Co-operative and Community Benefit Societies and Credit Unions Bill [HL]

My Lords, the Bill began as a Private Member’s Bill in another place, piloted through there by Mr Malcolm Wicks. It passed all stages in the House of Commons, but when it reached here, it was subjected to a critical report from both the Delegated Legislation Committee, and, perhaps more significantly, the Constitution Committee. Those criticisms were, quite properly, picked up by the noble Baroness, Lady Noakes, and formed the basis of certain amendments that she tabled. It was impossible to make the necessary progress before prorogation, so, in essence, the Bill that I am introducing today has exactly the same purpose as the previous Bill, but the technical problems that were brought to our attention by the two committees and by the noble Baroness, Lady Noakes, have now, I hope, been ironed out. Certainly the Select Committees have given the Bill in its present form their blessing. I again express my gratitude to the committees and to the noble Baroness for their careful scrutiny of the Bill and for their constructive criticism, which has led to what I hope noble Lords will agree is an improved version of the Bill before the House today, and one which I hope that the House will be able to adopt in its present form. I do not propose to go over all the background to the Bill or to sing the virtues of its subjects. Suffice it to say that, as far as I am concerned, it is axiomatic that co-operatives, community benefit societies and credit unions are good things. They are good of themselves, but they have been working in a very out-of-date legislative framework. The Bill, taken together with the legislative reform order which the Treasury will be introducing, makes the legal framework fit for the 21st century. I mention the legislative reform order because the Bill arises from a wide public consultation on co-operatives, community benefit societies and credit unions. Everything that can be done by way of a legislative reform order will be introduced by the Treasury in that form, but essential parts of the outcome of the public consultation depend on primary legislation, and the Bill addresses that. As I said, the Bill forms part of a package to reform legislation affecting industrial and provident societies and credit unions. The Government will introduce their legislative reform order, but today I draw your Lordships’ attention to the framework changes set out in the Bill. Clause 1 deals with a change of name. It provides that societies wishing to register under the Industrial and Provident Societies Act 1965 shall be registered as co-operative societies or community benefit societies. Clause 2 changes the name of the Industrial and Provident Societies Act 1965, and other Industrial and Provident Societies Acts, removing a term, "industrial and provident societies", which I believe is somewhat outdated—much more a 19th and early 20th century term—from the statute book. Clause 3 applies the Company Directors Disqualification Act 1986 to officers of industrial and provident societies as it applies to officers of companies, building societies and friendly societies. The Company Directors Disqualification Act 1986 provides for the disqualification of officers of companies and various bodies when such officers have seriously mismanaged them. Disqualification means being prohibited from being involved in the management of a company or acting as an insolvency practitioner for a period of time. Under the current law, officers of industrial and provident societies who have mismanaged their societies cannot be disqualified. Clause 3 makes their disqualification possible. Clause 4 gives the Treasury power to apply to industrial and provident societies, with appropriate modifications, company law on the investigation of companies, company names and dissolution and restoration to the register. I shall give two or three examples. It gives the Treasury power to apply company law on striking off and dissolving defunct societies by the registrar of industrial and provident societies, which will become the Financial Services Authority, with appropriate modifications, which will include allowing the assets to be transferred to a society with similar objects. It also gives the Treasury power to apply company law on the investigation of companies and the requisition of documents to industrial and provident societies by giving the Financial Services Authority powers equivalent to those of the Secretary of State for Business, Enterprise and Regulatory Reform. Finally, it gives the Treasury power to apply company law provisions about company names, including general requirements on company names, indications of company type or legal form and power to direct a company to change its name if it is similar to other names, if the company provides misleading information in order to register by a particular name or if the name of a company gives a misleading indication of its activities. Clause 5 enables provisions corresponding to building society law to be made for credit unions. The power will allow any provisions of building society legislation that are deemed appropriate to be mirrored for credit unions. Building society law has been tailored to deal with this use and is specific to institutions that accept deposits. It is therefore a suitable model to allow credit union law to keep pace with credit unions’ expanding membership and operations. Clauses 6, 7 and 8 deal with technical issues, such as the making of consequential amendments and regulations under the Bill, commencement and territorial extent. I shall briefly address the major amendments to the original draft of the Bill. I again express my gratitude to all those who by their diligence in scrutiny led to the reconsideration. The Bill contains the same substantive changes to legislation that were set out in its predecessor, but the concerns that were raised about it form the basis of the amendments. The Delegated Powers Committee supports the amendments to the Bill and the Constitution Committee, in its first report for the Session 2009-10, which was published yesterday, also supported the changes. In essence, the concerns were in connection with powers granted to the Treasury to import measures from the Companies Act in relation to industrial and provident societies under Clause 4 and to apply building society law to credit unions under Clause 5. Specific concerns were expressed in respect of the powers granted to the Treasury to create criminal offences and of the fact that there was no express duty in the Bill to consult before making regulations under Clause 4. In addressing these concerns, I draw your Lordships’ attention to Clauses 4(7)b and 5(1), which ensure that the Government can create offences only in circumstances corresponding to the offence in the legislation being applied and subject to a maximum penalty no greater than is provided in the corresponding offence. Additionally, I refer your Lordships to Clause 4(8), which makes explicit the requirement to consult before assimilating company law measures into industrial and provident society legislation. Such a requirement to consult in relation to building society law and credit unions existed in the previous draft of the Bill and is contained in Clause 5(6). The co-operative sector and credit unions fully support the changes in the Bill and the legislative reform order that has been laid in another place. I hope that your Lordships will agree that the Bill provides much-needed amendment to legislation that has grown sadly out of date and that they will support its passage as quickly as possible. I am not going to repeat what I said in the previous Session about how strongly I support the co-operative sector, the community benefits sector and the role of credit unions, particularly in the present economic circumstances. That should be taken for granted. Today, I am dealing with the technical differences between this Bill and the previous Bill. I beg to move.