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Financial Services Bill - Sitting 3

19 November 2020

Proposing MP
Philip Davies Con
Shipley
Type
Public Bill Committee

At a Glance

Issue Summary

Dr Susan Hawley from Spotlight on Corruption is testifying before the Committee about the Financial Services Bill, specifically advocating for the introduction of a 'failure to prevent economic crime' corporate offence. Dr Hawley discusses the current legal framework for corporate accountability and its impact on small versus large companies, highlighting issues with existing laws and proposing a need for change to prevent money laundering. Philip Davies is addressing the Committee about managing time effectively during the discussion. Dr Hawley discusses recommendations to strengthen the Financial Services Bill to hold companies more accountable for economic crimes. Dr Hawley discusses the implications of recent legal judgments on corporate liability rules and the decline in fines imposed by regulatory bodies for money laundering. The statement is about the conclusion of a Committee session and the adjournment until further evidence can be taken.

Action Requested

Dr Hawley suggests amending the Financial Services Bill to include a corporate offence that would focus on fraud, money laundering, and false accounting, arguing it is necessary to ensure strong corporate governance, fairness in enforcement between large and small institutions, equivalence with international standards, and consistency across economic crime prevention measures.

Key Facts

  • Spotlight on Corruption supports the introduction of a 'failure to prevent economic crime' corporate offence.
  • The suggested amendment would fit within the "Insider dealing and money laundering etc" part of the Bill.
  • Dr Hawley highlights issues such as market integrity, fairness in enforcement, equivalence with international standards, and consistency across economic crimes.
  • The current law makes it easier to prosecute small companies compared to large ones due to more hands-on management in smaller firms.
  • Under the Proceeds of Crime Act, individuals can face up to 14 years for money laundering crimes while corporate fines under money laundering regulations are around £5,000 with no criminal enforcement.
  • Germany and the Netherlands are implementing strong measures for corporate liability and imposing higher levels of corporate fines for money laundering.
  • There are 18 minutes left in the session.
  • Three colleagues wish to ask questions.
  • Dr Hawley suggests two legislative options: introducing a 'failure to prevent' offence and empowering courts to disqualify directors.
  • The Competition and Markets Authority has the power to disqualify directors where there is a corporate offence.
  • Airbus case involved a director leaving with a large golden handshake while the company faced fines.
  • Since the call for evidence closed, there have been legal judgments in the Barclays case and the Serco procurement fraud case.
  • There is a worrying decline in fines imposed by regulatory bodies, especially in the money laundering space.
  • The level of fines imposed by the US on London and New York banks is 22 times higher.
  • Dr Hawley advocates for private sector consultation to align regulations with corporate liability rules.
  • The Committee session was concluded.
  • Further consideration is adjourned until 2 pm on the same day.
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