Company Law Reform Bill [HL]

I have indicated that I wish to oppose the Question whether both this clause and Clause 496 shall stand part of the Bill. I shall speak to them together. I wish to raise questions about the need for the Secretary of State to issue guidance for regulatory and prosecuting authorities. In relation to the regulatory authorities, the Minister will be aware that the regulatory arrangements for the accountancy profession have recently been set up with some care to achieve an appropriately independent regime—one that is certainly independent of the accountancy profession but is not seen merely as an arm of government. The Government are saying in these clauses that they can tell that independent regime what to do. The Government appear to be saying that the regulatory arrangements cannot be relied upon and need to be underpinned by the Secretary of State’s guidance as to what the regulatory body should or should not do in relation to auditor behaviour. I hope that the Minister will say something about what kind of guidance the Government intend to issue to the regulatory bodies under these clauses. I also hope that he will say what the status of that guidance will be. What happens if the regulatory bodies believe that their functions would be better served by not following the guidance? It is not clear that issuing guidance necessarily has any impact. I cannot understand why the Secretary of State should have any locus as regards the prosecuting authorities. I have always understood that they consider the law, the evidence and the public interest in determining whether or not to prosecute. I think that I am right in that but, if I am not, I am sure that the Minister will correct me. What kind of guidance could the Secretary of State validly give to the prosecuting authorities? I hope that the Minister will explain a little more of what the Government have in mind. We are sceptical about the need for the Secretary of State to give guidance at all, but I hope that the Minister will say something about the process of drawing up guidance, particularly in relation to consultation processes. Subsection (2) refers to the consent of the Attorney-General but says nothing about consultation with those likely to be affected. I assume that the guidance will deal with some highly technical issues of accounting and auditing, but there will inevitably be a fear that those will be developed behind closed doors. The one thing that I can predict is that civil servants issuing guidance on auditing practice would not be robust. The Minister will be aware that we are not fans of the offence described in Clause 494, but even less are we fans of an offence that has to be overseen in such detail by the DTI. The degree of interference that the Government have drafted into the Bill suggests that the offence is not robustly drawn. I hope that the Minister can see that these proposals go beyond what is reasonable and necessary in the circumstances.