Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Clause 142

Banking Bill – in a Public Bill Committee at 11:15 am on 18th November 2008.

Alert me about debates like this

Disqualification of directors

Question proposed, That the clause stand part of the Bill.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

The clause refers to the Company Directors Disqualification Act 1986. Given our recent debate on clause 65 and the treatment of company directors, does the Minister anticipate that clause 65 could be used to amend that Act?

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury

The clause establishes that the provisions of the Company Directors Disqualification Act 1986 are applied to the bank administration procedure. That ensures that, where appropriate, action can be taken in the public interest against the directors of the company. As the hon. Gentleman notes, under that Act when a company goes into insolvency the office-holder—the  liquidator or the administrator—is required to consider the conduct of the directors of the failed company and report to the Secretary of State.

Action may then be taken, if it is considered to be in the public interest, to disqualify a person from acting as a company director for a specified period. The 1986 Act prescribes that a wide range of matters may be considered in determining whether a director’s conduct has been such that action should be taken to bar him or her from acting as a director for a period of between two and 15 years.

Clause 142 applies the Act with necessary modifications. These are important powers to protect the public and it is therefore appropriate to apply them to the bank administration procedure. The provisions of the Company Directors Disqualification Act are of long standing and will therefore be familiar to companies and their professional advisers. The provisions of the clause are straightforward and consistent with the Government’s overall approach that the bank administration procedure should be generally consistent with existing insolvency law and practice. That is an approach strongly supported by stakeholders.

Clause 65 could in theory amend the 1986 Act but it is not necessary in the bank administration procedure, due to the application in clause 142. The hon. Gentleman is right: we would want to look at whether the Company Directors Disqualification Act powers should be used with regard to a failing company. It would be abnormal to say that because a bank had failed we did not want to consider whether the conduct of the directors of the failed company had been appropriate. I hope that gives the hon. Gentleman the reassurances he seeks.

Question put and agreed to.

Clause142 ordered to stand part of the Bill.