Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)

I beg to move amendment No. 212, in schedule 13, page 197, line 11, at end insert

‘Licensing rules must provide that, in determining whether the requirements of sub-paragraph 1 are met, the burden of proof rests on the person who wishes to hold the restricted interest.’.

The amendment is designed to make it clear that the onus of demonstrating fitness to own rests on the applicant, rather than it being for the licensing authority to demonstrate that a person was not fit and proper before it could withhold approval. The effectiveness of fitness-to-own provisions is a crucial element of the public protections that need to be in place before external ownership of ABS firms can safely be permitted. It is essential to avoid the spectre of law firms being owned by criminal elements.

The Bill already allows licensing authorities specifically to consider whether or not those who hold more than a small interest in a prospective ABS firm are fit and proper persons. The intention appears to be that it should be for the applicant to demonstrate fitness to own, rather than the applicant being entitled to be approved unless the licensing authority can demonstrate that they are not fit to own. The intention of the provision in paragraph 14 under which licensing authorities may require non-authorised persons to provide it with such documents and information as it may require appears to be designed to achieve that.

However, it is important that there should be no doubt about the matter. Merely demonstrating an absence of criminal convictions might not be sufficient to entitle an applicant to become an approved person. For example, the possession of unexplained wealth could give rise to reasonable suspicions about the integrity of an applicant. It is important that the licensing authority should be able to refuse approval in those circumstances unless it received a convincing explanation of the source of the wealth. The onus should not be on the licensing authority to prove that the unexplained wealth was ill-gotten before it could refuse to approve the applicant. The amendment is intended to put beyond doubt the fact that the onus of proof should rest with the applicant.

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