POWERS OF ENTRY (Hansard, 11 June 1986)

HC Deb 11 June 1986 vol 99 cc397-402 397

§ '(1) A justice of the peace may issue a warrant under this section if satisfied on information on oath laid by or on behalf of the Secretary of State that there are reasonable grounds for believing—

(a) that an offence has been committed under section 4, 44, 52. 111, 114 or 141(2) or (3) above or section 1, 2.4 or 5 of the Company Securities (Insider Dealing) Act 1985 and that there are on any premises documents relevant to the question whether that offence has been committed; or
(b) that there are on any premises owned or occupied by a person whose affairs, or any aspect of whose affairs. are being investigated under section 92 above documents whose production has been required under that section and which have not been produced in compliance with that requirement;

but paragraph (b) above applies only if the person there mentioned is an authorised person, a person whose authorisation has been suspended or who is the subject of a direction under section 32(1) (b) above or an appointed representative of an authorised person.

§ (2) A justice of the peace may issue a warrant under this section if satisfied on information on oath laid by an inspector appointed under section 81 above that there are reasonable grounds for believing that there are on any premises owned or occupied by—

(a) the manager, trustee or operator of any scheme the affairs of which are being investigated under subsection (1) of that section; or
(b) a manager. trustee or operator whose affairs are being investigated under that subsection,

any documents whose production has been required under that section and which have not been produced in compliance with that requirement.

398

§ (3) A warrant under this section shall authorise a constable, together with any other person named in it and any other constables—

(a) to enter the premises specified in the information, using such force as is reasonably necessary for the purpose;
(b) to search the premises and take possession of any documents appearing to be such documents as are mentioned in subsection (1)(a) or (b) or, as the case may be, in subsection (2) above or to take, in relation to any such documents, any other steps which may appear to be necessary for preserving them or preventing interference with them;
(c) to take copies of any such documents; and
(d) to require any person named in the warrant to provide an explanation of them or to state where they may he found.

§ (4) A warrant under this section shall continue in force until the end of the period of one month beginning with the day on which it is issued.

§ (5) Any documents of which possession is taken under this section may be retained—

(a) for a period of three months; or
(b) if within that period proceedings to which the documents are relevant are commenced against any person for an offence under this Act or section 1, 2, 4 or 5 of the said Act of 1985, until the conclusion of those proceedings.

§ (6) Any person who obstructs the exercise of any rights conferred by a warrant issued under this section or fails without reasonable excuse to comply with any requirement imposed in accordance with subsection (3)(d) above shall be guilty of an offence and liable—

(a) on conviction on indictment, to a fine;
(b) on summary conviction, to a fine not exceeding the statutory maximum.

§ (7) The functions to which section 96 above applies shall include the functions of the Secretary of State under this section; but if any of those functions are transferred under that section the transfer may be subject to a reservation that they are to be exercisable by the Secretary of State concurrently with the designated agency and, in the case of functions exercisable by virtue of subsection (1)(a) above, so as to be exercisable by the agency subject to such conditions or restrictions as the Secretary of State may from time to time impose.

§ (8) In the application of this section to Scotland the references to a justice of the peace shall include references to a sheriff and for references to the laying of information on oath there shall be substituted references to furnishing evidence on oath; and in the application of this section to Northern Ireland for references to the laying of information on oath there shall be substituted references to making a complaint on oath.

§ (9) In this section "documents" includes information recorded in any form and, in relation to information recorded otherwise than in legible form, references to its production include references to producing a copy of the information in legible form.'—[Mr. Howard.]

§ Brought up, and read the First time.

§ Mr. Howard
I beg to move, That the clause be read a Second time.
I shall have a word with the hon. Member for Workington (Mr. Campbell-Savours) and answer the point that he made in the previous debate. I apologise for not having done so during the course of the debate.
During the debate in Committee on amendments tabled by the hon. Member for Dagenham (Mr. Gould) on powers of entry, I undertook to look again at the matter, and this new clause has been tabled to make provision for search warrants to be issued by justices of the peace on the Secretary of State's application. There are precedents for our proposals in the Prevention of Fraud (Investments) Act 1958, which is to be replaced by this Bill, and in the Companies Act 1985.
399 Warrants may be issued with a view to obtaining documents in three types of case. The first relates to suspected offences. The corresponding provision in the Prevention of Fraud (Investments) Act relates only to breaching the restrictions on advertising. That is too narrow and the new clause therefore also embraces a number of other offences concerning unauthorised investment business, misleading statements and practices, restrictions on promoting insurance contracts, unlisted securities and insider dealing.
The second and third types of case covered by the clause are designed to reinforce the investigation powers in clause 92, when investigating authorised and certain other persons, and in clause 81. If these powers are used to require the production of documents which are not produced in compliance with the requirement, a search warrant may be issued. A corresponding provision exists in section 448 of the Companies Act, designed to reinforce the power to obtain documents in section 447.
We have considered carefully whether to limit the exercise of these powers in relation to entering the premises of third parties. A limitation is not considered appropriate where a criminal offence is suspected, but use of the power to reinforce an investigation under clauses 81 or 92 may only permit entry of premises owned or occupied by the person under investigation, or by the manager, trustee or operator of a collective investment scheme.
The new clause provides for the powers which a warrant may authorise the police and other named persons to exercise, including the power to seize documents, and to demand explanations of them. Obstruction is to be an offence.
The Secretary of State's function of applying to a justice of the peace for a search warrant is one which may be transferred to the designated agency. The normal criteria for transferring functions will have to be met, and the Secretary of State may also impose conditions and restrictions on how the function is to be exercised in the case of a suspected offence. We consider that these are sufficient safeguards for applications by the agency, which will, like the Secretary of State, have to satisfy the justice of the peace that there are reasonable grounds for believing that relevant documents are on the premises in question. It would be cumbersome if the agency had to ask the Secretary of State to make applications for search warrants on its behalf, and delay would carry the risk of documents being moved or destroyed. It would be possible for the Secretary of State to retain the ability to apply for a warrant without affecting the agency's powers to do so.
The Government believe that these new powers, founded on precedents in other legislation, will improve the effectiveness of the new regulatory regime.

§ Mr. Gould
The new clause is a welcome recognition of the fact that the powers hitherto provided by section 14(8) of the Prevention of Fraud (Investments) Act 1958 are still necessary.
The Minister was right to recall that in Committee I tabled an amendment to the same effect, but not so expertly drafted as the new clause. At that point the Minister took the view that clause 92 provided adequate powers, but I gather from what he now says that he recognises that a power of entry into premises is important. That is the view that we took at the time. We 400 argued that, particularly in today's circumstances, it was of immense importance, when dealing with hardened unscrupulous criminals, that it should be possible to insist on entry to make a search, and that if that power was thought to be necessary in 1958, it was much more necessary today.
The Minister agreed with the suggestion of my hon. Friend the Member for Workington (Mr. Campbell-Savours) to consult the Securities and Investments Board about this matter. I am glad that the SIB is to have a concurrent power in this matter. The Minister's consultations with the SIB have produced a welcome outcome.
We perhaps raise an eyebrow at the limitation of the right to enter premises occupied by third parties, but I understand the Minister's reasoning for that. In broad terms we are satisfied that this power, for which we argued so strongly in Committee, is now to find a place in the Bill.

§ Mr. Nelson
The new clause marks a significant extension of the powers of investigation, which I welcome generally, in aid of the protection of investors.
First, I understood my hon. and learned Friend the Minister to say, and it is my understanding from the terms of the new clause, that the claim for a warrant comes into effect only where the request to disclose documents has not been satisfied. Can he confirm that that is correct? I cannot imagine many circumstances, for example, in a case of suspected insider dealing, where an individual who is asked to produce his stock contracts to show whether he has been engaged in share transactions and refuses will leave those contracts lying around long enough for a warrant to be issued and a search to be made. I am not sure whether it is intended that the powers can be invoked and a warrant issued before the other means of investigation have been satisfied.
Like the hon. Member for Dagenham (Mr. Gould), I am pleased that these powers can be applied concurrently by the SIB — the designated agency. That leaves a necessary option open which will ensure that the SIB has the means and ability to do its job, not just to supervise academically.
My second question relates to the relevance of the new clause to unauthorised persons. I am not entirely clear whether, under subsection (1), the powers to request a warrant apply only in the case of authorised businesses. What is the position for a suspected unauthorised person who may be committing a criminal offence under these provisions? What is the position for any individual, authorised or unauthorised, who may be committing the criminal offence of insider dealing? As I understand it, the power to claim a warrant in such circumstances is already provided for in separate legislation. Will my hon. and learned Friend clarify that this right to claim a warrant applies in all cases, not just those of authorised businesses?

§ Mr. Campbell-Savours
This debate gives the House an opportunity to have an early shot at one of the more controversial areas of the Bill. The issue is not so much the powers, which the majority of hon. Members accept as being important if the protection of investors is to be upheld and the law is to be complied with, but whether it is right that a private organisation should be able to exercise such powers in our society. I know of no precedent for this.
It is important to establish for those outside that the SIB is a private company. A private company which is no 401 different from Securior or a private policeman will police the City. [Interruption.] We have discussed the matter at length over 22 sittings in Committee, and during the past few months most of the arguments behind the scenes have been about that or the question of immunity, about which the Minister has been more flexible and has, perhaps, produced a reasonable alternative.
8.15 pm
Clause 93 states: The Secretary of State may authorise any officer of his or any other competent person to exercise on his behalf all or any of the powers conferred by section 92. Basically the Secretary of State is allowing a private company to exercise these considerable responsibilities. Therefore, under the new clause a private company will be allowed to apply to a justice of the peace to secure a warrant, and with that warrant it will be able to enter on any premises owned or occupied by a person whose affairs, or any aspect of whose affairs, are being investigated under section 92. That is a substantial power to give to a private organisation, and I must register my strong objection at this stage. It is not that we wish to vote against the matter tonight—we do not have the time to do so because we have many amendments and important matters to discuss —but this area shows up the deficiencies that lie at the heart of the legislation.

§ Mr. Howard
I am grateful for the support for the new clause extended by the hon. Member for Dagenham (Mr. Gould) and my hon. Friend the Member for Chichester (Mr. Nelson).
The answer to my hon. Friend is that it is not necessary, contrary to his understanding, that a prior request should have been made for the documents if an offence is suspected and a justice of the peace is satisfied that there are grounds for believing that the documents are on the premises concerned. The answer to the questions about whose premises may be entered pursuant to the powers granted in the new clause, where an offence is suspected of the type that is identified in subsection (1) of the new clause, is that anyone's premises may be entered. I hope that those two answers reassure my hon. Friend.
I have no desire to cross swords with the hon. Member for Workington (Mr. Campbell-Savours), particularly at this early stage in our proceedings. I make no apology for the Fact that these powers are to be entrusted to a private body. As I made plain repeatedly in Committee, it is my firm conviction that the role that is to be entrusted to a private body under the legislation will be discharged the more effectively because it is a private body. To suggest, as the hon. Gentleman did, that the private body would be just like Securicor, which was his analogy, is fanciful. Before the private body was designated by the Secretary of State it would have to satisfy exacting criteria prescribed in the legislation. This provides a real safeguard of the responsibility of the private body to which these powers could be entrusted.

§ Mr. Gerald Bermingham (St. Helens, South)
If the Minister is thinking along the lines that the power of investigation of this new body can be enhanced by these new powers of search and seize, will he consider extending similar powers to Lloyd's or to other self-regulating bodies for the investigation of insurance frauds?

§ Mr. Howard
We are not concerned with Lloyd's or with other self-regulating bodies in the new clause or in the 402 legislation, and I have given the reasons for that. I have carefully considered the points that were raised during our proceedings in Committee and I have been persuaded that it is appropriate for powers of this kind to be preferred. I commend the new clause to the House.

§ Question put and agreed to.

§ Clause read a Second time, and added to the Bill.