My Lords, I thank the Minister for setting out these regulations and everyone who has spoken in this short debate. I will take these instruments one at a time.
Under the current system, criminals can—often by using data unwittingly shared or stolen and for sale on the dark web—fraudulently register an individual residential address as a registered office with Companies House, without the knowledge of the actual residents. Since 2011 it has been possible for companies to be incorporated within 24 hours for as little as £12, with Companies House making no checks on the veracity of the address. Once this has been done, the perpetrators can apply for credit, business loans and other financial arrangements. This fraud often does not come to light until the individual wants to apply for credit and finds that they are unable to do so, often resulting in considerable problems.
This instrument relates to where individuals have had their residential address hijacked. It allows the registrar to change the address to a default address and to strike the company from the register of companies if a genuine new address is not provided. It establishes criminal offences for companies and officers where they do not comply. We welcome the streamlining of this process and expansion of the registrar’s powers that this instrument provides, including that, as well as acting on the basis of applications, the registrar can when necessary act unilaterally based on any information in their possession to move swiftly to change a company’s registered office address without giving notice in advance.
However, I would like to know how the Government seek to protect and support victims of these fraudulent practices, as mentioned earlier by the noble Lords, Lord Vaux and Lord Fox. Can the Minister say how they will be informed of developments? Will victims be supported if issues continue for them beyond the changing of the registered address—for example, if they have negative notes or ratings on their credit file? If so, how will this be addressed?
Given that this is clearly a widespread practice, does the Minister have any information about provisions to actively check business addresses? There could be existing situations in which fraudulent addresses are in
use but currently unchanged or undetected; they may not come to light until the innocent victims have their lives blighted by the discovery of a fraudulent registration of which they were unaware, as in the case in Wales that was mentioned. Does the Minister have accurate figures for how many addresses are registered? Surely it must be in the millions. If, as I suspect, it is on that scale, what analysis has been done on whether this instrument will create an influx of work for the registrar? Has resource been allocated for this?
I move on to LLP. This instrument will ensure that the reforms to company law made by the Economic Crime and Corporate Transparency Act 2023 also apply to the law governing limited liability partnerships. It will ensure that company law applies without arbitrary differences between companies and LLPs. It pertains to straightforward administrative amendments relating to a company’s name, registered office and email addresses, its directors, annual confirmation of accuracy on the register, information about persons with significant control and so forth. We support this legislation, which seems both reasonable and straightforward, and so on this occasion I do not have any further questions for the Minister.
I move on to the Service Address (Rectification of Register) Regulations 2024. As many noble Lords will know from personal experience, directors and secretaries of companies and persons with significant control over companies are required to notify the companies registrar of their service address—that is, a location where documents may be deemed effectively served on that person.
This instrument empowers the registrar to change the registered service address to a default address nominated by the registrar where the registrar is satisfied that the registered service address does not meet the necessary legal requirements. The registrar may change the address by their own motion or on application and may also, at their discretion, change the address without notice or after a period for objections, the length of which may also be at the registrar’s discretion. Clearly, the situation in which company directors, secretaries and persons of significant interest could attempt to delay or evade being held to their legal responsibilities by providing non-compliant addresses would be unsatisfactory.
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It will be obvious to noble Lords that this could be abused by those with dubious motivations, and we broadly welcome the additional powers that this instrument grants the registrar to close loopholes to prevent abuse and malpractice. However, it is not difficult to foresee situations in which the service address falls outside the necessary requirements—administrative errors, relocations, changes of ownership, deaths and so forth—where perhaps overeager actions, unrealistically short notice periods or both could create more problems and considerably more bureaucracy than benefits. Can the Minister inform us what checks and balances are in place to ensure that the registrar acts reasonably and proportionately?
Accuracy is important, of course, and if serious criminality is suspected, so too is speed. Does the Minister have any indication of what might be the standard period for registering objections? Will it be a
week, 28 days or three months, for example, unless there are compelling reasons otherwise? Given that individuals will be deemed to have committed an offence if they do not notify the registrar of a compliant new service address once the registrar has changed it to a default address, what recourse might there be for those who encounter additional costs or complications that impact upon their legitimate business if there is no general guide for consistently applying the new powers that this instrument introduces?
Finally, on the Principal Office Address (Rectification of Register) Regulations 2024, it may be necessary to empower the registrar to change the principal office address of a registered company. It could be in response to a motion from a third party, which may be due to deliberate fraud or poor administration, or if the registrar is satisfied that the address given is not in fact the principal office. I do not want to rehearse the arguments heard earlier in support of these powers, but I seek reassurance from the Minister that there will be guidance in place regarding standard timescales to ensure that the registrar acts reasonably and proportionately unless they have specific and clear justification to impose immediate changes with potentially no period for objection. As ever, we should keep in mind that our public bodies, when granted additional powers, must also be aware of the responsibility to apply them responsibly and that there are clear routes for appeal if individuals believe that this is not the case. I look forward to the Minister’s response to noble Lords’ questions, especially the question asked by the noble Lord, Lord Bourne, about whether the review of company law will happen and the question asked by my noble friend Lord Sikka on who enforces company law.