§ 40. Mr. Arnold Shawasked the President of the Board of Trade whether he is satisfied that the Protection of Depositors Act, 1963, is effective in its purpose of protecting depositors; and whether he will make a statement.
§ Mr. JayThe main purpose of the Protection of Depositors Act is to enable depositors to judge for themselves the financial soundness of a company advertising for deposits by making available to them at six-monthly intervals accounts in a prescribed form. The effectiveness of the Act, therefore, largely depends on the use depositors make of this information.
§ Mr. ShawI do not know how my right hon. Friend can be so complacent in a matter of this kind. Is he satisfied that since the inception of this Act only about half a dozen successful prosecutions have taken place while at the same time there has been a tremendous growth in fraudulent enticements?
§ Mr. JayI was not being complacent. I was merely telling my hon. Friend the facts about this legislation which was passed by the Tory Government. But the provisions which I announced in the Budget debate which we are adding to the Companies Bill will include these companies as well as other limited companies.
§ Sir G. NabarroDoes the right hon. Gentleman's reply mean that he proposes to introduce legislation which will cover the kind of malpractices which have been uncovered in the case of Pinnock, Davies and Central, all of which are in a very wonky position, with the threat of large sums of depositors' moneys being lost?
§ Mr. JayI agree. I think that the previous legislation, which the hon. Gentleman supported, is defective, and that is why I am introducing new legislation.
§ Sir K. JosephBut will the right hon. Gentleman accept that he is not introducing new legislation addressed to this particular problem? Will he say whether 1598 or not he is proposing to amend the Protection of Depositors Act? We on this side of the House would look with sympathy at any method which he may put forward to warn depositors, even more than they are warned now, against risks inherent in some sorts of lending, provided that it does no damage to the vast majority of firms using public savings in thoroughly cautious and prudent ways.
§ Mr. JayI will take note of what the right hon. Gentleman said. The immediate necessity is to do what we can through the Companies Bill, because that is now before the House. If we decide that it is necessary to amend the protection of depositors legislation, we shall certainly do so.
§ 42. Sir G. Nabarroasked the President of the Board of Trade, having regard to the recent losses of f17 million to depositors, what steps he is taking to strengthen appropriate statutes for prevention of malpractices; and whether he will make a statement.
§ Mr. JayThe failures of the deposit-taking companies in question are under investigation. I will consider, in the light of the results of the investigation, whether legislation is desirable.
§ Sir G. NabarroWould it be in time for inclusion in the Companies Bill, which is at present before a Committee upstairs? Would the right hon. Gentleman tell the House whether he does not agree that no malpractices as such have been revealed in these cases but rather the uncertainties arising from the companies borrowing short and lending long? It is that practice which the right hon. Gentleman should attack.
§ Mr. JayWe cannot resolve everything here by legislation. I prefer not to comment on individual companies which are under investigation. I believe that what we are already doing in the Companies Bill will be of value.
§ Mr. Stratton MillsIs the right hon. Gentleman aware that those depositors who have lost part of their capital in one of these hire-purchase companies which have been mentioned now find that the loss is not allowed against Capital Gains Tax? Will he consult the Chancellor of the Exchequer to put right this very unfair anomaly?