HL Deb 19 March 1970 vol 308 cc1242-53

3.28 p.m.


My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Bowles.) On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clauses 1 to 6 agreed to.

Clause 7 [Group insurance business]:

LORD BOWLES moved Amendment No. 1: Page 6, line 36, after ("employer") insert ("or such other group of persons for the time being approved for the purposes of this section by the registrar ").

The noble Lord said: I hope that it will be for the convenience of the Committee if we take this Amendment and Amendment No. 2 together. The purpose of the Amendments is to enable some latitude to be given in defining the group of persons to whom a group insurance scheme may apply in the context of Clause 7. As it stands, the clause applies only where the group consists of employees of a particular employer. Representatives of the friendly societies have submitted that this wording may be unnecessarily restrictive, because a group who otherwise might be suitable might contain persons who were not employees in the strict sense or who might not all be in the service of one particular employer. A football team provides an example of a suitable group which might not come within the present definition. There is no objection as a matter of policy to the widening of the definition, but to provide against possible abuse of the intention of the clause it is desirable that there should be a measure of control over the scope of groups which are outside the present definition. This is secured by requiring the registrar's approval. These Amendments have been agreed in principle by the representative body of the friendly societies. I beg to move.

On Question, Amendment agreed to.


I beg to move Amendment No. 2.

Amendment moved— Page 6, line 41, after ("employees") insert ("or other persons").—(Lord Bowles.)

On Question, Amendment agreed to.

LORD DRUMALBYN moved Amendment No. 3:

Page 6, line 44, at end insert— ("() In applying the limits set out in paragraphs (c) and (d) of section 41(1) of the principal Act group insurance business approved in accordance with this section shall be disregarded.")

The noble Lord said: I beg to move Amendment No. 3. This clause defines group insurance business for the purposes of the Friendly Societies Acts for the first time. In fact, however, employers have already been arranging group life insurance with friendly societies on behalf of their employees, but individual proposal forms have been required in each case. Maximum limits for both tax exempt and taxable sums assured apply to such policies under Part II of Schedule 8 of the Finance Act 1966 for each individual; that is to say, £500 untaxed and £2,000 taxed, or £3,000 if the entitlement includes any mortgage protection policies.

This has mean that an individual employee who was already a member of a friendly society might not be entitled to participate fully in the employer's scheme if he already had life cover. The employer making the proposal would thus have to find out whether each employee proposed to be covered was already covered with a friendly society. A common form of life cover, I understand, for death in active service benefits is twelve months', eighteen months' or two years' salary. In such a case, each employee would have to be asked at the time the group insurance contract was being negotiated, or when he entered the scheme, what holding he had in any particular friendly society.

If the particular employee had already covered himself for £750 with another friendly society, it might be that group life benefit could not be provided for him. In any case, the need to make this sort of inquiry can be embarrassing, and that for two reasons: in the first place, the employee might not wish to disclose to his employer his private insurance arrangements; and secondly, the employer might not be able to offer the same benefits, in consequence, to all his employees. Apart from the embarrassment, having to make these inquiries and any necessary adjustments greatly complicates what would otherwise be a simple and straightforward proposal. This Amendment is designed to remove these difficulties and complications and takes group insurance right outside the scope of the maximum limits.

It would, of course, be possible to draft the Amendment the other way round, so as to disregard any benefits which the individual was already providing for himself, but retain the maximum for the purposes of the group insurance policy. This would mean that under a group policy no individual employee could be covered for more than the maxima laid down in the 1966 Finance Act, but any policy an individual had taken out for himself with a friendly society would be disregarded. But given the level of current earnings, on the one hand, and, on the other, the likelihood that in most cases the benefits would be taxable anyway, it would seem more sensible, I suggest, to exempt group insurance from statutory limits altogether. That is what the Amendment seeks to do. If the business is to be taxable, the question is: is there any occasion for a limit for group life business?

There is a precedent for not having a limit, for in 1956 friendly societies were allowed to operate retirement annuities for the selfemployed without limit up to any amount which a man could provide by the permitted percentage of his income. This Amendment has been suggested by the Friendly Societies Liaison Committee representing the four Associations of Friendly Societies—the Association of Collecting Friendly Societies, the Association of Deposit Societies, the National Conference of Friendly Societies and the National Union of Holloway Friendly Societies. I understand that it has been put forward to the chief registrar, and that discussions have taken place.

I hope that the noble Lord will be able to accept the Amendment, but if the discussions have not yet been concluded. I hope that at least he will be able to indicate that the Government are favourably disposed to some Amendment along the lines proposed, and that he will himself move an Amendment at a later stage of the Bill. I beg to move.


In our debate a fortnight ago, the noble Lord raised this point—he had only just heard of it, and so had I—and I then undertook to have the proposals examined in consultation with other Departments. The present position is that these consultations are well advanced. The registrar is favourably inclined to the proposals in principle, and it would appear that they are unlikely to meet with objection elsewhere. It is hoped that a firm decision may be reached in the next few days, and assuming it to be favourable an Amendment which should be acceptable to all sides can be put down in time for the Report stage of the Bill. Perhaps the noble Lord, on the strength of that suggestion, will agree to withdraw his Amendment at this stage.


I am obliged to the noble Lord, and I willingly agree to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 7, as amended, agreed to.

Clauses 8 to 11 agreed to.

Schedule 1 [Sections to be substituted for section 77 of principal Act]:

3.38 p.m.

LORD DRUMALBYN moved Amendment No. 4: Page 10, line 28, leave out ("or suspension").

The noble Lord said: This is a small point, and I am informed a somewhat academic one, because the circumstances seldom, if ever, arise. Subsection (3) of the new Section 77 contained in Schedule 1 provides: Subject to subsection (4) of this section, not less than two months' previous notice in writing specifying briefly the ground of the proposed cancellation or suspension shall be given to a society by the chief or assistant registrar before its registration is cancelled or suspended. What this Amendment does is to question the usefulness of putting in the words "or suspension". I should have thought that, if it was necessary to suspend at all, it would be necessary to suspend immediately, so that there could be some sort of investigation into the circumstances, and not to give two months' notice of the reason for the suspension.

Perhaps it would be convenient if I dealt with the next Amendment, which seems, on the face of it, to be contradictory, but it is intended to bring out the options open. Subsection (5) of the new Section 77 goes on to say: Where before the expiry of the period of notice under subsection (3) of this section of the proposed cancellation of a society's registration the society duly lodges an appeal against the proposed cancellation under section 77A of this Act, the chief or assistant registrar, as the case may require, may by writing under his hand suspend the society's registration from the expiry of that period until the date of the determination or abandonment of the appeal. I should have thought that if the word "suspension" is to remain in subsection (3), then the word "suspension" should go into subsection (5), so that there should be an opportunity to appeal equally against the suspension within the period.

I am sorry that this is a complicated point, but if the noble Lord will look at what is now to be Section 77A of the Act, he will see there that: A society may appeal, in accordance with subsection (2) of this section, against—(b) the renewal under subsection (2)(b) of that section of a suspension of a society's registration. This would mean, in effect, that there would not be an opportunity to appeal against suspension until the time came to renew that suspension. It seems to me that it would be easier to give an opportunity to appeal straight away as soon as the suspension is made, if a suspension is needed at all. I am told that there has never been a suspension—I am not sure about this. If there is to be a suspension at all, then it should be dealt with logically, and one or other of the suggestions I have made here would be more logical than the Bill as it at present stands. I beg to move.


The purpose of the proposed Amendments is not entirely clear, and it is possible that the noble Lord may have misunderstood the scheme of the new Sections 77 and 77A. These two new sections lay down the circumstances in which the registration of a society may be cancelled or suspended. Section 77 also provides for the procedure for cancellation and suspension, and Section 77A deals with appeals.

The registrar may, in the cases specified in Section 77(1), cancel the society's registration. Alternatively he may in certain of those circumstances suspend the registration for a period not exceeding three months. He may also thereafter renew the suspension from time to time for a like period. Section 77(3) requires that the society shall be given at least two months' written notice, with reasons, of the proposed cancellation or suspension. It seems right and reasonable that this notice should be given, both in the case of cancellation and in the case of suspension. The effect of the first of the Amendments would be to delete the requirement to give such notice in the case of suspension. I cannot therefore advise the Committee, in these circumstances, to accept the first Amendment.

The second Amendment relates to Section 77(5). This provides that where a society has lodged an appeal against cancellation under the new Section 77A before the expiry of the two months' notice already referred to, the registrar may suspend the registration until the termination of the appeal. The Amendment apparently seeks to extend this provision to the case where an appeal has been lodged against a proposed suspension. The short answer to this is that there is no appeal against a proposed suspension: Section 77A(1) provides for appeals only against cancellation and renewal of suspension, where the suspension is to continue for more than six months.

There are good reasons for not giving a right of appeal against the initial suspension. First, the suspension cannot be for more than three months, and any appeal procedure could therefore hardly be completed within the time available. That means it has to go to the High Court. Secondly, it is desirable that the power of suspension should be available to be invoked without delay in those cases where some further investigation by the registrar is required in order to decide what more permanent action, if any, may be desirable. There is, as already mentioned, a right of appeal against a proposed renewal of the suspension and this, I submit, is a sufficient safeguard to the society itself.

A further objection to this Amendment is that Section 77(5) provides that where there is an appeal against a proposed cancellation of registration, the registrar may suspend the registration pending the determination of the appeal. The effect of the noble Lord's Amendment as it stands would be to provide that where the appeal is against a proposed suspension the registrar could sus pend the registration pending the outcome of the appeal. The position would, therefore, in substance be unaffected by the Amendment. I cannot advise the Committee to accept this Amendment.


I do not think the noble Lord has really answered the point I made. I would ask him to have a look at it between now and the next stage. I am certain that any suspension would have to remain in being during the period when there was an appeal against the suspension. That is a point he might look at further to make certain that it is covered. The objection of the suspension would obviously be to enable an investigation to be carried out in the meantime. This is rather like Board of Trade procedures. I should have thought it would be right to allow an appeal against the suspension, certainly after the investigation had been carried out. The Amendments I propose may be defective in that regard. I am not altogether sure that the Bill is entirely in logical form, as it is at the present time, so I would ask the noble Lord, in the light of my remarks, to have another look at it between now and the next stage.


I should not like the noble Lord to think that this has not been looked at already, and looked at very carefully. I can understand to some extent what the noble Lord is saying, but I think he has muddled himself up over this matter. In the first place, he asks that the possibility of suspension—


If the noble Lord will allow me to interrupt him, I think his noble friend started by saying that he did not quite understand the purport of my Amendments. I took the two Amendments together and made it quite clear they were alternatives. I think he is about to argue on the basis that they were both intended to be made. That is not so.


Probably the noble Lord will allow me to put my own argument. There are two Amendments before us and I suggest that they are not alternatives. The present positions are complementary, one to the other. In the first place it is proposed that a right should be vested in the registrar both to cancel and suspend. I am suggesting to the noble Lord that there should be this right to suspend. The noble Lord says that the two months' notice in the case of the suspension should be removed. It is not possible administratively to suspend immediately. You are not suspending the operation of a society; you are suspending only the registration. There is only value in suspending the registration if members of the society know that the society no longer has the respectability of registration. Therefore, a certain amount of time is necessary in order for members of the society to be acquainted with the fact that they are liable to be suspended as from a certain date.

The noble Lord then goes on to say that although there is no need to give notice, there should be the right of appeal in the case of suspension as well as in the case of cancellation. That would not be in the best interest of the societies themselves. What would happen at present is that if the Registrar has reason to believe that certain of the society's affairs are not in the order they should be, he gives notice that from a certain date he proposes to suspend. In the meantime there will be discussions and careful consideration of the point of view of the Registrar. I have no doubt that the matter would be gone into carefully by the society. In the case of suspension it would not be a really serious matter, otherwise cancellation would be considered by the Registrar. It is much better to have this period for discussion, consultation and further consideration, rather than to put upon the society the onus of having to go to the High Court in order to lodge an appeal against a proposed suspension. The present proposals are for an informal appeal, not through the expensive processes of the High Court but by negotiation, by discussion as between the society and the Registrar. This would be much better for the society and much better for its members than for the necessity, which the noble Lord would put upon the society, of having to go to the High Court if they wished to appeal against a proposed suspension. I assure the noble Lord that this matter has been considered very carefully, as has his Amendment, and I think that if he were to have another look at it he would feel that the present position is better covered by the proposals in the Bill.


I am most grateful to the noble Lord for his explanation, which has gone a long way to meet the misgivings I had. I am sure he is right in saying that the suspension does not mean suspension of the operations of the society; it means suspension of any rights or privileges that may flow from registration. It occurred to me that it was not a bad thing that those should be suspended right away, if it appeared that there was something wrong; and this would be more likely to be the Board of Trade procedure. With more experience at the Board of Trade than of the Chief Registrar's activities, I was thinking in those terms.

I do not want to press this Amendment. I think the noble Lord has explained the matter quite well—one could do it with two months' notice, or without; this is a matter of judgment. I am sure that the noble Lord is right in saying that, although I did not give much time for this Amendment to be considered (and for that I apologise) it has been considered—in fact, I believe the point was considered even before I put down the Amendment. That being so, I am quite happy to beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Schedule 2 [Amendments of Other Enactments]:

3.52 p.m.

LORD BOWLES moved Amendment No. 6: Page 13, leave out from beginning of line 15 to ("Where") in line 18 and insert— ("12. For section 53 (discharge of mortgages by endorsed receipt) there shall be substituted the following section:—


The noble Lord said: I hope it will be for the convenience of the Committee if we take the next two Amendments together. The purpose of paragraph 12 of Schedule 2 is to bring the special provision for the discharge of mortgages (contained in Section 53 of the 1896 Act) into harmony with the provisions of Section 115 of the Law of Property Act, 1925. Section 53 of the 1896 Act does not extend to Scotland or the Island of Jersey. It has now been ascertained that the provision in fact also has no application in the Island of Guernsey (the mortgage is something unknown in Guernsey law) or in the Isle of Man, which has its own procedure and does not use the endorsed receipt procedure.

In consequence, therefore, Section 53 is needed only to apply in England and Wales. By these Amendments paragraph 12 of Schedule 2 accordingly replaces the whole of Section 53 and a subsection (replacing the present subsection (5)) is added saying that the section extends to England and Wales only. I beg to move No. 6.

On Question, Amendment agreed to.


I beg to move Amendment No. 7.

Amendment moved—

Page 13, line 40, at end add— (" (3) This section extends to England and Wales only.").—(Lord Bowles.)

On Question, Amendment agreed to.


This Amendment concerns a drafting error and corrects a mistake that has been in operation since 1896. It was in the Friendly Societies Act 1896. We propose that this error should now be removed. I should say that there is an intention to consolidate this field of legislation, and it is obviously desirable to make it as tidy as possible before consolidation takes place. I beg to move.

Amendment moved— Page 14, line 14, leave out ("in").— (Lord Beswick.)

On Question, Amendment agreed to.

LORD DRUMALBYN moved Amendment No. 9: Page 14, line 46, leave out paragraph 19.

The noble Lord said: I am moving this Amendment merely to obtain an explanation. It seemed to be the easiest way of obtaining it. Paragraph 19 says, referring of course to the principal Act: In Section 78(l)(d) (dissolution of registered societies and branches by award of the chief registrar or assistant registrars) the words 'or assistant registrars' shall be omitted. As I understand it and on the face of it, it looks as if there is to be withdrawal of jurisdiction from the assistant registrar in Scotland; and, if there is one in Wales (I am not sure), from him also. This affects only dissolutions, but the same seems also to apply to amalgamations and transfers of engagements, where now it is the Chief Registrar only who is to be allowed to deal with these matters. I move this Amendment merely to obtain an explanation of the reasons.


The purpose of paragraph 19, which the noble Lord's Amendment seeks to delete, is not to change the effect of the law but to correct a mistake in the 1896 Act. The effect of accepting this Amendment would therefore be to perpetuate the mistake. Paragraph 19 provides that the words "or assistant registrars" in Section 78(1)(d) of the principal Act shall be omitted. In fact, those words should never have been there, because the assistant registrars have no power under the 1896 Act to make an award (for the dissolution of registered societies) in the cases specified in this Act. The cases specified in this Act are set out in Section 80(3) of the 1896 Act, and in that subsection it is provided that the Chief Registrar may make the award. There is no reference anywhere to the assistant registrars' making the award for dissolution. Clearly, therefore, the reference to "assistant registrars" in Section 78(l)(d) was a mistake, and opportunity is now being taken to correct it. I hope that, in the light of this explanation, the noble Lord will see his way to withdraw his Amendment.


I am grateful to the noble Lord. I looked up the 1896 Act, and, I think, with special reference to amalgamations, and so on. I wonder whether he can answer the point about amalgamations, too. Why is it now proposed that the assistant registrar should not be allowed to deal with the amalgamations of branches and of societies?


This applies only to dissolution awards.


I beg the noble Lord's pardon, but I made it clear at the beginning of my remarks that I was not really concerned with the content of this particular paragraph, but I was asking for an explanation of the reason why this is done. The noble Lord has amply explained that it is in fact not being done, because it never was the case so far as dissolution is concerned. I am merely asking him, as a matter of information, whether I am right in thinking that the power is being withdrawn from the assistant registrar in Scotland so Ear as amalgamation is concerned.


Probably I can help the noble Lord. I think that if he turns up the 1896 Act again he will find (I believe in Section 3, but I am speaking from memory) that there are powers of delegation, and it is under the delegated power of the Chief Registrar that the assistant registrar in Scotland operates. He will continue to operate with those same delegated powers because that power is not affected by this Amendment.


I am much obliged to the noble Lords for their explanations. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Remaining Schedule, as amended, agreed to.

House resumed: Bill reported, with Amendments.