that I propose to keep and I shall publish that list. It seems to me to be appropriate to publish it in the Companies Report annually. As I have told the hon. Member for Dunbartonshire, East (Mr. Bence), there is no need to have an Amendment for me to keep my pledge. I believe that that view will be accepted by all hon. Members who served on the Committee. I hope that the point is now well established.

Now I turn to the Amendment. My objection to having a second list—which is what I would be committed to by the Amendment—is that I should merely be adding an element of confusion to the financial world. I should certainly be subscribing to the thought that perhaps there were all sorts of grades of companies, and I do not wish to do that. The objection which the hon. Member for Cheetham had in principle to the publication of the Eighth Schedule list is in principle also applicable to his suggestion for another kind of list to be published picking out certain people who can apparently be trusted to behave themselves properly when it comes to financing companies by taking deposits.

I do not want another list. We should be treating the two lists quite differently under different forms of legislation. As my hon. Friend the Member for Torquay (Mr. F. M. Bennett) has rightly said, we should find that if the lists were not identical they would be nearly so. We should also be in the curious position of having certain companies treated in one way for one purpose under the Companies Act and treated in another way for another purpose under this Bill. That would not be a desirable situation.

Mr. H. Lever

As one purpose is to exempt the company from the need to publish its secret reserves, which may involve one kind of consideration, and the other is to exempt it from the need to comply with certain restrictions on advertising, which depends on its solvency and general status, different considerations apply, and hence different lists might well be kept.

Mr. Green

I know that argument. We had it in Committee, but I am not convinced by it. I should find myself in the very invidious position of adding to the list day by day, week by week or year by year, and the Board of Trade would be in the position of constantly having to make value judgments of different companies. This would put me in a position of giving some weight to the charge made by the hon. Member for Cheetham that I was proposing a list of first and second-class companies. As I sought to make perfectly plain in Committee—26th February, col. 558 of the OFFICIAL. REPORT—if I published the Eighth Schedule list, I would not make this invidious distinction between first and second-class companies. I said that I was glad of the discussion which we had had because I hoped that it would clear away the thought that there were companies of two different classes in the same character of business. If, as I am now asked, I produce a second list, I shall revive that thought and be unable in subsequent discussion to clear it away. For that reason, I hope that the House will reject the Amendment.

Mr. Morris

Will the hon. Member meet my point about the affairs of those companies not on the list and the innuendo which might arise from the fact that they would have no right to call themselves bankers in the common law understanding of the term?

Mr. Green

I do not think that I could stay within the rules of order and give a definition of "banker" for these purposes.

Mr. Diamond

This is a matter of some little difficulty and I am, therefore, bound to detain the House for a short time, with regret, so that full justice may be done to everybody's point of view.

The first thing I want to make absolutely clear—indeed, nobody has ever bad it in doubt—is that nobody, certainly not on this side of the House, has any doubts but that the Minister knew that he had given a pledge and would carry it out. There could have been some measure of doubt as to the way in which the Minister might interpret that pledge, having regard to the simple fact that it is clearly established in the record that we started off with a certain kind of consideration and, as the argument developed, moved to a slightly different consideration.

This is something for which no hon. Member has the slightest need to apologise. The purpose of giving consideration to a matter in Committee is that, as the arguments emerge and become clearer, we are enabled to move more precisely to the point at issue. It was nothing but useful that a discussion, which started, as, inevitably, it had to start, on the basis of a given Amendment in certain words, moved to the precise point in which the Committee was interested. Committee stages of Bills are deliberately designed to allow that to happen. I therefore start with the Companies Act list, the list which formed the basis of the Amendment as it was originally worded, but which was not the list upon which we were insisting at the end of the debate.

There are two views about this list. My hon. Friend the Member for Westhoughton (Mr. J. T. Price) has perhaps the clearest view of all. It is that the Companies Act list of bankers should be published. The hon. Member for Torquay (Mr. F. M. Bennett) has a strong view that it ought to be published. I am told that he is on it, but as it is a secret list, I have no means of knowing.

Other hon. Members have the strong view that it ought not to be published because it would, or might, do some damage to people whom one has no desire to damage and because it would do no particular good for the purposes of the Bill. As that is the list, may I do what I generally prefer to do and rely not only on my own unaided opinion about the list, but on the opinion of people who have given the matter a very great deal of consideration and who have listened to the evidence of others concerned with the list?

I refer, of course, to the Jenkins Committee. The Jenkins Committee produced a lengthy Report, but only in two respects are there minority dissents. The Report covers a vast number of recommendations, and only two are dissented to by a minority. There is a dissent about this matter, and it is therefore a matter upon which there could well be two opinions.

6.15 p.m.

The view of the majority of the Jenkins Committee is quite clear. It is contained in paragraph 407 and is: We recommend that—the existing exemption of banks and discount companies should continue The view of the minority, not a small minority but consisting of five distinguished members of the Committee, was: We dissent from the recommendation in paragraph 407 (a) that the existing exemption of banks and discount houses should continue. We agree with our colleagues that it is essential that confidence in the banking system should be maintained but we are not convinced that it is necessary for this purpose for banks to withhold information about their operations from their shareholders and from the public generally … In paragraph 13, on page 214 of the Report, the minority said: We can see nothing in the evidence to justify the continued concealment of the true level of profits. In short, we have first-rate authority for the view that the list should be published and first-rate authority for the view that it should not be published.

Mr. H. Lever

What my hon. Friend has quoted from the Jenkins Report is surely a first-rate opinion that there should be a list and a first-rate opinion to the opposite view. There is no opinion by the Jenkins Committee that the list should be published. Nobody, either the majority or the minority, ventured to support the Minister's view that it should be published.

Mr. Diamond

I appreciate what my hon. Friend has said. It is a matter of continuing exemption. The main purpose of my quoting the extracts was to make it clear that this was obviously a difficult matter.

The members of the Jenkins Committee were not the only people who had considerable difficulty. The Minister himself had considerable difficulty about reaching a conclusion as to whether the list should be published, and the record bears testimony to that fact and to the fact that, having difficulty about it, he wanted to give the matter further consideration. That is something that we always appreciate.

Having made the position about that list clear, I now turn to the Amendment, which is not concerned with that list. The Amendment is concerned with a different list. I want to make it absolutely clear that we on this side of the House see no connection between the two lists. It may well be that they are certain considerations, not the whole of the considerations, and certain criteria, as a result of which a firm qualifying under one list would qualify under the second list. That is incidental.

The list with which we are concerned is a list which we must have, because under the Bill we are saying that certain people do not have to advertise. How will the depositor know the people with whom he is dealing unless those people who do not have to advertise are known to be the people who do not have to comply with the regulations? One has to be aware of that situation so that this Bill can function properly. That is the point which we want to make.

I can see arguments of value in publishing a list under the Companies Act, as the minority indicated. It has been represented, and I accept it completely, that in certain cases damage might be done. The damage that might be done rests on the fact that banks which had been thought to be in the list would now be known not to be in it, and, therefore, banks which had been riding on a status to which they were not entitled would now be known not to be entitled to that recognition.

Therefore, I am not sure whether one ought not to take that into account. However, bearing in mind all the difficulties which the Committee and the Government had with regard to the Companies Act list, why should we get involved, on a Bill which does not deal with those matters, in making a decision, almost tangentially, about a matter which is clearly of importance and vast difficulty, in this irrelevant way? If we have to deal with that, I would much prefer the Minister to bring forward a document on which a proper question could be based, and we could debate whether or not the arguments in favour were greater than the arguments against.

Just because the Government have dealt with this by, as it were, legislation by reference, without thinking carefully whether the matter referred to was really the matter they had in mind, why should we decide it by reference? Let us decide it either positively, or not at all. I therefore say to the Minister that we would prefer not to come to any decision whatsoever as to whether the list under the Companies Act should continue, as it is at the moment, to be a private list, or should be turned into a public list.

We do not want to reach a decision on that without full and careful consideration. This is entirely consistent with the conclusion we reached towards the end of the discussion in Committee. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) made it clear that this was not a decision which we were pressing. It was for the Government to decide. My hon. and learned Friend said time and again that he wanted to leave it absolutely open for the Government to make a decision. He said: That would leave the wording of the Clause entirely to the Minister."—[OFFICIAL REPORT, Standing Committee A, 20tb December, 1962; c. 84.] The reason why I want to clear out of the way this Companies Act list, and the responsibility for a decision on that list, is that my hon. Friends and I have the clearest view about whether the list under this Bill should be published. Of course, it must be published so that people desiring to deposit with exempt companies know which companies are exempt. If, therefore, we reach the view that the list under this Bill should be published, we cannot accept as an argument against publishing this list the fact that the Minister says, "I have already decided to publish another list and I shall not publish two because it would be confusing".

I reject any idea that there would be confusion. I reject that they would be similar lists, and that the criteria would be so similar that people would be led into confusion, but what I affirm positively is that we must have the list in relation to this Bill, and we cannot accept as an argument against it that there would be a second list.

I am sorry that I have kept the House some little time, but I hope that I have made the position clear, and I am sure that I have the support of my hon. Friends in what I said. I can only repeat, with all the courtesy due to the Minister for having implemented, as we knew he would, the pledge he gave, that nevertheless, having regard to the discussion which took place in the Committee upstairs, and to everything that has been said today, we must invite the Government to agree that there should be a list referable to this Bill, and the way to do that is to accept the Amendment, and we must, therefore, press the Amendment to its conclusion.

Sir Henry d'Ayigdor-Goldsmid (Walsall, South)

This is an extraordinarily involved discussion on a point of some obscurity, because the fine metaphysical line which the hon. and learned Member for Kettering (Mr. Mitchison) and the hon. Member for Gloucester (Mr. Diamond) have drawn between the first and second lists did not clearly emerge in our Committee discussions.

I sat through those discussions and took part in them. Perhaps I took more, part in them than I should have. I listened attentively to what was said and I do not want to start a textual exegesis as to where the changed decision was taken. When I read the Amendment I thought that the hon. and learned Member for Kettering was referring to what I called the Schedule 8 list. We spent a lot of time on this list in Committee, but I do not think that it is really the stuff of the Bill. I rally to the support of my hon. Friend.

Nevertheless I am sure that it is right that a list of the companies which are exempt from the advertising restrictions of the Bill should go with the Bill and be published with it. I differ from my hon. Friend the Member for Torquay (Mr. F. M. Bennett). I do not think that the list is identical to the Schedule Eight list. I do not think that the Schedule Eight list is relevant to this because I believe that there must be a number of companies who would by the judgment of the Board of Trade be exempted from the advertising provisions if we were to exempt any companies.

There is still great obscurity on the point. If there is a Division my hon. Friend the Parliamentary Secretary will get his majority, but this is a decision which, for one reason and another, and for obvious reasons, too, a large proportion of hon. Members have had no means of investigating. We had a number of speeches repeating speeches made in Committee. A number of hon. Members now present were not members of the Committee and if we are called on to decide the point now most hon. Members will take a decision on it in complete ignorance. There must be grounds for second thoughts about this idea of a list of companies exempt for the purpose of this Bill, and that is the list which should be published.

I should like my hon. Friend to say that he will look at this again. Perhaps, when the Bill goes to another place, he may have the possibility of tying down the companies to which the Bill refers. That is the point f wanted to make, and I do it in this way so that it is on the record.

Question put, That the words proposed to be left out stand part of the Bill:—

The House divided: Ayes 195. Noes 156.

Division No. 81.]	AYES	[6.29 p.m.
Agnew, Sir Peter	Black, Sir Cyril	Clark, Henry (Antrim, N.)
Aitken, W. T.	Bossom, Hon. Clive	Clarke, Brig. Terence (Portsmth, W.)
Allason, James	Bourne-Arton, A.	Cleaver, Leonard
Ashton, Sir Hubert	Box, Donald	Cole, Norman
Atkins, Humphrey	Boyd-Carpenter, Rt. Hon. John	Cooke, Robert
Awdry, Daniel (Chippenham)	Braine, Bernard	Cooper-Key, Sir Neill
Balniel, Lord	Brooman-White, R.	Cordeaux, Lt.-Col. J. K-
Barber, Anthony	Bryan, Paul	Corfield, F. V.
Bell, Ronald	Buck, Antony	Costain, A. P.
Bennett, F. M. (Torquay)	Burden, F. A.	Coulson, Michael
Bevins, Rt. Hon. Reginald	Butcher, Sir Herbert	Craddock, Sir Beresford (Spelthorne)
Bidgood, John C.	Campbell, Gordon (Moray & Nairn)	Critchley, Julian
Biffen, John	Carr, Compton (Barons Court)	Cunningham, Knox
Biggs-Davison, John	Cary, Sir Robert	Curran, Charles
Bingham, R. M.	Channon, H. P. G.	d'Avigdor-Goldsmid, Sir Henry
Bishop, F. P.	Chichester-Clark, R.	de Ferranti, Basil
Donaldson, Cmdr. C. E. M.	Kimball, Marcus	Quennell, Miss J. M.
Doughty, Charles	Kitson, Timothy	Rawlinson, Sir Peter
du Cann, Edward	Langford-Holt, Sir John	Rees-Davies, W. R.
Eden, John	Leavey, J, A.	Renton, Rt. Hon. David
Elliot, Capt. Walter (Carshalton)	Leburn, Gilmour	Ridley, Hon. Nicholas
Emmet, Hon. Mrs. Evelyn	Legge-Bourke, Sir Harry	Ridsdale, Julian
Errington, Sir Eric	Lilley, F. J. P.	Roots, William
Erroll, Rt. Hon. F. J.	Lindsay, Sir Martin	Ropner, Col. Sir Leonard
Farey-Jones, F. W.	Linstead, Sir Hugh	Russell, Ronald
Farr, John	Litchfield, Capt. John	St. Clair, M.
Finlay, Graeme	Longbottom, Charles	Scott-Hopkins, James
Forrest, George	Lucas-Tooth, Sir Hugh	Sharples, Richard
Fraser, Ian (Plymouth, Sutton)	McLaren, Martin	Shaw, M.
Gammans, Lady	Maclay, Rt. Hon. John	Skeet, T. H. H.
Gardner, Edward	McMaster, Stanley R.	Smith, Dudley (Br'ntf'd & Chiswick)
Gilmour, Ian (Norfolk, Central)	Macpherson, Rt. Hn. Niall(Dumfries)	Smithers, Peter
Gilmour, Sir John (East Fife)	Maddan, Martin	Smyth, Rt. Hon. Brig. Sir John
Goodhart, Philip	Maginnis, John E.	Spearman, Sir Alexander
Gower, Raymond	Maitland, Sir John	Speir, Rupert
Green, Alan	Marten, Neil	Stevens, Geoffrey
Gresham Cooke, R.	Matthews, Gordon (Meriden)	Steward, Harold (Stockport, S.)
Grosvenor, Lt.-Col. R. G.	Mawby, Ray	Stodart, J. A.
Hall, John (Wycombe)	Maxwell-Hyslop, R.J.	Storey, Sir Samuel
Hamilton, Michael (Wellingborough)	Maydon, Lt.-Cmdr. S. L. C.	Studholme, Sir Henry
Harvey, John (Walthamstow, E.)	Mills, Stratton	Summers, Sir Spencer
Hastings, Stephen	Miscampbell, Norman	Talbot, John E.
Hay, John	Montgomery, Fergus	Thatcher, Mrs. Margaret
Henderson, John (Cathcart)	More, Jasper (Ludlow)	Thomas, Sir Leslie (Canterbury)
Hendry, Forbes	Morgan, William	Thornton-Kemsley, Sir Colin
Hiley, Joseph	Morrison, John	Tiley, Arthur (Bradford, W.)
Hill, Dr. Rt. Hon. Charles (Luton)	Neave, Alrey	Touche, Rt. Hon. Sir Gordon
Hill, Mrs, Eveline (Wythenshawe)	Nicholls, Sir Harmar	Turner, Colin
Hill, J. E. B. (S. Norfolk)	Nicholson, Sir Godfrey	Turton, Rt. Hon. R. H.
Hirst, Geoffrey	Noble, Rt. Hon. Michael	Tweedsmuir, Lady
Holland, Philip	Nugent, Rt. Hon. Sir Richard	van Straubenzee, W. R.
Hollingworth, John	Oakshott, Sir Hendrie	Walder, David
Hopkins, Alan	Orr-Ewing, C. Ian	Walker, Peter
Hornsby-Smith, Rt. Hon. Dame P.	Osborne, Sir Cyril (Louth)	Wall, Patrick
Howard, John (Southampton, Test)	Page, Graham (Crosby)	Ward, Dame Irene
Hughes-Young, Michael	Pannell, Norman (Kirkdale)	Webster, David
Hurd, Sir Anthony	Partridge, E.	Wells, John (Maidstone)
Irvine, Bryant Godman (Rye)	Pearson, Frank (Clitheroe)	Whitelaw, William
Jennings, J. C.	Peel, John	Williams, Dudley (Exeter)
Johnson, Dr. Donald (Carlisle)	Percival, Ian	Williams, Paul (Sunderland, S.)
Johnson, Eric (Blackley	Pickthorn, Sir Kenneth	Wills, Sir Gerald (Bridgwater)
Johnson Smith, Geoffrey	Pott, Percivall	Wilson, Geoffrey (Truro)
Jones, Arthur (Northants, S.)	Price, David (Eastleigh)	Worsley, Marcus
Kerans, Cdr. J. S.	Price, H. A. (Lewisham, W.)
Kerr, Sir Hamilton	Prior, J. M. L.	TELLERS FOR THE AYES:
Kershaw, Anthony	Profumo, Rt. Hon. John	Mr. Batsford and Mr. MacArthur.
NOES
Abse, Leo	Davies, S. O. (Merthyr)	Hoy, James H.
Ainsley, William	Delargy, Hugh	Hughes, Cledwyn (Anglesey)
Albu, Austen	Dempsey, James	Hunter, A. E.
Allaun, Frank (Salford, E.)	Diamond, John	Hynd, H. (Accrington)
Allen, Scholefield (Crewe)	Dodds, Norman	Hynd, John (Attercliffe)
Awbery, Stan (Bristol Central)	Duffy, A. E. P.	Irving, Sydney (Dartford)
Bacon, Miss Alice	Ede, Rt. Hon. C.	Jay, Rt. Hon. Douglas
Barnett, Guy	Edwards, Rt. Hon. Ness (Caerphilly)	Jones, Rt. Hn. A. Creech (Wakefield)
Baxter, William (Stirlingshire, W.)	Edwards, Robert (Bilston)	Jones, Dan (Burnley)
Beaney, Alan	Evans, Albert	Jones, Elwyn (West Ham, S.)
Bellenger, Rt, Hon. F. J.	Finch, Harold	Jones, J. Idwal (Wrexham)
Bence, Cyril	Fitch, Alan	Key, Rt. Hon. C. W.
Bennett, J. (Glasgow, Bridgeton)	Forman, J. C.	King, Dr. Horace
Blackburn, F.	Fraser, Thomas (Hamilton)	Lawson, George
Blyton, William	Galpern, Sir Myer	Lee, Frederick (Newton)
Boardman, H.	Gordon Walker, Rt. Hon. P. C.	Lee, Miss Jennie (Cannock)
Bray, Dr. Jeremy	Gourlay, Harry	Lever, Harold (Cheetham)
Brockway, A. Fenner	Greenwood, Anthony	Lewis, Arthur (West Ham, N.)
Brown, Rt. Hon. George (Belper)	Griffiths, W. (Exchange)	Lipton, Marcus
Butler, Herbert (Hackney, C.)	Grimond, Rt. Hon. J.	Lubbock, Eric
Callaghan, James	Hamilton, William (West Fife)	Mabon, Dr. J. Dickson
Carmichael, Neil	Hannan, William	MacColl, James
Cliffe, Michael	Hayman, F. H.	MacDermot, Niall
Collick, Percy	Henderson, Rt. Hn. Arthur(Rwly Regis)	McInnes, James
Corbet, Mrs. Freda	Herbison, Miss Margaret	McKay, John (Wallsend)
Craddock, George (Bradford, S.)	Hill, J. (Midlothian)	Mackie, John (Enfield, East)
Crosland, Anthony	Hilton, A. V.	McLeavy, Frank
Dalyell, Tam	Holman, Percy	Mallalieu, J.P.W. (Huddersfleld, E.)
Davies, G. Elfed (Rhondda, E.)	Holt, Arthur	Manuel, Archie
Davies, Harold (Leek)	Houghton, Douglas	Mapp, Charles
Davies, Ifor (Gower)	Howell, Denis (Small Heath)	Marsh, Richard

Mayhew, Christopher	Pursey, Cmdr. Harry	Thomas, George (Cardiff, W.)
Mendelson, J. J.	Reynolds, G. W.	Thompson, Dr. Alan (Dunfermline)
Millan, Bruce	Rhodes, H.	Thornton, tiniest
Milne, Edward	Roberts, Albert (Normanton)	Wade, Donald
Mitchlson, G. R.	Roberts, Goronwy (Caernarvon)	Wainwright, Edwin
Moody, A. S.	Rogers, G. H. R. (Kensington, N.)	Warbey, William
Morris, John	Ross, William	Watkins, Tudor
Mulley, Frederick	Shinwell, Rt. Hon. E.	Weitzman, David
Noel-Baker, Francis (Swindon)	Short, Edward	Wells, Percy (Faversham)
Oliver, G. H.	Silverman, Sydney (Nelson)	White, Mrs. Eireno
Oram, A. E.	Skefrington, Arthur	Whitlock, William
Owen, Will	Slater, Joseph (Sedgefield)	Wigg, George
Paget, R. T.	Small, William	Wilkins, W. A.
Panned, Charles (Leeds, W.)	Smith, Ellis (Stoke, S.)	Willey, Frederick
Pargiter, G. A.	Sorensen, R. W.	Willis, E. G. (Edinburgh, E.)
Parker, John	Sosklce, Rt. Hon. Sir Frank	Woodburn, Rt. Hon. A.
Pavitt, Laurence	Sprigga, Leslie	Woof, Robert
Pearson, Arthur (Pontypridd)	Stewart, Michael (Futham)	Yates, Victor (Ladywood)
Peart, Frederick	Stross, Dr. Barnett (Stoke-on-Trent, C)	Zilliacus, K.
Pentland, Norman	Swain, Thomas
Price, J. T. (Westhoughton)	Symonds, J. B.	TELLERS FOR THE NOES:
Probert, Arthur	Taylor, Bernard (Mansfield)	Mr. Redhead and Dr. Broughton

Mr. Green

I beg to move, in page 2, line 23, to leave out "of the Board of Trade" and to insert: made by the Board of Trade under section 3 (1) (a)".

Mr. Speaker

I think that it would be for the convenience of the House to discuss with this Amendment the following Amendments: In line 27, after "apply", insert" (a)".

In line 29, leave out from "regulationsto" to and insert: made by the Board of Trade under section 3 (1) (b); or (b)". In line 33, leave out "this subsection" and insert "paragraph (b)".

Mr. Green

I am sure the House is grateful to you, Mr. Speaker, for permitting discussion on these Amendments.

I think that the discussion will be very brief. The Amendments are in pursuance of an undertaking which I gave during the Committee stage to clarify, by redrafting, the relationship between Clauses 2 and 3. They are, therefore, essentially drafting Amendments.

Mr. Mitchison

I wish to thank the hon. Gentleman for carrying out the undertaking which he gave and to tell him that I think the Amendments make the Bill clearer.

Amendment agreed to.

Mr. Mitchison

I beg to move, in page 2, line 26, at the end to insert: Provided that no such advertisement shall be issued if, on consideration of the said accounts and of any further information prescribed by regulations for the purpose, the Board of Trade is satisfied that the company is in an unsound financial position. (4) For the purpose of the last foregoing subsection the Board of Trade may from time to time make regulations in the form of statutory instruments (which shall be subject to annulment in pursuance of a resolution of either House of Parliament) prescribing information to be furnished (whether generally or by any group or class of companies) and the form in which any such information shall be furnished or verified; and (without prejudice to the generality of the foregoing) such information may include particulars of the company's membership, if any, of an Association and of any financial conditions compliance with which is required for such membership From our point of view this is the most important Amendment with which we have to deal today and it has a certain history. The scheme of the Bill as a whole is to protect depositors by furnishing the Board of Trade with a great deal of information which it will not then communicate to the depositor. How that helps is, no doubt, clear to the Board of Trade, but it is far from clear to us. We have tried to improve on the one document which certainly will reach the depositor, that is the advertisement, long or short, and the Board of Trade has in mind advertisements which will inform him where to put his money.

The Government have assured us more than once that they do not mind so much about the advertisements. After all, they are only documents which will reach the man who is to pay the money. What do they matter in the eyes of the Government? The Government are concerned with the documents which reach the Board of Trade. We have had a great deal of detailed argument about accounts and regulations and so on, all of it about the relations between the Board of Trade and the lending company, the depositing company.

This matter was raised at a quite early stage, and in the course of winding up the Second Reading debate the Economic Secretary referred again at some length, and with some pride, to the information which would be given to the Board of Trade. He was asked—I asked him in fact—what the Board of Trade would do with the information and how it would protect the depositor. The answer from the hon. Gentleman was a very curious one. He assured us, in effect, that on receiving the information the Board of Trade would read, mark and inwardly digest it and form an opinion on the status of the company. He said, when asked what the Board of Trade would do with the information to protect the depositor: I would say that they would do as follows: they would examine it with care and attention, and would attempt to evaluate it and use it as an indication—which would be very easy to, the trained mind "— that is the Board of Trade mind— of the substance and stability of the company concerned, and then keep the situation constantly under review—to coin a phrase". My right hon. Friend the Member for Battersea, North (Mr. Jay) then said: Surely, if they had been doing that for the last five years just as many depositors would have lost just as much money as they have in fact lost. The reply of the Economic Secretary was: That is not an appropriate point"—[OFFICIAL REPORT, 4th December, 1962; Vol. 668, c. 1225.] 6.45 p.m.

What my right hon. Friend had in mind is perfectly clear. It is all very well to come to these conclusions in the fastnesses of the Board of Trade. What really matters is, what gets round to the depositor at the end of it? During the Committee stage discussions we had the extraordinary position that the Government appeared unwilling to let out the result of their cogitations.

The matter arose on an Amendment which would have limited the issue of advertisements to companies which the Board of Trade, on the information available to it under the Bill—I repeat, on the information available under the Bill—considered to be sound. There was, of course, bound to be a limited amount of information—a qualified judgment to that extent—but it was quite sufficient, apparently, for the Board of Trade to use as an indication—I quote the words again— substance and stability of the company concerned ". What the Board of Trade wanted were the accounts and its trained minds would find it easy to do it. But having done it the Board of Trade was not prepared to limit the issue of advertisements to companies which it then considered to be sound.

I think that this was Ministerial fright—Departmental fright, shall I say? The Board of Trade felt that if it had to decide that a company was sound, that would give it a seal of authenticity, a "crown" of some sort, which it was not prepared to confer on anybody, for fear that it might not confer it on the right person or that it might omit somebody who would be entitled to it. And it ran away. It refused to let us know the result of that which, to the Department's trained mind, was so easy. This Amendment was voted down.

Now we have tried to make it easy for the Government. I wish to see whether they are going to refuse what is put on them by the Amendment. If we look at page 2, line 26, we find that we have just ended a subsection which exempts from the general prohibition in the Bill against advertisements the advertisement which complies with regulations of the Board of Trade and also the similar requirement, that the "accounts … to be delivered … are duly delivered." If that is done, all is well, and the advertisement is then released from the general prohibition.

All we wish to add is that, notwithstanding that, no such advertisement should be issued if on consideration of the said accounts —that is what the Economic Secretary said he required, but we should be willing to give him a little more— and of any further information prescribed by regulations for the purpose, the Board of Trade is satisfied that the company is in an unsound financial position. There then follows a subsection giving the Board of Trade power by regulations—and prescribing some negative procedure about those regulations—to get the necessary information in the form in which it is required, including among the things in that information membership of an association. The Radcliffe Committee, when considering this sort of matter, had evidence from two associations—no doubt highly respectable associations—of the companies with which this Bill is concerned—companies which take deposits. One association was called the Association of Finance Houses and the other the Association of Industrial Bankers.

It is true that they were asked why they called themselves that. I do not think that the Radcliffe Committee quite discovered the answer, but that does not matter. It is clear that they were reputable bodies and the object of their existence was to make provisions about liquidity and so on. That would ensure the stability of their members so that the membership of an association of that sort and the character of these conditions are things about which the Board of Trade might properly get information.

There seems to be no doubt that if the Economic Secretary was prepared to make up his mind in these unqualified terms on the accounts, he should have even less difficulty in this regard. What is the difficulty with this Amendment? It requires him to make up his mind simply about whether he is satisfied, not that a company is in an unsound position but that it is in a sound position. The consequences would be that, provided the requisite hoops are gone through, that is to say, that the advertisements of the company comply with Board of Trade regulations and the accounts are duly delivered in the appropriate form—the Board of Trade has to evaluate them anyhow, we were told about that—and there is reason to do so, the Board of Trade will come to the conclusion that the company is in an unsound financial position.

Nevertheless, it will not be able to restrain the company from issuing advertisements except in one way, I shall come to that one way in a moment. So far as the whole of Clause 2 is concerned, the company in question thought by the Board of Trade to be in an unsound financial position by virtue of provisions in the Bill—the object of which is supposed to be the protection of depositors—will be able to issue advertisements and collect money from depositors and the Board of Trade can do nothing whatever about it, subject to one point. The one point is that there is always the last resort. The Board of Trade may go to the courts and petition for the winding-up of the company.

I do not know what the hon. Gentleman will say in reply to the Amendment. Is he going to say that in every case where he is satisfied that the company is in an unsound position he undertakes to petition for its winding up? I have no particular interest in these companies, but I think that might be a rather harsh application of the provisions of the Bill. I think so for this reason. A company might perfectly well at the time be in a position when it ought not to ask for any more deposits, but equally, after a lapse of time, it may be perfectly solvent. This is a very drastic step.

I am interested in this matter fat another reason. There is one fairly obvious parallel which I think occurs to many of us, and which was mentioned by my hon. Friend the Member for Glasgow. Craigton (Mr. Millan) in our discussions in Committee. That is the position of building societies. Building societies invite deposits from the public. In many ways what they do is very like what companies will do under the Bill, although I agree at once that the purposes of the two kinds of bodies are rather different and there are same distinctions. I think this is the closest parallel which one can find. The position of building societies seems to be that they can be wound up as companies.

They are regarded as companies fat the purpose of winding up in the ordinary way and they can also be wound up by an award of the Registrar. The award of the Registrar does not come in here because there is no provision for a Register of the companies accepting these deposits. Therefore, there is no registrar, but in the case of building societies the Registrar, an administrative official, has power to order the winding up of a society. He does it in the form of an award, which is the phrase used.

If there were a parallel in this case it would be not only that the Board of Trade under the Bill has power to petition far a winding up, as it has now, but also power by an award to wind up the company in question. These are rather more extensive provisions for winding up in the case of building societies than exist in the case of these companies. When one turns to the building societies legislation in respect of these more extensive provisions about winding up, and in cases where I should have thought there was on the whole certainly no more, and probably less, reason for it than in connection with these companies, the Registrar has two other powers.

They occur in Sections 6 and 7 of the Building Societies Act, 1960. I need not go into them in detail. The first is power to suspend the raising of money by a building society. That is in Section 6. The second, in Section 7, is power to control advertising by a building society. Section 7 is, I think, the less drastic power while Section 6 is the more drastic, but neither of them amounts to winding-up. They exist side by side with provisions for winding-up which, as I have already shown, go rather beyond the provisions in this Bill.

As regards building societies, Parliament has found it necessary to have no fewer than four provisions of a controlling character. The first is power to control advertising and that is not merely provision as to the form of the advertisement. It includes that, but also includes power to prohibit the issue by the building society of advertisements of all descriptions. It is a complete prohibition, or something which may fall short of that. The second power is suspension of raising of money by a building society. That is so general and so drastic that there has to be a special exception allowing the building society to borrow from a banking or finance company or from one of its own directors. It covers a great deal more than mere advertisements. Then there is the third provision about winding-up by the award of the Registrar and there is the fourth set of provisions about winding up in the ordinary way in a court.

In this Bill, the only power the Board of Trade is taking is power to petition for winding up by the court. I suggest very strongly that the hon. Gentleman ought not to refuse the power which is now being offered to him to prohibit the issue of advertisements, which may comply in form and may follow accounts complying in form with the provisions of the Bill, but which are advertisements of a company which, in the judgment of the Board of Trade—formed in the manner which was admitted and stated by the Economic Secretary—is in an unsound financial position.

If he will not do this, there will be the most fantastic position. The Board of Trade will be compelled to choose between winding up a company altogether and allowing the advertisements to go through. The point behind all this is the position of the depositor. In many ways he resembles the person who puts money into a building society for the time being. From a social point of view those two classes are not far apart.

7.0 p.m.

In addition to that type of depositor, there are far more substantial depositors, sometimes corporate, sometimes not. In Committee we found ourselves talking about the sophisticated depositor and the unsophisticated depositor. There is no sharp line in these matters, but clearly the unsophisticated depositors in these borrowing companies exist, and they exist in very large numbers. That opinion is confirmed by such particulars as are available about deposits. They are the people whom the Bill is intended to protect. The sophisticated depositor can usually look after himself. He can go and look at the accounts, which will no doubt be available for inspection, which are given to the Board of Trade, and he can form his judgment upon them. The unsophisticated depositor will not be very much wiser if he is allowed to see the accounts. To take the words of the Economic Secretary again, it is the trained mind which is required to evaluate these accounts.

This was pressed on the Government on Second Reading. Their answer was very curious. They said, "You cannot expect the Board of Trade to do it. We rely on the financial journalists". That is an improbable answer, but it is what the Government said. It was the President of the Board of Trade who said that the financial newspapers could do it. Then I suppose the financial newspapers were relied on to publish an account or a description or criticism—whatever it may be—about every company inviting deposits in this way. I should have thought that they were most unlikely to do it.

There is a further difficulty. A great many of these depositors do not even get as far as reading the financial newspapers. There is yet a further difficulty. Financial journalists are not infallible. I should think that they make more mistakes than any other group of journalists put together. At any rate, they make a substantial number. Not only are they not infallible. There is another trouble about them. They are like scientists and lawyers. They do not always agree. The Government did not clearly indicate which financial journalists were reliable and which were not. If the Government hesitate to discriminate between one company and another, how much more reluctant they must find themselves to discriminate between one financial journalist and another. I assure them that that way leads to destruction—destruction in terms of public opinion—for the financial newspapers might go on to criticise the Government.

The unsophisticated depositor cannot be expected to get the information he ought to get in this way. He knows, and we know, that the Board of Trade not only has the information but uses it to form a value judgment about these companies. I have given up trying to get the Government to say that in every case in some form or another that value judgment ought to be published. I have given up trying to get the Government to say, as I think they should, that the company is in this or that case apparently—it is no more than apparently—in a sound financial position. We have now come to the real bare bones, the last step, the one thing that the Government may not be too barefaced to refuse to do; that is, when they know the company is unsound, to tell the public that that is so by preventing the advertisements. Indeed, they do not even really tell the public. All that happens is, not that there is any published comment on the company, but simply that its advertisements do not appear.

However reluctant a Government Department may be, surely it can go that far, unless it is prepared to undertake that, whenever it comes to that opinion, for however short the period of unsoundness may appear to it to be, it will wind the the company up or take steps to get it done by the court.

The Government cannot mean it. It is too close a parallel with the building societies. I therefore hope that on this occasion the Government will accept the Amendment, which is the very minimum of protection, the smallest little tooth put into the Bill, the purpose of which after all is said to be the protection of depositors.

What is the alternative to this? I have suggested questions of soundness Another alternative, I suppose, would be licensing. I myself do not think that licensing is necessary if the Board of Trade is prepared, even to this limited extent, to communicate the judgment it has formed in some form or other and stop advertisements by unsound companies or, better still, if it would allow advertisements only by sound ones. Whichever way it is put, that should be enough, but that is the bare minimum.

If the Government are going to refuse to do this kind of thing in the Bill—from the way we have conducted our discussions this afternoon it looks as if they are going to refuse everything we propose—they are simply putting off the evil day, not only for themselves but for their friends in the City of London, because sooner or later the alternative to this will have to be some complicated licensing system which will be far worse for the Board of Trade, no more effectual as regards control and far more troublesome to the companies concerned. Is it not better to take what is suggested now, this bare minimum? It may have to be enlarged later. It very likely will have to be. For the moment it is surely indefensible to refuse it?

Mr. Green

The Amendment does indeed differ in emphasis from that moved by the hon. and Learned Gentleman in Committee. I agree with him that it is in emphasis a different matter. The Amendment moved in Committee would have imposed on the Board of Trade a positive duty to declare its own satisfaction about a company's financial soundness before the company advertised. I agree with the hon. and learned Gentleman that this Amendment puts the emphasis in a negative sense. In other words, we are asked to prohibit advertising when we feel that a company is in an unsound state. In that sense this Amendment is different from the Amendment moved in Committee.

I am not, in one sense, going to disappoint the hon. and learned Gentleman, because I cannot recommend the House to accept the Amendment. My reasons are these. This is a matter of judgment. I cannot prove with absolute certainty that my judgment is right, nor can the hon. and learned Gentleman prove that his is absolutely right. The expectation would be, if we accepted the Amendment, that the Board of Trade would act if in its opinion the company might be heading towards insolvency. No doubt if the Amendment became law the public would expect the Board of Trade to act.

If the company is in an unsound position, it may, as the hon. and learned Gentleman said, be temporarily in a state of delicate health. This is quite possible. It might subsequently recover. Indeed, it might recover quickly and grow sturdy and strong again. But a prohibition of this sort on its advertisements would be a very public act. It would have to be. A company would be actually advertising and it would be told to withdraw its advertisements. Is it really suggested that nobody would notice that withdrawal and that inquiries would not arise? That would surely be done, for when a company is putting out advertisements in public—perhaps having posters and other advertisements of a permanent character on a site—inquiries would be bound to arise if they were suddenly withdrawn.

It passes the bounds of real credibility if it is suggested that it would not be a public act, for it would have to be. Someone, some commentator on the scene perhaps, would notice that a company which had been advertising had suddenly ceased to do so without any explanation. Only one explanation could be drawn—that the Board of Trade had come to the conclusion that the company was unsound, but not so unsound as to require a petition for winding up. I can think of few actions which would make it more certain that the company's position would deteriorate. I cannot imagine how such a company would recover that confidence which the hon. and learned Member for Kettering (Mr. Mitchison) thought, or hoped, would be the case.

I do not see how such a company could recover from the jolt of such an action. I cannot prove that what I am saying is right because, after all, we are dealing with something that is hypothetical and not something that has happened. I put forward these views as a very real consideration. Let us consider what it might mean. Is it expected that a company will account to the Board of Trade, for example, if it is unable to pay the sums due and payable to its depositors? We are concerned with accounts which may record, perhaps, a period of indifferent trading and which may show that a company's solvency position is dependent on the correctness of the value assigned to some questionable assets. The Board of Trade notices this and, under the powers conferred on it by Clause 17, may seek further information.

At this point this is all known to the company, but is not known to someone else. I should have thought that at this stage the company would be given its chance either to change its method of trading and pull its horns in, so to speak, and so grow strong and sturdy again, as we hope it would, without necessarily having to proceed to a winding-up petition. But if the Board of Trade goes further under Clause 17 and seeks the necessary information—as it is entitled to do by using the powers under that Clause—and is convinced that there is radical unsoundness in the company, it does not have much option but to proceed to ask for a winding-up petition: Naturally, I am not too sure of this because the courts may not grant the order.

I believe that it would be equivalent if we accepted the Amendment—to placing on the Board a responsibility for ensuring that the public may, with complete safety, deposit its money with any company which is permitted to advertise for deposits. The hon. and learned Member for Kettering may say that it does not go as far as that because it only expects the Board to act if the company is unsound. I am afraid that the conclusions to be drawn—and I am sure that this is quite inescapable if an Amendment such as this was incorporated in the Bill and operated for even a short period—would always be that if the Board of Trade did not act under the Amendment it would be because it was satisfied that the company was sound. We should be back to "square one" at which I had to discard the Amendment in Committee for the reasons I gave then.

Mr. Mitchison

Will the Minister deal with the question of why these powers exist, and what effect they have, on building societies?

Mr. Green

Building society legislation is its own legislation. It is quite separate from the matter we are discussing. The hon. and learned Member is quite entitled to put that point, but it is hardly a parallel analogy to deposit-seeking companies to quote building societies. Such societies have a great many other bounds or barriers around them. They are a separate class of company and have their own legislation, I do not think that such an analogy is complete and I am afraid that I cannot accept it as a true parallel.

Perhaps the hon. and learned Member for Kettering—and I do not expect him to be convinced by this—will recall the words of my right hon. Friend the President of the Board of Trade when he said on Second Reading: No legislation"— however it is framed— can stop companies running into difficulties,"— That is clear and obvious, for we cannot stop them running into difficulties— nor is it for the Board of Trade to prescribe that a particular form of commercial operation is risky and unsound, or, on the other hand, bold and enterprising and likely to be successful. Thus it is not for the Board of Trade to make this kind of judgment. What the Government must do is to ensure that the information which a depositor ought to have is available, and available early enough to be of use in assessing the prospects or progress of a company. That is what the Bill sets out to do"—[OFFICIAL REPORT, 4th December, 1962; Vol. 668, c. 1150.] We went through this in Committee. It was pointed out that the Board of Trade should have certain powers to ensure its own safety. We went into the question of the Board of Trade's own sanction and need, and it is a sanction regarding the winding up of companies. It is adequate for the Board of Trade to proceed with that sanction if it needs to do so. To go further and to make the Board make value judgments is a totally different matter.

Mr. Mitchison

But if there were an express admission that the Board of Trade made those value judgments? That is exactly what he said.

Mr. Green

But the value judgments it is making—and I accept what the hon. and learned Member said about that—is a form of judgment as to whether it is justified to proceed with the further sanction which the Bill empowers it to do. What I cannot accept is that it should become the bar of public judgment, publicly uttered and publicly made. I am afraid that if I accepted the Amendment the Board of Trade would be in that position. It is for that reason that I ask the House to reject the Amendment.

7.15 p.m.

Mr. Diamond

We are having a disappointing afternoon. We have put forward one Amendment after another, each one more moderate than the last, but we do not seem to be able to reach such a low stage of moderation as to obtain the approval of the Minister. On this occasion, we find ourselves in the same position of being completely disappointed with his reply.

As has happened previously, it is not necessary for me to underline the case for the Amendment, because that has been done adequately and lucidly by my hon. and learned Friend the Member for Kettering (Mr. Mitchison). It is my duty to consider the arguments adduced by the Minister in rejecting the Amendment and to attempt to demonstrate, as I have on previous occasions, why we cannot accept them as sufficient arguments.

As my hon. and learned Friend the Member for Kettering made perfectly clear, the Amendment refers to the Clause which is of the essence of the Bill and gets to the guts of it, to use a rather inelegant term. I must remind the Government that the Bill is not only called the "Protection of Depositors Bill", but that its Long Title refers to … the supervision of companies which issue such advertisements … Indeed, if this Amendment were incorporated, it would be virtually the only provision in the Bill giving real supervision.

We have made the point time and time again that the Bill is miscalled—and, therefore, misleading—the Protection of Depositors Bill, and I add that it is misleading to describe this as a Measure to supervise companies that issue advertisements when, on the only occasion on which we seek by a very modest Amendment to achieve that purpose we are unable to persuade the Minister of its acceptability.

There is an enormous gap between a company being, as the Amendment says in an "unsound financial position" and its being in such a position as to merit the action of the Board of Trade in starting winding-up proceedings—an enormous gap. As the Minister said, and in this we support him completely, the last thing anyone wants is for such action to be taken as so to tilt the scales that a company which is in a difficult position but might otherwise succeed is compelled to go into liquidation. But we have also a responsibility to protect depositors, and every Government speech is empty of thought for depositors. The Government's attitude is that the depositor must look after himself. As lawyers say, in a slightly different sense, "Caveat depositor" is the whole Government attitude in this Bill.

We thought that we were dealing with a Bill to protect depositors, and that, therefore, at some point of time, consideration would be given to the rights of the depositor even if the exercise of those rights might in some way and to some slight extent inconvenience those running a company seeking deposits. This is the minimum level at which we insist that the rights of the depositor should be considered. How else shall we avoid the utterly premature action of the Board of Trade in taking steps to wind up a company when the Board is satisfied that the interests of the depositor require it? We can only avoid that kind of premature action being taken by having some intermediate stage, by taking slightly less harsh action of the kind provided in the Amendment.

I should have thought that the Government would have been absolutely satisfied as to the parallel of the building societies, where the legislation provides for precisely the kind of thing my hon. and learned Friend seeks. The Minister turned that down as a parallel, but we did not say that a building society is the same thing as a company which seeks deposits. We said something quite different. We said that the method by which the Registrar of Building Societies protects those who would invest in a building society is an exact parallel with the methods suggested here.

The Minister alleged against that method that it might have damaging results through publicity, and that, therefore, any method that publicised what was being done might have a more deleterious effect than one wanted, but that is the precise position of the building society. The Registrar of Building Societies is anxious to protect the deposits of the public in the building society, and he does it at times by refusing a building society permission to accept further deposits.

There are times when the Registrar is satisfied that such action is in the interests of depositors with the building society, notwithstanding that those same depositors have no doubt already deposited vast sums that must be protected. He is satisfied that there is an appropriate time when one can take action of this kind which brings fully into the daylight what is happening with regard to the building society yet protects the depositors who have already put money into the building society.

The Registrar is so satisfied, and the Government are satisfied that the Registrar needs those powers. What we are completely unable to understand is why the Government are not satisfied that the President of the Board of Trade needs identical powers with regard to depositors in companies of this kind. It is only the method we are concerned with, and we deny that in every single case if these powers were granted more damage would be done than benefit gained.

The Minister's argument is that we would do more damage to the existing depositors than there would be benefit in protecting would-be depositors. I recognise the argument, and I think that I understand it correctly. We say that there are times when one would do more benefit in protecting would-be depositors than one would do damage to the company, or to those depositing with it, or to its shareholders.

Those occasions provide an opportunity to use powers of this kind, and the Minister lacks those powers at the moment. There would be no compulsion on him to use them; he would have discretion to use them where he thought it appropriate. It is completely to be regretted that the hon. Gentleman has not seen fit to accept this very modest and moderate Amendment. I am sure that my hon. and learned Friend is right in saying that a situation can arise in relation to finance companies such as there has been with building societies.

I need not give detail or name, but there was a nasty situation which gave rise to special legislation. I am quite sure that were a similar situation to arise in connection with a finance company—and there is nothing in this Bill that could prevent it arising—the Government would immediately want to ask for additional powers. We ask, "Why not take the powers while you have the opportunity—while we are considering this particular aspect?"

I am sorry that I always have to finish my remarks in the same way. We try very hard to persuade the Government that, moderate as our Amendments are, they are worthy of consideration and would improve the Bill. No one could possibly suggest that either in Com-

mittee or now any party issue of the slightest kind has been involved. The approach is completely non-partisan. Al: of us, on which ever side we may sit, are trying to do the same thing, which is to improve the Bill.

We bring such limited knowledge of the facts as we have to the attention of the Government, yet we meet this situation in which the Government are not prepared to accept any Amendment, however much limited in scope, or however much following a precedent laid down by the Government themselves, or however much needed in what is supposed to be the Protection of Depositors Bill. If the Government are not prepared to change their minds now, we must once again insist on dividing the House.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 125, Noes 164.

Division No. 82.]	AYES	[7.28 p.m.
Abse, Leo	Hamilton, William (West Fife)	Parker, John
Ainsley, William	Hannan, William	Pavitt, Laurence
Allaun, Frank (Salford, E.)	Hayman, F. H.	Pearson, Arthur (Pontypridd)
Allen, Scholefield (Crewe)	Harbison, Miss Margaret	Pentland, Norman
Awbery, Stan (Bristol Central)	Hill, J. (Midlothian)	Price, J. T. (Westhoughton)
Bacon, Miss Alice	Hilton, A. V.	Probert, Arthur
Baxter, William (Stirlingshire, W.)	Holman, Percy	Pursey, Cmdr Harry
Beaney, Alan	Holt, Arthur	Rhodes, H.
Bennett, J. (Glasgow, Bridgeton)	Houghton, Douglas	Roberts, Albert (Normanton)
Blackburn, F.	Howell, Denis (Small Heath)	Rose, William
Boardman, H.	Hughes, Cledwyn (Anglesey)	Short, Edward
Bowden, Rt. Hn. H. W. (Lelcs, s. w.)	Hunter, A. E.	Silverman, Sydney (Nelson)
Bray, Dr. Jeremy	Hynd, H. (Acorington)	Skeffington, Arthur
Brockway, A. Fenner	Hynd, John (Attercliffe)	Slater, Joseph (Sedgefleld)
Broughton, Dr. A. D. D.	Irving, Sydney (Dartford)	Small, William
Butler, Herbert (Hackney, C.)	Jones, Rt. Hn. A. Creech (Wakefield)	Smith, Ellis (Stoke, S.)
Carmichael, Neil	Jones, Dan (Burnley)	Sorensen, R. W.
Castle, Mrs. Barbara	Jones, S. Idwal (Wrexham)	Spriggs, Leslie
Cliffe, Michael	Key, Rt. Hon. C. W.	Stewart, Michael (Fulham)
Colllck, Percy	King, Dr. Horace	Stonehouse, John
Corbet, Mrs. Freda	Lawson, George	Stross, Dr. Barnett(Stoke-on-Trent, C.)
Craddock, George (Bradford, 8.)	Ledger, Ron	Symonds, J. B.
Dalyell Tam	Lee, Miss Jennie (Cannock)	Taylor, Bernard (Mansfield)
Davles, G. Elfed (Rhondda, E.)	Lever, Harold (Cheatham)	Thompson, Dr. Alan (Dunfermllne)
Davies, S. o. (Merthyr)	Lewls, Arthur (West Ham, N.)	Thornton, Ernest
Delargy, Hugh	Lubbock, Eric	Thorpe, Jeremy
Dempsey, James	Mabon, Dr. J. Dickson	Wade, Donald
Diamond, John	MacColl, James	Wainwrlght, Edwin
	MacDermot, Niall	Warbey, William
Duffy, A. E. P.	Mclnnes, James	Watkina, Tudor
Ede, Rt. Hon. C.	McKay, John (Wallsend)	Weitzman, David
Edwards, Rt. Hon. Ness (Caerphilly)	Mackle, John (Enfield, East)	Wells, Percy (Faversham)
Edwards, Robert (Bilston)	Mallalieu, J.P.w. (Huddersfield, E.)	Whitlock, William
Fitch, Alan	Manuel, Achie	Wigg, George
Fletcher, Erie	Mapp, Charles	Wilkins, W. A.
Forman, J. C.	Mendelson, J. J.	Willis, E. G. (Edinburgh, E.)
Fraser, Thomas (Hamilton)	Mlllan, Bruce	Woodburn, Rt. Hon. A.
Galpern, Sir Myer	Milne, Edward	Woof, Robert
George, Lady MeganLloyd (Crmrthn)	Mitchlson, G. R.	Yates, Victor (Ladywood)
Gooch, E. G.	Morris, John	Zllllacus, K.
Gourlay, Harry	Oliver, G. H.
Griffiths, w. (Exchange)	Oram, A. E.	TELLERS FOR THE AYES;
Grimond, Rt. Hon. J.	Parglter, G. A,	Mr. Redhead and Mr. Ifor Davies.
NOES
Agnew, Sir Peter	Gilmour, Sir John	Nicholson, Sir Godfrey
Aitken, W. T.	Goodhart, Philip	Noble, Rt. Hon. Michael
Allason, James	Gower, Raymond	Oakshott, Sir Hendrie
Ashton, Sir Hubert	Green, Alan	Orr-Ewing, C. Ian
Atkins, Humphrey	Grosvenor, Lt. Col. R. G.	Osborne, Sir Cyril (Louth)
Awdry, Daniel (Chippenham)	Gurden, Harold	Page, Graham (Crosby)
Balniel, Lord	Hall, John (Wycombe)	Pannell, Norman (Kirkdale)
Barber, Anthony	Hamilton, Michael (Wellingborough)	Partridge, E.
Batsford, Brian	Harvey, John (walthamstow, E.)	Peel, John
Baxter, Sir Beverley (Southgate)	Hastings, Stephen	Percival, Ian
Bell, Ronald	Hay, John	Pickthorn, Sir Kenneth
Berkeley, Humphry	Henderson, John (Cathcart)	Pott, Percivall
Bevins, Rt. Hon. Reginald	Hendry, Forbes	Price, H. A. (Lewisham, w.)
Bidgood, John c.	Hiley, Joseph	Prior, J. M. L.
Biff en, John	Hill, Mrs. Evelline (Wythenshawe)	Proudfoot, Wilfred
Biggs-Davison, John	Hill, J. E. B. (S. Norfolk)	Ramsden, James
Bingham, R. M.	Hirst, Geoffrey	Rawlinson, Sir Peter
Bishop, F. P,	Holland, Philip	Redmayne, Rt. Hon. Martin
Black, Sir Cyril	Hollingworth, John	Renton, Rt. Hon, David
Bourne-Arton, A.	Hopkins, Alan	Ridley, Hon. Nicholas
Box, Donald	Hornsby-Smith, Rt. Hon. Dame P.	Ridsdale, Julian
Braine, Bernard	Howard, John (Southampton, Test)	Ropner, Col. Sir Leonard
Brown, Alan (Tottenham)	Hughes-Young, Michael	St. Clair, M.
Buck, Antony	Hurd, Sir Anthony	Shaw, M.
Bullard, Denys	Irvine, Bryant Godman (Rye)	Skeet, T. H. H.
Butcher, Sir Herbert	Johnson, Dr. Donald (Carlisle)	Smith, Dudley (Br'ntf'd & Chiswick)
Campbell, Gordon (Moray & Nairn)	Johnson, Eric (Blackley)	Smithers, Peter
Carr, Compton (Barons Court)	Jones, Arthur (Northants, S.)	Speir, Rupert
Cary, Sir Robert	Kerans, Cdr. J. S.	Steward, Harold (Stockport, S.)
Channon, H. P. G.	Kerr, Sir Hamilton	Stodart, J. A.
Chataway, Christopher	Kershaw, Anthony	Studholme, Sir Henry
Clark, William (Nottingham, S.)	Kimball, Marcus	Summers, Sir Spencer
Clarke, Brig. Terence (Portsmth, W.)	Langford-Holt, Sir John	Taylor, Sir Charles (Eastbourne)
Cleaver, Leonard	Lehurn, Gilmour	Thomas, Sir Leslie (Canterbury)
Cooper, A. E.	Legge-Bourke, Sir Harry	Thornton-Kemsley, Sir Colin
Cooper-Key, Sir Neill	Lewis, Kenneth (Rutland)	Tiley, Arthur (Bradford, W.)
Cordeaux, Lt. Col. J. K.	Lilley, F. J. P.	Touche, Rt. Hon, Sir Gordon
Corfield, F. V.	Linstead, Sir Hugh	Turner, Colin
Coulson, Michael	Litchfield, Capt. John	Turton, Rt. Hon. R. H.
Craddock, sir Beresford (Spelthorne)	Lucas-Tooth, Sir Hugh	Tweed smut r, Lady
Critchley, Julian	MacArthur, Ian	van Straubenzee, W. R.
Cunningham, Knox	McLaren, Martin	Walder, David
Curran, Charles	McMaster, Stanley R.	walker, Peter
d'Avigdor-Goldsmid, Sir Henry	Macpherson, Rt. Hn. Niall (Dumfries)	Wall, Patrick
Deedes, Rt. Hon. W. F.	Maddan, Martin	Ward, Dame Irene
Donaldson, Cmdr. C. E. M.	Marten, Nell	Webster, David
Doughty, Charles	Matthews, Gordon (Meriden)	Wells, John (Maidstone)
du Cann, Edward	Mawby, Ray	Whitelaw, William
Eden, John	Maxwell-Hyslop, R. J.	Wills, Sir Gerald (Bridgwater)
Emmett, Hon. Mrs. Evelyn	Maydon, Lt. Cmdr. S. L. C.	Wilson, Geoffrey (Truro)
Erroll, Rt. Hon. F. J.	Mills, Stratton	Woodnutt, Mark
Farey-Jones, F. W.	Miscampbell, Norman	Worsley, Marcus
Farr, John	Montgomery, Fergus
Finlay, Graeme	More, Jasper (Ludlow)	TELLERS FOR THE NOES:
Fraser, Ian (Plymouth, Sutton)	Neave, Airey	Mr. Chichester-Clark and
Gammans, Lady	Nicholls, Sir Harmar	Mr. Frank Pearson.

Amendments made: In page 2, line 27 after "apply", insert"(a)".

In line 29, leave out from "regulations" to "to" and insert: made by the Board of Trade under section 3 (1) (b); or (b)".

In line 33, leave out "this subsection" and insert "paragraph (b)".—[Mr. Green.]

Mr. Green

I beg to move, in page 2, line 35, after "class", to insert: issued by a particular person". In Standing Committee I referred to the fact that the Board of Trade would give a person permission to issue a single advertisement or a specified class of advertisement, which might be all the advertisements which the person issued. I went on to say that it was not thought that the Board's power would extend to giving a single permission relating to a class of advertisement put out by a number of people. It is certainly not intended that the Board of Trade should have this power.

The Amendment, by limiting the power to classes of advertisement issued by a particular person, makes the position clear. When it is necessary to allow the issue of a class of advertisement by a number of people, it can be done by making a regulation uder Clause 3 (1, b) which would be subject to Parliamentary procedure. I was hoping in Committee to be able to clarify my intentions in this way, and it is for this reason that I am moving the Amendment.

Mr. Mitchison

It would be almost, but not quite, as unreasonable to divide against this Amendment as it was to divide against our last one.

Amendment agreed to.