HL Deb 07 July 1966 vol 275 cc1182-3

3.13 p.m.

LORD ERROLL OF HALE

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government why, in view of the evidence made available to them more than a year ago, the Board of Trade took no steps to prevent the sequence of events which led to the compulsory winding-up of the Fire, Auto and Marine Insurance Company.]

THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES)

My Lords, the Board of Trade have been in constant touch with the company from the commencement of its business. Neither the information obtained from enquiries made of the company by the Board nor suggestions made to them from other sources would have justified the Board in making earlier use of their powers under the Insurance Companies Act 1958. The reasons for the failure of the company will be fully investigated by the Official Receiver if the Court makes a winding-up order against the company.

LORD ERROLL OF HALE

My Lords, while thanking the noble Lord for that full reply, may I ask whether he could explain why, since his Department has been in constant touch with this company, an official of the Board of Trade made a Press announcement as late as Friday, June 24, saying "As things are at the moment, there does not appear to be any immediate danger of insolvency", and a week later the company was "bust"?

LORD RHODES

That is how it happens. That is quite true. When he made the statement he was not misleading anybody, but other people were.

LORD ERROLL OF HALE

My Lords, does this not imply that the President of the Board of Trade nowadays does not know what is going on in his Department?

LORD RHODES

My Lords, it shows just exactly the opposite, because the 1958 Act was legislation which was consolidating three previous Acts of Parliament. But it has its limitations now, just as it had in the days when the noble Lord was at the Board of Trade, and we shall take steps to remedy this as soon as possible.

THE EARL OF SWINTON

My Lords, is this not exactly the kind of case for which we passed the provision in the recent Act, to put in an inspector at an early stage? That does not require the provisions of the Insurance Companies Act or anything else. If that had been done, might not far less loss have been incurred?

LORD RHODES

My Lords, the question is very much to the point. But may I point out that Section 13 of the 1958 Act sets out stringent conditions for the companies which are non-life. The inspection rights arc under Section 14 of that Act. I must say that those provisions need improving, and I am hoping that it will not be long before we have an opportunity to do that.

LORD DRUMALBYN

My Lords, when the noble Lord is talking about steps to improve the situation, is he referring only to the steps that he has just now mentioned, or has he something else in mind as well?

LORD RHODES

Yes, my Lords, many. We want improved powers for the Board of Trade to require insurance companies to produce documents; the required solvency margins to apply from the date of commencing business, and not merely after two years; an increase in the required minimum paid-up capital and some power to ensure that it is suitably invested; and, possibly, many more which it would bore the House to read out.