§ (1) A certificate given by the Board of Trade that they are satisfied that a person can properly be treated for the purposes of the Moneylenders Acts 1900 to 1927 as being a person bona fide carrying on the business of banking shall, for those purposes, be conclusive evidence that he is so carrying on that business.
§ (2) If, upon an application (made before the expiration of the period of six months beginning with the day on which this Act is passed) for the issue of a certificate under the foregoing subsection, the applicant satisfies the Board of Trade that he can, as respects a period before the issue of the certificate (whether beginning before or after the passing of this Act), properly be treated for the purposes of the said Acts as having been a person who was bona fide carrying on the 868 business of banking, they may certify that they are so satisfied (specifying the period in question), and the certificate shall, for those purposes, be conclusive evidence that, as respects that period, he was so carrying on that business.
§ (3) A certificate given under subsection (1) above with respect to a person may be revoked by the Board of Trade if they cease to be satisfied as respects him as mentioned in that subsection, but the revocation shall be without prejudice to the effect of the certificate as respects any period before the revocation.—[Mr. Darling.]
§ Brought up, and read the First time.
§ Mr. Deputy Speaker
It is suggested that with this new Clause there should be discussed the two Amendments thereto: at end insert:(4) Before exercising with respect to any person the power of revocation conferred by the last preceding subsection the Board shall serve on that person a written notice stating that they are considering exercising that power, the grounds on which they are considering exercising it and inviting the person to make to the Board within the period of one month from the date of service of the notice, any representations that he desires to make with respect to the proposed exercise of power; and the Board may exercise the power after the expiration of the said period, but before deciding whether or not to do so, shall take into consideration any representations so made, and if the person so requests, afford to him an opportunity of being heard by the Board within that period.(5) Any person aggrieved by the exercise of the Board's power of revocation conferred by this section may within twenty-eight days of the date on which the Board's decision to revoke is notified to him, apply to the High Court for a declaration that he is in fact bona fide carrying on the business of banking;and at end insert:(4) As from the day on which this Act is passed, section 6 of the Money-lenders Act 1900 shall. in its application to Great Britain, have effect with the substitution, for paragraph (d) (which excludes from the definition contained in that section of 'money-lender' a person bona fide carrying on the business of banking or insurance or bona fide carrying on any business not having for its primary object the lending of money in the course of which and for the purposes whereof he lends money), of the following paragraph:—'(d) a person bona fide carrying on the business of banking or insurance or bona fide carrying on a business not having for its primary object the lending of money, in the course of which he lends money';and also new Clause 20—"Extent of Part V—and Government Amendment 869 No. 282, and Amendment No. 131: in rage 88, line 32, leave out subsection (2).
§ Amendment No. 132, in page 89, line 4, leave out '(other than banking)'.
§ Amendment No. 133, in page 89, line 6, leave out 'and for the purposes whereof' and Government Amendment No. 283.
§ 5.45 p.m.
§ Sir J. Foster
On a point of Order. I would ask for your guidance, Mr. Deputy Speaker. When can an Amendment in a group be divided on and when can it not? I understand your Ruling to be that Mr. Speaker had not selected it for a Division. I always understood that, if it was asked for, an Amendment grouped with a new Clause or Amendment could be divided upon.
§ Mr. Deputy Speaker
Sometimes Mr. Speaker selects Amendments and sometimes he does not select them. He sometimes permits an Amendment to a new Clause to be discussed, but does not permit a separate Division on them. In the Lobby there is a list of Mr. Speaker's Amendments. As the hon. and learned Member will see, in some cases Amendments are starred, which indicate that, if desired, a Division on those Amendments is permitted.
§ Mr. Burden
Further to that point of order. Does this not create an extraordinary situation? It means that if it becomes clear that an Amendment is of such importance that the Opposition wish to express their disagreement, they are denied the opportunity of so doing, which is rather strange.
§ Mr. Darling
Further to that point of order. I do not want to quarrel with the hon. Member about the general proposition, but we are here trying to meet the wishes of the Opposition. I do not think that it is possible to have votes on any of these Amendments.
§ Mr. Deputy Speaker
I think that the hon. Member for Gillingham (Mr. Burden) has misunderstood the position. It is the responsibility of Mr. Speaker to select from among the Amendments on the Notice Paper those which should be called for debate. It is sometimes, as 870 here, convenient that certain Amendments should be grouped with new Clauses, but, in addition to that, in other cases Mr. Speaker permits certain Amendments in a group to be the subject of a Division, if desired. However, that is not the case with the Amendments selected for discussion with new Clause 19.
§ Mr. Corfield
Further to that point of order. Surely where we have a new Clause put down by the Government, albeit one which replaces another Clause, the only way in which we can express a view on its drafting, and so on, is to put down Amendments to it, and the only way in which those Amendments can be made, if the Government are not prepared to accept them, is by voting on them. We seem to waste our time if the Government can accept Amendments without a vote, but the House cannot vote on them. I think that we should be allowed to vote on these Amendments at the end of the discussion if we so desire.
§ Mr. Deputy Speaker
I do not think that any new principle is involved. It has always been the case that a number of Amendments on Report are not selected. There is no different principle involved where Amendments are added to a new Clause.
§ Mr. Darling
The purpose of the new Clause is to replace what was Clause 90 and is now Clause 117. We had some very interesting and quite constructive discussions on the new Clause, because we were putting into the Bill what was really an Amendment to the Moneylenders Acts to cover a situation that had developed as the result of a court judgment. A number of finance companies, which had very large sums of money at risk, had been acting on the assumption that they got exemption as moneylenders and were classified as banks, but the court judgment put in grave doubt whether they were exempted from the Moneylenders Acts. To cover this position we brought forward Clause 90, now Clause 117, so that we could help them out of this difficult situation.
During the course of the debate on what is now Clause 117 it was pointed out that the way we were proceeding to 871 help was not satisfactory to what I would call the "undoubted banks". We were, for what we thought were tidy administrative reasons, putting the "undoubted banks", who had had exemption from the Moneylenders Acts in Statutes since 1900, in the same category as any other lending institution which wished to be classified as a bank and, under the terms of the Bill, obtained exemption and received a certificate from the Board of Trade that it was normally engaged in the business of banking.
Therefore, to meet the wish of the Opposition, the clearing banks, the merchant banks and the other "undoubted banks", we are taking out Clause 117 and replacing it with new Clause No. 19. The purpose is that the "undoubted banks" will continue to have exemption from the Moneylenders Acts, as they did before, and that the finance companies and other bodies who lend money in the course of their business will, if they wish their position to be completely legally clear, come along to the Board of Trade for a certificate of exemption. The Board of Trade will then look at the operations of the companies and if they are engaged in lending money, as the finance houses and other bodies do, and ought to be exempted from the conditions of the Money-lenders Acts, they will get exemption.
This has been accepted by the companies concerned whose position has been in doubt as a result of the legal judgment to which I have referred. The retrospective provisions which we have put in will enable the finance companies with the certificates of exemption, as it were, to backdate the exemption so that they cover outstanding loans that they have made to their customers which might be at risk. We have tried to make the position clear by removing undoubted bankers from the need to go to the Board of Trade and ask for an exemption.
We were also asked in Committee to look at the point about revoking certificates of exemption when once they had been granted. We have tried to meet that in subsection (3). What it means is that a lending institution's certificate can be revoked if the Board of Trade should cease to be satisfied that for the purposes of exemption from the Moneylenders Act 872 he is bona fide carrying on a business of banking.
That revocation, of course, will be without prejudice to the effect of the certificate before it was revoked. In other words, a loan made when the certificate was in force cannot be challenged on the ground that it was made by an unlicensed money-lender. This is the case at present, of course, with an Order for exemption made by the Board of Trade under section 6(e) of the Moneylenders Act, 1900. I think that we have met the views expressed to us and the criticisms about the original Clause 117.
§ Mr. Corfield
This new Clause does meet—is intended to meet all our criticisms. I corrected myself because one can never be quite sure in these matters. The right hon. Gentleman will remember that when we discussed this issue in Committee, we did so on the assumption that the certificates, or whatever the form of exemption was—the word "certificate" was not used in the old Clause 90—would be revocable. We did not raise the matter in Committee other than to say that we assumed that that was the case, and the right hon. Gentleman nodded. It occurred to me afterwards, as a result of remarks made to me by other people, that this might well not be so and that, therefore, our Committee proceedings were based on a wholly wrong assumption.
Clearly, none of us wishes the Board of Trade to give certificates of exemption and have no power to remove them if the corporate body concerned turns out to be doing something very different from the purpose for which it was given exemption, and so I particularly welcome subsection (3). There is always a tendency on these occasions to stick rather rigidly to Departmental briefs.
Personally, I have always taken the view that it is very easy to put in a provision for the purposes of clarification or for being certain, and I am sure that it is right, but I must admit that my researches, such as they have been, have wholly failed to reveal any authority for the proposition that without subsection (3) these certificates would have been revocable.
The two Amendments arise from the consideration which I gave to the matter 873 subsequent to the Committee stage, because we had based our Committee proceedings to some extent on this misapprehension. Having turned my mind to the problem of revocation, which we would all agree to be necessary, it occurred to me that this could be a power which could be used by the Board of Trade perhaps on wrong information and that there ought to be a provision similar to that which the Government themselves have provided in Clause 68 when it is decided to remove an authorisation which has been granted to an insurance company. I have largely adopted the words of Clause 68 for the suggested subsection (4).
I know that this is a difficult problem, because the Board of Trade may want to act very hurriedly and in a situation in which it would be unwise to give the company concerned a period of three or four weeks. But the argument is precisely the same as that for Clause 68 when we deal with an existing insurance company which may be running on the rocks, but fir which, nevertheless, the Board of Trade provides a period of a month or 21 days during which the company concerned can make representations.
In both the new Clause and Clause 68 tie action of the Board of Trade in revoking a certificate granted under this Clause, or an authorisation granted under Clause 68, could have very damaging effects on the company concerned. Particularly if the Board of Trade revoked a certificate granted under this Clause, a company could immediately be thrown open to the full effects of being an un1 tensed moneylender.
With the suggested subsection (5), in that event the aggrieved company would immediately have the right to go to the High Court for a declaration simply to emphasise that this was not the end of the road and to emphasise to all possible debtors that it was no good rushing to the courts and refusing to pay their debts on the basis of the Moneylenders Act, because there would still be the long stop of the courts.
I hope that the right hon. Gentleman will agree that this would be a sensible approach. This is a difficult problem, which is why I raised the matter of voting on Amendments to new Clauses. 874 The Government are sometimes apt to regard an Amendment as a curate's egg, good in parts, and to be prepared to accept some but not other bits, but one cannot split up one's Amendments into endless pieces. My suggested subsection (5) may be unnecessary, but would do no harm, while subsection (4) would be thoroughly useful and in accordance with the principle which the Board of Trade has adopted in respect of insurance companies.
The second Amendment seems to be retaining subsection (2) of the old Clause 90, but, in fact, it does not. What it does is to amend Section 6(d) of the Moneylenders Act, 1900, somewhat differently from the way in which Clause 90 attempted. All it does is to delete the words "for the purposes whereof" at the end of that provision. Paragraph (d) says:any person bona fide carrying on the business of banking or insurance or bona fide carrying on any business not having for its primary object the lending of money, in the course of which and for the purposes whereof he lends money…By leaving out the words "for the purposes whereof" some protection is given to the firm which is perfectly legitimately carrying on a business in which from time to time it lends money, although its business is not the lending of money. A number of companies are being attracted to this sort of lending in bridging finance and it seems to us that the best way in which to tackle this problem is to amend paragraph (d). In other words, we have followed the lines of the old Clause 90, but somewhat altered it. The Clause leaves one or two matters outstanding, but that is not a criticism of the Minister of State, because I have only recently thought of them.
There is one point that the right hon. Gentleman mentioned. I still do not understand why the Clause is necessary. We have the curious situation in that under Clause 6(e) of the 1900 Act, the Board of Trade can still give an exemption of this sort. It has, unfortunately, tied our hands by a fixed rate of interest, calculated in a curious manner which I have not yet been able to fathom. I know that from the ordinary 6½ per cent. or 5 per cent. for the ordinary man in the street it becomes 12 per cent. of something.
875 We have the curious situation that if any company holds a certificate of exemption under Clause 6(e) of the 1900 Act it will be tied to this purely arbitrary interest and arbitrary method of calculation, whereas, once a company gets the certificate under new Clause No. 19, it is entitled to charge any rate of interest that it likes.
It is clear that the Board of Trade can revoke and has powers to investigate. Maybe it is not a serious disadvantage in that it will be able to get round the problem in another way. The problem arises from the fact that the certificate is given to the person, whether it be a corporate person or an individual, and not necessarily in respect of a particular business. Individuals and companies can carry on businesses, under different hats, and there is some danger, more of a danger with an individual than with a corporate body, that the perfectly respectable banking undertaking under one hat would qualify for the exemption, and the certificate would give a complete defence in the case of an action under the Moneylenders Act to another business carried on by the same undertaking. This is something which could lead to awkward results.
As a general conclusion, the Clause as drafted meets the points raised in Committee. It is subject to improvement by way of our Amendments, and I hope they can be added to it.
§ Mr. Geoffrey Hirst (Shipley)
I rise with a certain amount of diffidence, because my experience of this place tells me that when one has not been a member of a Committee which has spent many hours digesting a Bill like this, it is difficult to intervene. However, one has one's responsibilities as a Member of Parliament. If I appear to be rather stupid I hope that it will be understood that I have not heard all the deliberations that have taken place. I want to be satisfied on one point which I find confusing. I am not sure that I understand it correctly, but is new Clause No. 19 a substitute for the whole of Clause 117? If that is so, we would like it confirmed, because as I read it, it appears to deal very largely with people in some form of banking.
876 Obviously, I must have got it wrong, because I know that some of my hon. Friends are more satisfied than I, but it does not seem to cover the plight of businesses to which the Amendment of my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) refers:(d) a person bona fide carrying on the business of banking or insurance or bona fide carrying on a business not having for its primary object the lending of money, in the course of which he lends money.I must be wrong because I am sure that my hon. Friend would have seen the representations that I am making. In my constituency, I have the principal directors of what is the largest firm in the country, if not in the world, of check traders, a firm which must be well known to all Members, and which, naturally, has been in touch with me. It has had a great deal of help from my hon. Friends on the Committee.
I would not like this to go through without the Minister confirming that I am wrong and that the bona fide busness of that character, which is well known and has been carried on by firms that are recognised as being substantial, complying with every requirement of the Board of Trade as to integrity, nature of business, and so forth, will not be worse off under this Bill than they were when operating previously.
The right hon. Gentleman must have had these representations made to him, and if he could include those comments in his reply I would be grateful.
§ 6.15 p.m.
§ Mr. Anthony Grant (Harrow, Central)
For some years I have had professional experience of the Moneylenders Acts, and of finance companies. I have found that many of my colleagues including, I am sure my hon. Friend the Member for Crosby (Mr. Graham Page), are very disturbed at the way in which they are likely to be interpreted in the case of loans advanced, sometimes on mortgage by an increasing number of reputable finance companies.
We were told that the amount at risk before the Bill started on its way through the House was no less than £400 million. This is a startling figure, and it was obviously necessary for the Government to do something. While I was glad that 877 they have sought to rectify this dangerous position, I would have preferred to have seen the Government grasp the nettle rather more firmly, and have a total review of the whole of the Moneylenders Act. I consider the law on moneylenders to be completely out of date. It was designed in an age different from this, and, nowadays, it is more often a vehicle for fraud than one to prevent oppression. Nevertheless, we get some sort of assistance in the Bill. I am very bothered by the new Clause.
I was rather concerned in Committee that all the power to determine whether a person was a bank and whether he should have a dispensation was to be vested in the hands of the Board of Trade rather than in the courts. The definition as to whether one is a bank, as recent cases have shown, have caused learned judges a great deal of anxiety and concern. It is a matter for substantial debate, and it has been reviewed in various learned articles at some length.
I daresay that my hon. and learned Friend the Member for Northwich (Sir J. Foster) is more familiar with this than I am. The Board of Trade boldly does what the Lords of Appeal in Ordinary decided was rather difficult, and says that it can give a certificate that a person can be properly treated for the purposes of the Moneylenders Acts…as being a person bona fide carrying on the business of banking.It goes on to say that that shall be conclusive evidence, so that the Board of Trade is way above the Law Lords.
What concerns me is the question of revocation. It was through the assiduity of my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) that this point was drawn to the attention of the Government. Everyone else seemed to have overlooked it in Committee. Hence we have new Clause No. 19(3). As my hon. Friend has pointed out this can be extraordinarily dangerous to a bona fide company. Let us assume that a finance company is lending money, quite genuinely, to the public and advances a considerable amount of money. It goes through the process of getting dispensation, and the certificate from the Board of Trade, which is satisfied that it should have that dispensation.
Then it goes on, lending more money as time goes on, and we reach a period 878 when it slightly changes the modus of its operation. It might go in for hire purchase or building development. Suppose that this attracts the attention of some official in the Board of Trade. As the Clause stands the certificate can be revoked if the Board of Trade ceases to be satisfied about the conditions mentioned in the first subsection. Nevertheless, because of executive action, the certificate is stopped and all the money which the company has lent—it may run into hundreds of thousands of pounds—can lay the company open to a plea of the Moneylenders Act from its borrowers. If the Board of Trade had taken that arbitrary action of revocation, it would mean the unjust enrichment of borrowers at the expense of what is probably a bona fide company.
The Minister of State, who, I am sure, approaches this matter in the same sense of dissatisfaction about moneylending as I do, will see the point. I commend to him the Amendment which enables notice to be given and allows appeal against the decision of the Board of Trade.
The judges can be appealed against to the Court of Appeal and the House of Lords. Nevertheless, the Board of Trade, in this case, seems to be omnipotent and nobody can appeal further. This is a most serious point. When grappling with the general reform of moneylending law, which I hope will be undertaken, we must try to get the procedure right because there are many people engaged in the perfectly bona fide pursuit of advancing money to people all over the country and they have a number of small shareholders who would suffer very much if the Moneylenders Act could be pleaded.
I hope that we can have an assuring reply from the Minister.
§ Sir J. Foster
The object of the Amendment in line 16 of new Clause 19 is to protect the company which lends money but whose primary purpose is not the lending of money and which does not carry on banking or insurance. With the sophistication of modern investment, a company which makes boots and shoes may have accumulated a fund of, say, £1 million to extend its factory in two years' time. It should be allowed to lend money on bridging finance without running the risk of being classed as a moneylender. It is proposed that a company, in order not to be classed as a 879 moneylender, must lend the money in the ordinary course of its business and for the purposes of its business.
To dispose of an argument which at first blush might be put against the point of view which I am advancing, it might be said that if the boot and shoe company lends money that is in the course of its business and that it must be for the purposes of its business because it is to get interest. But that will not do, because no company which lent money in the course of its business would run the risk of being classed as a moneylender. That construction has not been adopted by the courts, rightly, because it is not for the purposes of its business that it lends money on bridging finance. The purposes are not just to earn money. The purposes must be reconciled with the purposes of making boots and shoes.
Therefore, the Amendment in line 16 would improve the Bill and would make the necessary alteration to the Moneylenders Acts and would remove the threat to companies of a dishonest borrower raising the point against them that they are moneylenders.
§ 6.15 p.m.
§ Mr. Darling
I know the firm to which the hon. Member for Shipley (Mr. Hirst) refers. He is probably aware that representations were made to us. In fact, I saw the people myself. The new Clause will not help them. But I am happy to say that it will not make their life any more difficult. It will not make the slightest difference to their activities. I think that that is the answer which the hon. Gentleman expected, and I am glad to give it to him.
This must be temporary legislation. Hon. Members know my views about the need to amend the Moneylenders Acts. I do not know whether I shall get into trouble by saying that that is one piece of legislation which I would push up the list of priorities. It is long overdue.
The hon. Member for Gloucestershire, South (Mr. Corfield) will not expect me to respond to the solution to all our difficulties which he put forward. It is a very simple solution and I am sure that the Government should consider it. But it is not a solution which I can present to the House today, which may be unfortunate.
880 The hon. Members for Gloucestershire, South and Harrow, Central (Mr. Grant) raised the point about the Board of Trade suddenly revoking a certificate of exemption given to a company. I do not know how one can write even into a piece of temporary legislation which may continue to be temporary for a long time instructions to the Board of Trade not to revoke a certificate unless it is satisfied that it should be revoked.
One factor which the Board of Trade must take into consideration is the point raised by the hon. Member for Harrow, Central that a lending company has a lot of customers and a lot of money is at risk to it and everybody associated with it, and if the certificate was revoked a borrower could say, "You should not have lent me the money because the Board of Trade has said that you are not exempt from the Moneylenders Acts and as you did not plead the Moneylenders Acts when you lent me the money I will not repay you". If the transaction took place before the certificate was revoked, that would not happen. But the hon. Gentleman would have a substantial argument if he went on to say that any transaction after the certificate has been revoked would be at risk as far as the company was concerned. But clearly the Board of Trade will not revoke certificates if the company is genuinely carrying on a business and if to revoke the certificate would put the company in unnecessary and undeserved difficulties.
I would accept the spirit of the Amendments about an appeal against revoking a certificate, but they are unnecessary, for this reason. If the certificate is revoked, all that has happened is that the Board of Trade has said to the company, "We do not think that you are properly carrying on the business of moneylending for the purpose of getting a certificate. In other words, you are at risk if any of your clients say that the money should not have been lent because you do not have exemption from the Moneylenders Acts". The company can go on conducting its business. It does not stop conducting its business because the Board of Trade revoked a certificate. There is an appeal to the courts if anything happens.
All that would happen after the certificate had been revoked. None of the 881 transactions before the certificate had been revoked would be at risk. Suppose that after revocation the company continues to lend money until one of its clients pleads in court the Moneylenders Act. If the company is satisfied that it is properly carrying on the business of balking and that the court will give it the certificate that the Board of Trade had refused, that would be a far better legal protection for the company than would be provided by the Amendment.
In other words, if the Board of Trade said to the company, "We will revoke your certificate for reasons A, B, C and D" and if the Amendment were accepted aril the company made its appeal and eventually an appeal to the courts, it would be in a less advantageous position thin it would be without the Amendment, because finally there would be an appeal to the court. It would be a far better appeal to the court on the basis of a shyster client trying to get away with things and the company defending itself against a shyster client rather than defer ding itself from what might have been a genuine mistake on the part of the Board of Trade. That is how we have looked at it.
I know very well that I do not need to assure the hon. and learned Member about this. We have looked at the position of companies in the most generous way and we think that the appeal to the court as I have described, in the way that it might eventually work out if a certificate is revoked, would be far better for the company than to cover the point by the Amendment.
As to the first part of the first Amendment, there is a big difference from a direction given by the Board of Trade under Clause 68, which is a revocation under the Prevention of Fraud (Investments) Act, because a revocation or direction in this case means, for instance, that an insurance company is restricted in he business that it can carry on or, if the operation is that of a unit trust, that the managers of the unit trust are restricted—they could not issue circulars about their business—or that a dealer in securities would lose the status attaching to the exemption which he previously had. There is a great difference here and we would not wish to put into this part of the Bill the same kind of directions as apply under Clause 68.
882 The final point raised by the hon. and learned Member for Northwich, into which, again, we have looked carefully, concerned a boot and shoe company having a lot of money in the "kitty" and lending it out to somebody else for bridging finance. This is a difficult one.
It is possible for us to rewrite this piece of what, I hope, is only temporary legislation to cover all the possibilities that might arise when companies which are not primarily engaged in the lending of money get involved in the lending of money as bridging finance from the money which they have piled up at the bank or from whatever else it might be.
On frequent occasions in Committee, the hon. and learned Member generously acted as my legal adviser, and so I have to appeal to him again. I am advised by the legal pundits that we would have to go much further in amending the Clause than the second Amendment provides. The retention, as we desire, of the wordsfor the purposes whereof…a business…not having for its primary object the lending of money, in the course of which and for the purposes whereof he lends moneywould give us great flexibility to cover quite a number of cases that might arise.
We see no difficulty in practice, and I am sure that the hon. and learned Member does not, where a reputable boot and shoe company with, as he said, £1 million in the "kitty" knows of a business—there might be friendly relations between the directors—which is in need hurriedly of bridging finance for industrial development and the directors of the two companies get together and those of the boot and shoe factory say, "We will lend you the money you want. We have it standing by for the time being. We have been saving it up for industrial developments of our own." In those circumstances, nobody would plead the Moneylenders Act to get out of the obligations of the loan.
Do we require to go through all the legal difficulties which, I am told, would be involved to spell out the cover which we must give for all the transactions which are likely to arise and which would come within the definition of lending money not for the purposes for which the company was founded?
§ Sir J. Foster
The boot and shoe company would be at the mercy of the borrower. The right hon. Gentleman presupposes that there are friendly relations between the directors. There might not be. The company might be taken over by somebody else. Gone would be the friendly relations. The company might go into liquidation. The liquidator has to take the point. That is the difficulty. Trustees and liquidators, like Governments, always take the most immoral points.
§ Mr. Darling
The hon. and learned Member is giving me my arguments. Those, too, were put to me and were advanced as reasons why we would have to go much wider than the Amendment proposes.
For those reasons, we thought that by retainingfor the purposes whereof he lends moneywe had covered most of the difficulties which might arise. For the time being at least, so long as we rely on this temporary legislation for the protection that the finance houses and other companies need, we have also to rely on the fact that this executive body will behave sensibly and will certainly do all that it can to cover such cases as the hon. and learned Member has raised. To go over the whole field, however, I am assured that the Amendment would have to be widened considerably.
§ Mr. Grant
What would be the position of a large company which lent money regularly to its employees to buy their houses and, perhaps, set up a subsidiary company precisely for that purpose? Presumably, it would be a moneylending company. It might or it might not be acting in the ordinary course of its business—I do not know—hut it could be a dangerous situation if the Moneylenders Act were to be pleaded against it. I would appreciate having the right hon. Gentleman's views.
§ Mr. Darling
I would like to consider the circumstances of such a company. I imagine that if it set up a subsidiary to lend money on mortgages or directly for the employees to pay hack out of their weekly wages or something like that, it might apply to the Board of Trade for a certificate. I would like to consider the matter, and if there are 884 any difficulties I will let the hon. Member know.
§ Mr. Michael Shaw
The Minister of State always tries to be helpful in these matters and he has gone some way towards allaying our fears. Having heard all the arguments, however, we still believe that the person who is subject to a possible revocation order should have a right to be heard.
The matter is not quite as simple as the right hon. Gentleman suggests, namely, that if the Board of Trade revokes a certificate, the company has a right to go to court. This may be so, but it is a fairly drastic step to take. Clearly, if a company has a certificate it will have publicised the fact; it will be well known that it possesses this certificate; and, clearly, it is going to be of some hardship well before the possible date of an appeal to the court if it becomes generally known that in fact the certificate has been withdrawn. Therefore, withdrawal of the certificate itself is, in our view, an important event in the business life of the company. It is, therefore, I believe, important that there should be a power of representation to be made to the Board of Trade before the power is exercised.
Consequently, I shall be grateful to you, Mr. Speaker, if I could address you on a point of order on this matter. It is very difficult, considering a new Clause such as this, really to weigh up its merits and to decide whether or not one wants to vote on one's own Amendments to it until one has heard the arguments. We are most anxious to know if you would allow us to vote on the first of the Amendments put down by my hon. Friends and myself to this new Clause.
§ Mr. Speaker
I am grateful to the hon. Member for putting his request so courteously. I had already received a similar private request from other hon. Gentlemen on the Opposition Front Bench. In the circumstances, I am prepared to allow a Division on that Amendment to the new Clause.
§ Mr. Darling
Before the Division is called, I should like to repair an omission. I think that earlier on I should have congratulated the hon. Member for Scarborough and Whitby (Mr. Michael 885 Shaw) on appearing for his maiden effort on that Front Bench. [HON. MEMBERS: "Hear, hear."] He attacked me so pleasantly during the course of the Bill that I should not like this opportunity to go by without some recognition of his appearance there.
§ Question, That the Clause be read a Second time, put and agreed to.
Amendment proposed to the proposed Clause, at the end to add:
(4) Before exercising with respect to any person the power of revocation conferred by the last preceding subsection the Board shall serve on that person a written notice stating that they are considering exercising that power, the grounds on which they are considering exercising it and inviting the person to make to the Board within the period of one month from
§ the date of service of the notice, any representations that he desires to make with respect to the proposed exercise of power; and the Board may exercise the power after the expiration of the said period, but before deciding whether or not to do so, shall take into consideration any representations so made, and if the person so requests, afford to him an opportunity of being heard by the Board within that period.
§ (5) Any person aggrieved by the exercise of the Board's power of revocation conferred by this section may within twenty-eight days of the date on which the Board's decision to revoke is notified to him, apply to the High Court for a declaration that he is in fact bona fide carrying on the business of banking.—[Mr. Michael Shaw.]
§ Question put, That those words be there inserted in the proposed Clause:—
§ The House divided: Ayes 100. Noes 177.887
|Division No. 453.]||AYES||[6.33 p.m.|
|Allson, Michael (Barkston Ash)||Gurden, Harold||Pike, Miss Mervyn|
|Awry, Daniel||Hall-Davis, A. G. F.||Pink, R. Bonner|
|Baker, W. H. K.||Harris, Frederic (Croydon, N.W.)||Powell, Rt. Hn. J. Enoch|
|Bennett, Sir Frederic (Torquay)||Harvie Anderson, Miss||Pym, Francis|
|Berry, Hn. Anthony||Hawkins, Paul||Ridley, Hn. Nicholas|
|Biggs-Davison, John||Hirst, Geoffrey||Ridsdale, Julian|
|Birch, Rt. Hn. Nigel||Hogg, Rt. Hn. Quintin||Russell, Sir Ronald|
|Body, Richard||Holland, Philip||Scott, Nicholas|
|Bossom, Sir Clive||Hunt, John||Shaw, Michael (Sc'b'gh & Whitby)|
|Braine, Bernard||Hutchison, Michael Clark||Stainton, Keith|
|Brewis, John||Jennings, J. C. (Burton)||Stodart, Anthony|
|Brinton, Sir Tatton||Jopling, Michael||Taylor, Frank (Moss Side)|
|Bromley-Davenport, Lt.-COI. Sir Walter||Kershaw, Anthony||Temple, John M.|
|Buck, Antony (Colchester)||Lancaster, Col. C. G.||Thatcher, Mrs. Margaret|
|Burden, F. A.||Legge-Bourke, Sir Harry||van Straubenzee, W. R.|
|Campbell, Cordon||Loveys, W. H.||Vaughan-Morgan, Rt. Hn. Sir John|
|CarLisle, Mark||McAdden, Sir Stephen||Walker, Peter (Worcester)|
|Channon, H. P. G.||Mac Arthur, Ian||Walters, Dermis|
|Cooper-Key, Sir Neill||McMaster, Stanley||Ward, Dame Irene|
|Corfield, F. V.||Maude, Angus||Weatherill, Bernard|
|Craddock, Sir Beresford (Speithorne)||Mills, Peter (Torrington)||Webster, David|
|Crowder, F. P.||Mitchell, David (Basingstoke)||Whitelaw, Rt. Hn. William|
|Dalkeith, Earl of||More, Jasper||Wills, Sir Gerald (Bridgwater)|
|Dance, James||Morgan, Geraint (Denbigh)||Wilson, Geoffrey (Truro)|
|Dean, Paul (Somerset, N.)||Mott-Radclyffe, Sir Charles||Wolrige-Gordon, Patrick|
|Deedes, Rt. Hn. W. F. (Ashford)||Munro-Lucas-Tooth, Sir Hugh||Wood, Rt. Hn. Richard|
|Elllott, R. W. (N'c'tle-upon-Tyne,N.)||Nabarro, Sir Gerald||Woodnutt, Mark|
|Errington, Sir Eric||Neave, Alrey||Worsley, Marcus|
|Eyre, Reginald||Nott, John||Wylle, N. R.|
|Farr, John||Orr-Ewing, Sir Ian||Younger, Hn. George|
|Foster, Sir John||Osborn, John (Halfam)|
|Goodhew, Victor||Page, Graham (Crosby)||TELLERS FOR THE AYES|
|Gower, Raymond||Pearson, Sir Frank (Clltheroe)||Mr. Timothy Kitson and|
|Grant, Anthony||Peel, John||Mr. Hector Monro.|
|Gresham Cooke, R.||Peroival, Ian|
|Abse, Leo||Bishop, E. S.||Butler, Herbert (Hackney, c.)|
|Allaun, Frank (Salford, E.)||Blackburn, F.||Cant, R. B.|
|Anderson, Donald||Blenkinsop, Arthur||Carmichael, Neil|
|Archer, Peter||Boardman, H.||Carter-Jones, Lewis|
|Armstrong, Ernest||Booth, Albert||Coleman, Donald|
|Atkins, Ronald (Preston, N.)||Bowden, Rt. Hn. Herbert||Concannon, J. D.|
|Atkinson, Norman (Tottenham)||Boyden, James||Craddock, George (Bradford, S.)|
|Bagier, Gordon A. T.||Braddock, Mrs. E. M.||Crosland, Rt. Hn. Anthony|
|Barnett, Joel||Broughton, Dr. A. D. D.||Crossman, Rt. Hn. Richard|
|Beaney, Alan||Brown, Rt. Hn. George (Beiper)||Cullen, Mrs. Alice|
|Benn, Rt. Hn. Anthony Wedgwood||Brown, Hugh D. (G'gow, Provan)||Dalyell, Tam|
|Bennett, James (G'gow, Bridgeton)||Brown, R. W. (Shoreditch & F'bury)||Darling, Rt. Hn. George|
|Bessell, Peter||Buchanan, Richard (G'gow, Sp'burn)||Davidson,James(Aberdeenshlre,W.)|
|Davies, Dr. Ernest (Stretford)||Hughes, Roy (Newport)||Page, Derek (King's Lynn)|
|Davies, G. Elfed (Rhondda, E.)||Hunter, Adam||Pannell, Rt. Hn. Charles|
|Davies, Ednyfed Hudson (Conway)||Jackson, Colin (B'h'se & Spenb'gh)||Pardoe, John|
|Davies, Harold (Leek)||Jay, Rt. Hn. Douglas||Parker, John (Dagenham)|
|Davies, Ifor (Gower)||Jenkins, Hugh (Putney)||Pearson, Arthur (Pontypridd)|
|Davies, S. O. (Merthyr)||Johnston, Russell (Inverness)||Pentland, Norman|
|Dempsey, James||Jones, Dan (Burnley)||Perry, George H. (Nottingham, S.)|
|Diamond, Rt. Hn. John||Kelley, Richard||Prentice, Rt. Hn. R. E.|
|Dickens, James||Lewis, Arthur (W. Ham, N.)||Price, Thomas (Westhoughton)|
|Dobson, Ray||Lewis, Ron (Carlisle)||Price, William (Rugby)|
|Driberg, Tom||Lipton, Marcus||Probert, Arthur|
|Dunnett, Jack||Lomas, Kenneth||Rhodes, Geoffrey|
|Eadie, Alex||Loughlin, Charles||Robertson, John (Paisley)|
|Edwards, Robert (Bilston)||Lubbock, Eric||Robinson, W. 0. J. (Walth'stow, E.)|
|Edwards, William (Merioneth)||Lyons, Edward (Bradford, E.)||Rogers, George (Kensington, N.)|
|Ellis, John||McCann, John||Shaw, Arnold (llfOrd, S.)|
|Ennals, David||MacColl, James||Sheldon, Robert|
|Evans, Albert (Islington, S.W.)||MacDermot, Niall||Short, Rt. Hn. Edward (N'c'tle-u-Tyne)|
|Evans, loan L. (Birm'h'm, Yardley)||Macdonald, A. H.||Silkin, Rt. Hn. John (Deptford)|
|Faulds, Andrew||McGuire, Michael||Slater, Joseph|
|Finch, Harold||Mackie, John||Spriggs, Leslie|
|Fletcher, Raymond (Ilkeston)||Maclennan, Robert||Steel, David (Roxburgh)|
|Fletcher, Ted (Darlington)||MacMillan, Malcolm (Western Isles)||Steele, Thomas (Dunbartonshire, W.)|
|Foot, Michael (Ebbw Vale)||McMillan, Tom (Glasgow, C)||Swain, Thomas|
|Forrester, John||McNamara, J. Kevin||Swingler, Stephen|
|Fowler, Gerry||Mahon, Peter (Preston, S.)||Symonds, J. B.|
|Calpern, Sir Myer||Mapp, Charies||Thomas, George (Cardiff, W)|
|Gardner, Tony||Marquand, David||Thornton, Ernest|
|Garrett, W. E.||Mcllish, Robert||Thorpe, Rt. Hn. Jeremy|
|Ginsburg, David||Mendelson, J. J.||Tomney, Frank|
|Greenwood, Rt. Hn. Anthony||Millan, Bruce||Urwin, T. W.|
|Gregory, Arnold||Miller, Dr. M. S.||Varley, Eric G.|
|Grey, Charles (Durham)||Milne, Edward (Blyth)||Wainwright, Richard (Colne Valley)|
|Griffiths, David (Rotrier Valley)||Mitchell, R. C. (S'th'pton, Test)||Walden, Brian (All Saints)|
|Grimond, Rt. Hn. J.||Moonman, Eric||Wells, William (Walsall, N.)|
|Hamilton, William (Fife, W.)||Morgan, Elystan (Cardiganshire)||Williams, Alan (Swansea, W.)|
|Hannan, William||Morris, Alfred (Wythenshawe)||Williams, Mrs. Shirley (Hitchin)|
|Harper, Joseph||Morris, Charles R. (Openshaw)||Williams, W. T. (Warrington)|
|Harrison, Walter (Wakefield)||Moyle, Roland||Willis, George (Edinburgh, E.)|
|Hart, Mrs. Judith||Neal, Harold||Wilson, Rt. Hn. Harold (Huyton)|
|Hooson, Emlyn||Newens, Stan||Winterbottom, R. E,|
|Howarth, Harry (Wellingborough)||Ogden, Eric||Woodburn, Rt. Hn. A.|
|Howarth, Robert (Bolton, E.)||O'Malley, Brian||Woof, Robert|
|Howell, Denis (Small Heath)||Oswald, Thomas||Yates, Victor|
|Howie, W.||Owen, Dr. David (Plymouth, S'tn)|
|Huckfield, L.||Owen, Will (Morpeth)||TELLERS FOR THE NOES:|
|Hughes, Emrys (Ayrshire, S)||Padley, Walter||Mr. Alan Fitch and|
|Mr. Harry Gourlay.|
§ Clause added to the Bill.