HL Deb 17 May 1960 vol 223 cc920-7

6.0 p.m.

Amendments reported (according to Order).

Clause 14 [Valuation of security]:

LORD WISE moved, in subsection (1) (b), after "being a" to insert "written" [report]. The noble Lord said: My Lords, I am sorry to keep the House with my two small Amendments to this Bill. I did mention them on Committee stage, and I think that, although they are small, they are worthy of consideration again on Report stage. It may have been that in the past a director of a building society has been able at times to make a verbal report on the value of a property. But, in order that the records of a society should now be complete—and I think the general intention of the Bill is that they should be a complete record, and available for inspection at any future date—I wish to insert the word "written" before the word "report" in line 5. Your Lordships will notice that the word "report" comes earlier in this subsection, in the third line, but that refers to the availability of a report for the directors' consideration. I think the actual report should be in written form, and I therefore beg to move.

Amendment moved— Page 18, line 5, after ("a") insert ("written").—(Lord Wise.)

THE LORD PRIVY SEAL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM)

My Lords, the noble Lord asked me about this point on Committee stage, and I then told him that I thought the courts would probably take the view that a written report was implied in the words of the clause as it now stands. Those advising me have now thought that perhaps this is not quite correct, and so they have asked me to accept the noble Lord's Amendment. But, in order to complete the work, I have told the noble Lord—and I hope that the noble Lord on the Woolsack has a copy—that it would be convenient to move (and, with the leave of the House, I shall do so) a manuscript Amendment in addition, to insert the words "and signed" after the word "prepared". The reason for that is largely a technical one. A written document does not need, I think, to be signed in order to make it effective for legal purposes. But if we are, in fact, going to prescribe specifically that this report should be a report in writing, which on the whole we have accepted, it would, I think, be convenient to identify the author by providing that it should be signed. On that understanding, I would accept the noble Lord's Amendment.

LORD LATHAM

That is to say, the subsection would then read, "prepared and signed"?

VISCOUNT HAILSHAM

Yes.

On Question, Amendment agreed to.

LORD MERTHYR

My Lords, as the noble Viscount has said, I have received a manuscript Amendment. It reads: Page 18, line 5, after the word ('prepared') insert the words ('and signed').

VISCOUNT HAILSHAM

My Lords, I beg to move.

Amendment moved— Page 18, line 5, after the word ("prepared") insert the words ("and signed").—(Viscount Hailsham.)

On Question, Amendment agreed to.

6.14 p.m.

LORD WISE moved, in subsection (1) (b) to leave out "competent and prudent" and insert "professionally qualified". The noble Lord said: My Lords, may I thank the noble Viscount for accepting my first Amendment. I hope that he will treat the second Amendment in a similar way. Having disqualified a director from making a report on a valuation of a property which bas been referred to the directorate of a building society for consideration, we have now to find someone outside the directorate who is capable of carrying out valuation work on behalf of the society. In my view, the words "competent and prudent", which appear in the subsection at present are extremely difficult to interpret. I may be wrong, but that is my view. The person must have both attributes. I do not know by what standards competence and prudence can be measured, and who can judge whether a person has both qualities or lacks one and has the other. In my Amendment, I seek to make the subsection definite in its wording and its meaning. A professionally qualified person is one who, from experience, practice and scholarship, has been accepted as being a fit and proper person to be a member of one of the chartered institutions governing the profession to which he belongs.

LORD MILNER OF LEEDS

And by examination.

LORD WISE

And by examination. I covered that by "scholarship", I thought. He is bound to be a competent person, and he must be a responsible one with definite traits of prudence: otherwise, he would not have sought qualification and membership. He is subject to stringent codes of professional conduct and honour.

The Bill seeks to put the operations of building societies upon sound, regular lines; to safeguard those interested in the welfare of any particular society; and, also, to safeguard the investors and borrowers. I think, therefore, that outside advisers engaged in work on instructions from a building society should have professional qualifications of high merit, and integrity. This may be the case at present, but the Bill limits the activities of some and opens up new professional work for others. Now procedure has been introduced. It is quite probable that there are competent and prudent persons outside the ranks of the professions who are capable of carrying out inspections and valuations, and of making reports; but the building society directors are custodians of borrowed money, and this puts upon them an obligation to exercise the greatest care in accepting properties for mortgage purposes. This clause, even as it stands, seems to stress this fact. In other matters, the building societies undoubtedly engage professional men of standing and experience, who carry out their instructions. The examples which come to my mind are chartered accountants, who already find some place in the Bill; chartered architects; members of the noble Viscount's own profession; and admitted solicitors. I hope, therefore, that my Amendment, which I believe to be an improvement and a simplification of the Bill, can be accepted by the Government in that respect. I beg to move.

Amendment moved— Page 18, line 6, leave out ("competent and prudent") and insert ("professionally qualified").—(Lord Wise.)

LORD LATHAM

My Lords, may I ask the noble and learned Viscount a question upon procedure? As he will recall, the Committee stage of this Bill occupied part of two days; and there were, I think, more than 72 Amendments, a number of which were accepted. There were, however, a number of important Amendments which were withdrawn on the understanding that the noble and learned Viscount would look into the matter, and on the understanding that the questions raised by those Amendments would be capable of further consideration on the Report stage. I should like to ask the noble and learned Viscount if he is in a position to report this further consideration, whether by himself or by his right honourable friend the Minister, especially in connection with Clause 5, which has now become Clause 6, dealing with restriction upon the acceptance of deposits; Clause 6, which has now become Clause 7 and deals with advertising; and Clause 14, which has become Clause 15 and deals with the rather doubtful and complicated question of whether the portion of 15 per cent. for which the building society is responsible is properly regarded as being a guarantee. If the noble Viscount could give us some information on those points, we should be grateful.

VISCOUNT HAILSHAM

My Lords, I do not think I can say much on this Amendment without getting dangerously out of order. I have a long list of points outstanding, of varying importance, which I promised to look into. I think that a convenient course would be for me to mention any important ones on Third Reading. I do not think that I should be called to deal with them at this stage, certainly not on the noble Lord's Amendment. About some I propose to write to noble Lords. A good many of them involve detailed discussions with various persons, and it is proposed to discuss these again in another place after discussions have taken place. There is none which really demands action by your Lordships' House, but if there are any particular matters which noble Lords desire to raise specifically, they could be discussed on Third Reading. That will not be to-day.

LORD MILNER OF LEEDS

My Lords, that does not give us an opportunity of putting down Amendments on Third Reading.

VISCOUNT HAILSHAM

My Lords, the noble Lord is quite wrong. Of course, he can put Amendments down on Third Reading.

LORD MILNER OF LEEDS

My Lords, it requires putting down the Amendments beforehand and presumably awaiting the noble Viscount's answer. My noble friend and I were hoping to avoid putting the noble Viscount to that inconvenience by asking questions now, if an opportunity were extended to us to do so.

VISCOUNT HAILSHAM

My Lords I am conscious that the noble Lord is trying to be helpful, but we must obey the ordinary Rules of Order about Report stage. I do not think that it is within my competence to depart from the ordinary Rules of Order. After all, the noble Lord, Lord Wise, has moved an Amendment, and I ought to reply to that. I do not think that I can undertake to answer a number of detailed questions when the only question before your Lordships' House is the limited one to which the noble Lord has drawn my attention.

LORD LATHAM

My Lords, I appreciate the position in which the noble Viscount is, but the facts are that the Third Reading is to be taken on Thursday, and whilst it may be the case that Amendments can be put down on Third Reading, we shall not have had the advantage of the further consideration which the noble Viscount undertook to give to certain important points which would influence us as regards putting down Amendments which were withdrawn on Committee stage.

VISCOUNT HAILSHAM

My Lords, the noble Lord, Lord Milner of Leeds, is one of the greatest experts on Parliamentary procedure in either House. As I remember, he acted as Deputy Speaker in another place, so I do not think that he can claim to be taken aback by my refreshing his mind that, on the limited Amendment on Clause 14, it is not within my power to discuss the whole Bill. This has been on the Order Paper in the ordinary way, and nobody should appreciate more clearly than the noble Lord, with his vast experience of procedural matters, exactly how matters stand. If the matter simply rested with me to say "Yes" or "No" to what the noble Lord has asked, obviously I should seek, with the leave of the House, to consult the noble Lord's convenience, but there are departures from the Rules of Order so violent that I do not think that I should carry the House with me, if I were to attempt to indulge them.

LORD MILNER OF LEEDS

My Lords, I agree that we may be strictly out of order on this Amendment. The only course for my noble friend and I to adopt is to put down Amendments on Third Reading and await the noble Viscount's replies on that occasion.

VISCOUNT HAILSHAM

My Lords, if I may now come to reply to the noble Lord, Lord Wise, the object of his Amendment is obviously praiseworthy, and the Government have a good deal of sympathy with it. It is only after consideration—because the matter had indeed occurred to them—that they have decided that they cannot meet it, and I hope that your Lordships' House will agree with me. First of all, the noble Lord criticises the existing language of the Bill. But the words "competent and prudent person" are taken from the 1939 Act, and are not new language which we have thought up for ourselves. This has been the law in this connection for 21 years, and it has stood the test of experience. I do not wish to be pedantic, but the noble Lord's Amendment is no more precise than the language of the Bill. If the noble Lord asks me what is "competent and prudent", I might ask him what is "professionally qualified"? So far as I can see, both have difficulties in the way of him who would answer them precisely.

For all that, the Government would have liked to specify the professions which were meant, and to limit the preparers of such reports to members of them. They have done so with the auditors' profession; but anyone who is familiar with professional matters will remember how extraordinarily complicated, and even thorny, was the history of the various bodies concerned; and only comparatively recently has it been possible to specify particular bodies. I am told that this stage has not yet been reached in the valuers' profession. There are a number of professional bodies who beyond all question could yield persons capable of delivering a report of this kind. There are a number of other bodies, about whom there may be dispute. And there are probably a number of other professionally qualified people who do not belong to any registered body. This profession is in the position in which the accountants were some time ago. I would be very far from saying that, in a number of years' time, some other Member of your Lordships' House, moving the next Building Societies Bill, might not be able to specify such bodies; but I do not think it would be possible now.

There are only two ways out of this problem, apart from leaving it as it is in the Bill, which, on the whole, is what we have decided is best. Either we can state in the Bill a number of qualified bodies, which inevitably would create a feeling of injustice in those bodies whose names were not in the Bill—and equally in those persons who were not on the register of any registered body; or alternatively it would be possible to leave it to the Registrar to prescribe the bodies, without specifying in the Bill what they should be. We think that this would be an invidious task to lay on the Registrar when the state of the profession, so far as I can ascertain, is as I have just described it; and we have put a large number of duties on this gentleman which have attracted the criticism that perhaps we have been giving him too wide a discretion and authority. Therefore, on balance, we decided not to do it. Though I was impressed by what the noble Lord, Lord Wise, said, and think that it is an attractive idea, we have been forced to abandon it this time, and I hope that the noble Lord will be contented with the arguments which I have advanced.

LORD WISE

My Lords, I thank the noble Viscount for his explanation. To a great extent I accept what he said: that there are difficulties in the way of expressing exact institutions whose members should participate. I have already thanked him for accepting one Amendment, and it would be bad grace on my part to put him in any difficulty in regard to a second one. I beg leave to withdraw the Amendment.

Amendment, by leave withdrawn.