Company Law Reform Bill [HL]

moved Amendment No. 511AA: "Page 391, line 20, leave out leave out ““(1)”” and insert ““(1)(a)””" The noble Baroness said: My Lords, in moving Amendment No. 511AA I shall also speak to the three other amendments in this group. With these amendments we return to an area we discussed in Committee, namely the exciting area of the reciprocal authorisation of auditors. I thank the Minister for his letter of 25 April following our Committee debate. The amendments address whether the Secretary of State’s powers of recognition of overseas qualifications under Clause 815—which, we understand, would in practice be exercised by the Professional Oversight Board for Accountancy—would have to be restricted either to reciprocal treatment for the professional qualification as a whole or to the ability to audit. I understand that Article 44 of the eighth directive requires the Secretary of State to have regard to reciprocity only in respect of registered foreign auditors, not foreign qualifications. Why then does Clause 815(4)(b) indicate that the Secretary of State has to be satisfied in respect of professional qualification reciprocity? Our amendments would ensure that the oversight board concerned itself with the reciprocal treatment of auditors, not the much bigger territory of professional qualifications. Behind this lies a desire by the Institute of Chartered Accountants—and, doubtless, other relevant bodies—to see more recognition of overseas qualifications, because that is the route to greater overseas recognition of UK auditors. The larger professional accountancy firms, not just the big four, send some of their partners to overseas territories and will receive overseas-trained partners into the UK. That is what global businesses do; audit firms are no exception. If we do not recognise overseas qualifications because we make the test too hard, our own auditors will be unable to practise overseas and we will have to deny practising rights to overseas auditors. Alongside that is the issue of transparency and the speed with which the approval process works. Amendment No. 511D—to which the noble Lord, Lord Sharman, will speak in the next group—could provide greater transparency through the use of the Freedom of Information Act 2000. Yet speed will remain an issue, as I am advised that in the 17 years since the 1989 legislation was introduced those reciprocal recognition powers have been used only twice. Only two overseas bodies have been approved. Will the Minister say something about the need to improve the recognition process? If Clause 815 is passed unamended, the fear is that the reciprocity formulation will delay matters even further. There is a universe of non-EU overseas auditor qualifications extending considerably beyond Canada and Australia, which have the two that have already been approved. I beg to move.