§ 4.32 p.m.
§ Lord Beaverbrook
My Lords, I beg to move that the draft Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment No. 2) Order 1986, which was laid before the House on 25th November and 1097 which has been considered by the Joint Committee on Statutory Instruments, be approved.
This order disapplies certain provisions of the Rehabilitation of Offenders Act in relation to the senior management of building societies. Both the Financial Services Act and the Banking Bill currently in Parliament contain similar provisions. It was first planned to introduce these provisions by amendment to the Building Societies Bill which Parliament approved in the previous Session. In view of the pressure of time on the Bill, however, it was decided to take the alternative course of making the disapplication by an order under the 1974 Act.
The order will make it possible for building societies and their supervisory body, the Building Societies Commission, to inquire about and take into account spent convictions for certain offences in assessing the suitability of an individual to hold a senior position in a building society. Such information can then be relied upon in any decision by the Building Societies Commission to impose conditions on the authorisation of a society or to revoke or to refuse to grant such authorisation. It may also be relied on in the grounds for a society's decision not to appoint or to dismiss an officer of the society; and it would be admissible evidence in any appeal against such decisions.
The order is fairly complex because in framing the disapplication we have carefully balanced two obligations. It is important that regulatory bodies charged by statute with maintaining high standards of probity in the City should have the power to carry out effective scrutiny of the fitness of senior executives. It is equally important, however, that this should not go so far as to run counter to the fundamental intentions of Parliament in passing the Rehabilitation of Offenders Act. The disapplication has therefore been restricted in its scope so that it affects only individuals in the upper echelons of building societies, and then only where certain types of offenders are concerned.
The order relates only to individuals who are directors or officers of a building society. The term "officer" is defined in the Building Societies Act 1986 and means any director, chief executive, secretary or manager of a society. The term "manager", too, is defined in the Building Societies Act as an individual employed by the society who is under the immediate authority of a director or a chief executive. In concentrating on the senior management of societies we have followed the approach taken in the Banking Act 1979 and also in the Financial Services Act. To extend the disapplication to less senior employees would deprive an unreasonably large number of people of the protection they enjoy under the Rehabilitation of Offenders Act and, as their activities would be properly supervised by senior staff, we do not think this is justified.
The order will enable questions about spent convictions to be put by the Building Societies Commission as the supervisory authority for building societies and by societies themselves. But only spent convictions for "relevant offences" would need to be disclosed. These are defined as offences of fraud or other dishonesty and offences under legislation relating to building societies and other commercial 1098 institutions. These are the types of spent conviction which may be material to judgments about an individual's suitability to be involved in the running of a building society. Other offences which are not so relevant to maintaining confidence in financial institutions would be outside the scope of this order, and ex-offenders would continue to have the protection of the Rehabilitation of Offenders Act. Again, this restriction is in line with the one which applies in the Financial Services Act and is to be found in the present draft of the Banking Bill which is now before Parliament.
The House will see, therefore, that the order has been drafted so as to strike a proper balance between the need to protect investors in building societies by strengthening regulation and the need to maintain the integrity of the Rehabilitation of Offenders Act by protecting rehabilitated persons from unreasonable prejudice. The provisions of the order are analogous to those which apply to banks under the Banking Act to be amended by the Banking Bill and to other financial institutions which fall within the terms of the Financial Services Act. I commend it to the House on that basis.
Moved, That the draft order laid before the House on 25th November be approved.—(Lord Beaverbrook.)
§ Lord Mishcon
My Lords, I am so glad, and I believe that your Lordships will be as well, that the Minister took such care in explaining the draft order to us. Incidentally, I wonder whether the noble Lord would kindly check whether he is right or whether my note is right. I believe he said that the order was laid on 25th November, whereas I have a note before me which says that it was laid on 2nd December. Although this matter is not of great moment, I think the record at least ought to be correct.
I said that I was glad, and indeed grateful to the noble Lord, that he took such care in explaining the order because Parliament debated long and hard when the Rehabilitation of Offenders Bill (which became an Act in 1974) came before this House and another place. It was revolutionary. It decided that there should be spent convictions. It decided that in order to enable people to rehabilitate themselves after they had paid their penalty for their wrong doing they should, with certain very limited exceptions, be enabled to do so.
The House may remember that one of those exceptions was that if on a conviction there was a custodial sentence in excess of 30 months. That was an exception, and indeed any subsequent conviction after any such custodial sentence was inflicted upon somebody also was an exception to the Act. But it was a broad general policy of great humanity and great common sense in the work of endeavouring to rehabilitate those who had erred but had paid their penalty.
When we come to consider the building society legislation and the financial services legislation, we shall be dealing with people who are in charge in many cases of the lifelong savings of citizens of this country. A duty falls upon Parliament to ensure with the greatest caution that, in all the regulatory processes that are now obligatory in regard to building societies and financial institutions covered by the Financial 1099 Services Act, people in authority—I underline the words "people in authority"—are properly vetted before appointments are made and before authorisations of a vital nature are given.
The noble Lord the Minister said very properly that one had to deal with balances in this matter. Here we are with the principle of the Rehabilitation of Offenders Act 1974 and our duty to the public. I believe that the Government have that balance about right because they have limited the exceptions to ones of fraud and other dishonesty and offences very relevant to and connected with both building societies and financial institutions. They are limited, too, to those who are in senior positions supervising the funds involved. This exception does not cover the minor employees in those institutions.
I think that this is a correct order. I believe that we shall always want to watch with great attention the exceptions that are made to the policy that Parliament so wisely and so humanely enacted in 1974. We shall be doing our duty both to that Act and to the public if we give this order a safe passage.
§ Lord Harris of Greenwich
My Lords, I join the noble Lord, Lord Mishcon, in saying that the House will obviously approve of this order. It is right to look from time to time at this question of disapplication. I speak only because I was involved as Minister when the Rehabilitation of Offenders Act came forward as a Private Member's Bill in 1974. It is always a temptation to follow the noble Lord, Lord Mishcon, down Memory Lane on this matter. I am bound to say that it was one of the worst drafted Private Member's Bills that it has been the misfortune of this House to consider. The principle behind the measure had been approved by the previous Conservative Government and was approved by the incoming Labour Government.
I think everybody sees the enormous advantage of doing everything possible to rehabilitate the offender and to avoid damage to him in subsequent years by the disclosure of some minor conviction many years before. But there are problems about it. One of them was addressed by the noble and learned Lord, Lord Diplock, as soon as the Bill arrived here. As the Bill was then drafted newspapers would not have been able to disclose that people who were trying to obtain substantial sums of money from the public were convicted fraudsters. The Bill was substantially amended in this House. As a result, it is a far more worthwhile piece of legislation.
I join the noble Lord, Lord Mishcon, in saying that we have constantly to ask ourselves whether we are satisfied that people doing work of a sensitive character have their antecedents scrupulously examined. As we all know, there have been a number of occasions when, inadvertently, this legislation has had damaging consequences. There have been changes as a result, but there is no point in assuming that the Act has had entirely beneficial consequences. It has not. Nevertheless, the central purpose of the 1974 Act was admirable. However, I repeat the point that it is necessary for us constantly to ask ourselves whether from time to time we should proceed by way of further disapplication procedures. This is such an occasion, 1100 and I think that the order should be supported by the House.
§ Lord Beaverbrook
My Lords, I am most grateful to the noble Lords, Lord Mishcon and Lord Harris. I am especially grateful to the noble Lord, Lord Mishcon, because, as is often the case, I find that he is correct and that I am incorrect. By way of explanation I should say that the order was withdrawn on 25th November and laid again on 2nd December.
As I have explained, it is inevitable that there will be a conflict between the need to ensure high standards of probity in building societies and the need to maintain the protection conferred on ex-offenders by the 1974 Act. I believe that we have found the right balance on a difficult matter. I beg to move.
§ On Question, Motion agreed to.