New Clause 8 - Financial Crime Unit

Part of Financial Services (Banking Reform) Bill – in a Public Bill Committee am 2:15 pm ar 16 Ebrill 2013.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Greg Clark Greg Clark The Financial Secretary to the Treasury 2:15, 16 Ebrill 2013

It is nice to welcome the shadow Minister back to his role, although it is fair to point out that it is usually when the hon. Member for Kilmarnock and Loudoun speaks that I am able to make some progress on agreeing with the Opposition, so he may want to reflect on his attendance.

The whole Committee recognises the importance of tackling financial crime through the criminal law as well as through the regulatory sanctions we discussed previously. It is a stark fact but, following the financial crisis, there were fewer convictions for fraud and forgery in 2009  than there were in 1999. That may be for a number of reasons, but I suspect that it is not because the incidence of those crimes was lower. There is a common concern that the system needs to be more effective in pursuing those people who take advantage of others in the financial system and, indeed, of taxpayers.

New clause 8 would establish a new unit in the Serious Fraud Office, which would be concerned with financial crime. However, much of the SFO's work is on financial crime: fraud tends to be, of its essence, financial for the most part. So to create a further subdivision of a unit that is dedicated pretty much to financial crime is not the best way structurally to deal with the problem, although I accept that the new clause has given us the opportunity to debate these matters.

The other aspect of the new clause concerns the financing of the SFO. Its financing is unconstrained in that if an investigation needs to command more resources, an application can be made to the Treasury to provide for funding from the special reserve. I cannot imagine circumstances in which the determination to undertake an important fraud inquiry would not achieve a satisfactory result. There have been problems with the SFO, to which the hon. Gentleman alluded, but this is a time in its life when changes have been made and are bedding in. From last April, the SFO has had a new director and has brought in a new structure. It is fair to say that the principal problems with the SFO that led to the Home Secretary considering its future were not about resourcing, but about its operational and organisational effectiveness.

New arrangements are in place and we need to keep them under review because the SFO needs to improve. In particular, the Attorney-General will legislate to give Her Majesty’s Crown Prosecution Service inspectorate the power to inspect the SFO, so there will be an independent ability to assess its future performance. Given all that, now is not the time to tinker further with the SFO by creating a unit within it that would cover the dominant part of the function in the first place.

It is also worth recording that the new national crime agency, which is responsible for directing the national response to economic and financial crime, is due to be established under the Crime and Courts Bill, which is currently before Parliament. I think it comes back to the Commons for debate on 23 April. That would establish an economic crime command with a clear remit to reduce the threat from economic and financial crimes, and co-ordinate the work of the SFO with individual police forces and the regulators, including the FCA and the PRA.

All those bodies have been actively engaged in establishing this command during the past months. Subject to Royal Assent being granted, we expect it to be fully operational by the end of the year, and the new national crime agency will be under the supervision and control of an experienced chief constable. The hon. Gentleman spoke about the need to make sure that the measures that we have in place at the moment to deter and punish financial crime are used rigorously in future. Those arrangements are being strengthened. I therefore hope that he will withdraw his new clause.