Regulatory Enforcement and Sanctions Bill [HL]

My Lords, finally, I turn to Amendment No. 69. I thank the noble Lord, Lord De Mauley for tabling it and I wish to restate the Government’s case. The new sanctions are an alternative to criminal prosecution and will be imposed by a regulator only when he is satisfied beyond reasonable doubt, which is a criminal standard of proof, that a criminal offence has been committed. The regulator will have undertaken a thorough and rigorous investigation and at the end of that process will have determined that a person is liable for the offence; and that person then has a right of appeal to an independent tribunal. In such circumstances it cannot be for a person or a business to decide how it should be punished. In particular, allowing a person to choose would leave the system open to abuse. They could, for example, attempt to delay the enforcement process by opting for a criminal prosecution and requiring the regulator to undergo another process of setting out its case and presenting all its evidence before a court. Allowing a person to choose to go down the route of criminal prosecution would also go against another of the fundamental tenets of what we are attempting to achieve, which is a proportionate sanctioning regime, whereby criminal prosecution should be reserved for the most serious cases. Indeed, that has to be decided by the regulator, in view of all the cases before it. The choice between civil and criminal sanctions must remain at the discretion of the regulator and not the offender. On the first day of Report, the noble and learned Lord, Lord Lyell, asked what principles would determine whether a civil or criminal sanction was pursued by the regulator. It may be helpful if I give some examples. They include the seriousness of the conduct and whether malicious intent or gross negligence is involved. The regulator may also take account of the extent of harm that the conduct has caused—for example, whether there have been a large number of victims of the regulatory non-compliance. The regulator is required by Clause 63 to give public guidance in its enforcement policy as to the circumstances in which it is likely to pursue a criminal or civil sanction. The regulated community will be well aware of the kind of factors that will be taken into account. As we said in Committee, we understand the concerns that noble Lords have had about the new sanctioning powers being misused and the need to provide adequate protections for persons subject to these sanctions. There are already powerful safeguards in the Bill, including the criminal standard of proof, which is different from the reference by the noble Lord, Lord De Mauley, to the regulator being the judge, jury and sanctioner. Most importantly, the imposition of these sanctions will be the subject of scrutiny by an impartial and independent tribunal, as we have discussed at length this evening, and that will offer an opportunity further to challenge the evidence collected by the regulator. Therefore, there will no question of the regulator acting as prosecutor, judge and jury. The tribunal will also have the power to overturn or reduce the level of the penalty imposed by the regulator or to take any other steps that the regulator could have taken in relation to the incidence of regulatory non-compliance. Therefore, it is not correct to say that the regulator will have absolute powers and that therefore business should be allowed an alternative route.