My Lords, I will deal briefly with these amendments concerning the creation of an offence in relation to a decision that results in bank failure. The amendments are designed to test the definitional value of the present clause, and work on the realistic expectation that once this becomes statute there will be a very much reduced prospect of people committing such an offence, particularly if they face up to seven years in prison on indictment. So the purpose of this
section is more of a deterrent, although it has a punitive value if there is a transgression. It is with that in mind that these amendments were put forward.
I shall address Amendments 58A, B and C in turn. My reading of this draft offence does not include any use of the words “reckless” or “recklessness”. It would be unwise in legal terms to equate its contents with some broad description to be used as a synonym, or understood synonym, of “recklessness”, which is a term of art in the law.
Amendment 58A deals with the following risk. It is likely that there will be more cases of one or more people being involved—two, three, four, five, whatever it might be—than a singleton defendant in a bank failure. If the bank is operating properly, it is almost inconceivable that one person could engineer its failure without the knowledge of others. Therefore I predict that if they are brought to trial, one or more of them will say, “I did not know; it was that man, not me.” This particular amendment is designed to cover that situation. “Should have been aware” infers “should have been aware by reason of competent and honest practice of appropriate banking standards”. It is an entirely reasonable test, and it gets over the point that the noble Lord, Lord Lawson, was telling us about earlier, of elective ignorance: “I don’t want to know”; or wilful blindness: “I don’t want to know because I’m never going to ask”. Many would think that both of those situations involve culpability. You cannot get away with it by shutting your mind to that which you should have known by professional standards and proper competence. So the time between now and Report should involve a consideration of how this clause is to be used if it becomes an offence where there is more than one defendant. Even if there is only one, he can blame someone who is not before the court.
I now turn to Amendment 58B. Corporate manslaughter is rarely brought to court. It is normally brought to court in respect of a flagrant breach of health and safety standards, usually in the construction industry, energy, or whatever it might be that causes a terrible accident. In other words, the incident speaks for itself. The word “far” in that context adds nothing to the impact of the event, and I suspect that most juries will not pay any attention to the word “far” when they are directing—they will look at the event. Between now and Report I want the Government to consider this question: how on earth will a judge directing a jury interpret the word “far” in respect of refined banking practices that may cause a concatenation of events that lead to a failure? It is an extremely loose word to use in this context, and I invite reconsideration of it or its omission.
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Amendment 58C is directed, as was suggested, at creating an objective test. The wording that is used,
“a senior management position in relation to a bank”,
makes it an entirely objective test. It prevents a person who is charged claiming that in his particular context, looking at it from his particular point of view, he did his best. That is simply not enough. The greater the responsibility, the more objective the test should be in this banking context.
I turn to Amendment 59A. I will not repeat the point about the statutes, although they are referred to. However, I invite the House to note that there is an intention here to deal with something where there has been a serious or systematic failure, not just in respect of those statutes but in respect of such other financial compliance obligations as may be specified in rules made by the FCA. In other words, the matter arises in respect of people who seriously fail in their duty to comply with the appropriate standards and competences envisaged by this section. It is not likely, but it is conceivable, that there will be situations in which a failure occurs because of a system collapse in which particular people were responsible, which system had been carried on systematically or involved a serious breach of compliance requirements by the FCA.
I close with the following thought. One wants to have on the statute book an offence that makes people think when they are in their job, “I’m not going to jail for this; I won’t take the risk”. I beg to move.