Clause 50

Regulatory Enforcement and Sanctions Bill [Lords] – in a Public Bill Committee at 9:15 am on 19 June 2008.

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Enforcement undertakings

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

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

Clause 50 takes us on to a slightly different issue from that of stop notices, which we have been discussing so far this morning. It comes at the issue of regulatory compliance from a slightly different angle. The clauses and amendments that we have discussed so far have dealt with the options available to a regulator to ensure compliance, and stop notices are part of that. Clause 50, however, offers an option to the regulated, rather than just the regulator.

The clause enables a Minister to make an order allowing a regulator to accept enforcement undertakings offered by a person or business subject to regulation. An enforcement undertaking is an undertaking or promise by a person or business to take certain actions. It is not something that can be imposed by the regulator, but an option that is available to a business that is found to be in contravention of the regulations. The clause takes forward a key recommendation of the review by Professor Richard Macrory and allows businesses to volunteer action to put right any harm that has been done.

Under subsection (1), the regulator may accept enforcement undertakings only when it has reasonable grounds for suspecting that an act or omission by a  person constitutes a relevant offence. In practice, that is likely to mean that the business is offering undertakings during an investigation for an offence. Subsection (3) outlines the type of action that an undertaking must cover, which

“must be...action to secure that the offence does not continue or recur...action to secure that the position is, so far as possible, restored to what it would have been if the offence had not been committed...action (including the payment of a sum of money) to benefit any person affected by the offence, or...action of a prescribed description.”

Photo of Mark Prisk Mark Prisk Shadow Minister (Business, Enterprise and Regulatory Reform) 9:30, 19 June 2008

Can the Minister confirm that, while the test of reasonableness is clearly set out in subsection (1), the principle of reasonableness would also be incorporated in the case of an action of securing a position that is to restore what would have been, had the offence not been committed?

Photo of Pat McFadden Pat McFadden Minister of State (Department for Business, Enterprise and Regulatory Reform) (Employment Relations and Postal Affairs), Member, Labour Party National Executive Committee

The regulator will have to judge, after an enforcement undertaking has been offered and if it has been accepted, that it has been complied with. The regulator must make a judgment. As I said, subsection (3) sets out the types of things that we are talking about. Subsection (4) provides that if an enforcement undertaking is accepted, the person may not be prosecuted for the offence, or have a fixed monetary penalty or discretionary requirement imposed on them, unless they fail or are deemed to have failed to comply with the undertakings.

We are saying that if a business, in the course of such an investigation, says, “These are the actions that we wish to take in order to put this matter right”, and it has come forward in such a way, it should benefit from doing so. There should be an incentive to do so, rather than its being placed in a situation where the option is available but if the business exercises it, it gets no benefit, because it is equally liable to all the other penalties that we have been talking about.

That is in a situation where there is compliance, but—a significant but—where a person fails to comply with their undertaking, the regulator will be able to prosecute the person for the original offence or impose a fixed monetary penalty or discretionary requirement. Subsection (5) enables the Minister to include further provision in the order, such as the procedure for entering into the enforcement undertaking, publication of the details, certification by the regulator that that has been complied with, and so on.

There is not a right of appeal against the enforcement undertaking itself, given that that is something volunteered by the person and not imposed on them by the regulator. We believe in allowing enforcement undertakings. We can envisage a reputable, well-intentioned business coming forward to exercise that option. The lack of compliance may be completely inadvertent. It may be that it did not know that it was not compliant, but it is something that it is more than happy to put right. That could be an important option available. It is something that was encouraged by Professor Macrory and is another important addition to the Bill.

Question put and agreed to.

Clause 50 ordered to stand part of the Bill.

Clause 51 ordered to stand part of the Bill.