It is a privilege to have secured this Adjournment debate under your watchful eye, Mr. O’Hara. My first involvement with accommodation addresses and mail forwarding agencies arose from my close and long-standing working relationship with local and national trading standards officers. [Interruption.]

Order. Will hon. Members exit expeditiously and quietly, please?

Thank you, Mr. O’Hara.

I declare an interest, because the relationship led to my being afforded the privilege of nomination to the position of vice-president of the Trading Standards Institute, which is entirely honorary and unpaid but one that I cherish. I should like to put on record my thanks in particular to Sue Seddon and Stuart Pudney of the TSI, who showed skill and determination in uncovering the extent to which accommodation addresses and mail forwarding agencies are abused and my thanks for the constant support of Ron Gainsford, the chief executive of the TSI.

The case that I want to make is simple to summarise. Indeed, I have already done so in early-day motion 37. I have also met the Minister responsible and his predecessor to discuss the issues and have left him with a considerable and detailed dossier.

Our research has demonstrated that accommodation addresses and mail forwarding agencies are exploited by individuals and organisations connected with a wide range of criminal activities, such as terrorism, serious organised crime, identity theft, mail scams, tax evasion, financial swindles and benefit fraud. As a result of that clearly recognised abuse, a range of major crime fighting organisations, including the Metropolitan police, the Serious Organised Crime Agency, the Trading Standards Institute, the Office of Fair Trading and various Departments and agencies, are calling for accommodation addresses and mail forwarding services to be regulated across the United Kingdom.

The Under-Secretary of State for Business, Enterprise and Regulatory Reform will be aware that until 2000 there was some limited regulation, albeit rarely used, under the Official Secrets Act 1920. That control was removed by the Postal Services Act 2000. However, and this is the real crux of my argument, regulation of accommodation addresses and mail forwarding agencies has now been restored in London as a result of the London Local Authorities Act 2007. Given the proven criminal abuse of accommodation addresses and mail forwarding services, the range of major crime fighting organisations calling for regulation to be extended across the country and the fact that such regulation already exists in some form in London, why should that provision not be extended in the way that we are calling for? It seems superfluous for me to point out that the criminal fraternity are unlikely to restrict their activities to the boundaries of Greater London.

Accommodation addresses and mail forwarding businesses often operate on a “no questions asked” basis and keep insufficient records or no records at all of those using their services; thus the person or organisation becomes virtually untraceable. Criminals rent those addresses, then have the mail redirected to them or collect it personally. Very often, the desirability of the address suits the scam concerned: an obvious example is using Harley street for medical products. Crucially, consumers or organisations who send money or, often, vital documentation to such addresses do not realise that the addresses are merely fronts and may in fact consist of a small shoe-box sized locker or a pigeon hole in a small office.

The use of such addresses is extremely widespread among both honest traders and criminals. Although most providers of such services act perfectly honestly and legitimately—I stress that—and ask their customers for identification, many do not. Many large national providers, as well as small operators such as newsagents and even cafés, provide accommodation addresses. Royal Mail, for example, offers PO box addresses throughout the country to customers wanting

“a snappy, discreet new address”,

to quote the Royal Mail website.

Officers investigating possible offences relating to accommodation addresses can request information, but I understand that under the Enterprise Act 2002, any information so obtained cannot be passed on to consumers who may want to pursue a claim against a fraudulent business. As there is no requirement to keep records, they are insufficient or non-existent in some cases, and as there is no requirement to carry out checks, any information recorded is likely to be inaccurate, especially in cases of fraud or other uses of such addresses for criminal purposes.

In the absence of a registration scheme, tracing the owner of an accommodation address may be difficult for authorities and practically impossible for consumers. The legislation that we seek, like the London Local Authorities Act, would merely deal with those who make no effort to obtain suitable identification, keep records and co-operate with enforcement authorities. It does not pretend to stop criminals, merely to close a wide-open door that they are currently only too happy to exploit.

During our meeting with my hon. Friend the Minister and his predecessor, my right hon. Friend the Member for Makerfield (Mr. McCartney), the TSI and I provided numerous wide-ranging examples of the type of criminal activity for which accommodation addresses are used. It is not my intention to go through all of them today, but I shall give some pertinent examples. Initially, our examination of the abuse of accommodation addresses and mail forwarding businesses was prompted by their abuse by the perpetrators of various mailshot scams of a type that we are all more than aware of—bogus lottery wins, bogus prize draws and so on. One elderly resident in my constituency was defrauded of more than £20,000 by a range of scams, and another parted with more than £2,000. They are certainly not unusual examples. Similar scams and bogus traders and services are legion, and I need not elucidate.

The more we looked into the abuse of accommodation address agencies, the more we realised that their exploitation by people such as the perpetrators of mail scams and rogue traders was only the tip of what turned out to be a more extensive and much more frightening iceberg of crime. From the agencies with which we have spoken, it is clear that both within the UK and abroad, organised crime groups are using accommodation addresses to deceive members of the public and major organisations, particularly in the public sector, as well as to conceal themselves and their criminal activities.

For example, in 2003, an organised crime gang plundered £12 million from high street banks in a prolific multiple-application fraud by stealing the identities of dead people and setting up Royal Mail redirections on their addresses to redirect the mail to accommodation addresses under the criminal organisation’s control. Once the false identities were fully established, the criminals opened multiple bank accounts and applied for loans. In addition, accommodation addresses were used to protect the fraudsters’ real identities. Cars were registered to the mailbox, and the fraudsters quoted the accommodation address when hiring out office space to further the criminal enterprise.

In another case, a pair of phishers—phishing is an internet-based crime whereby criminals obtain personal bank details by sending bogus e-mails purporting to be from the victim’s bank—stole £6.5 million. Their use of accommodation address services gave them a physical street address, which they used as part of their tradecraft to receive documents and equipment to assist them in creating multiple identities. As a further extension of the abuse, they also used the accommodation addresses to register their vehicles, thereby implementing an early warning security system for possible traffic violations that might render them open to attention from law enforcement agencies.

In a third case, an individual linked to organised international crime, murder and the use of multiple bank accounts in fraud was discovered through his use of an accommodation address that revealed multiple identities, all of them stolen. He had used Royal Mail diverts and mailboxes to establish multiple identities in order to undertake a number of criminal activities, all of which resulted in the loss of considerable revenue to the UK.

Her Majesty’s Revenue and Customs has provided us with many examples. I quote them not just because of the crimes involved, but because they demonstrate the sort of obstacles confronting officers of various enforcement agencies pursuing potential criminals through accommodation addresses. Traders such as those involved in duty-paid alcohol frauds, for example, frequently use accommodation addresses to avoid paying VAT.

A typical example of HMRC’s experience occurred when HMRC officials followed up a trader’s given address to find that the principal place of business was a letterbox on a fence down a secluded lane, owned by a man who lived around the corner—you could not make it up. The man said that he knew nothing about the trader and stated that the box was there for a number of companies and individuals wanting an address in the UK. He told them that he processed the mail and then forwarded it. Inquiries showed that eight VAT-registered traders used the address, and that the directors of some of the companies were the directors of hundreds of other companies.

An investigation into self-assessment fraud identified the principal criminals as living in another EU country. They had concealed their whereabouts by forwarding self-assessment returns to HMRC via virtual offices located throughout the UK. Clearly, such malpractices are not centred solely in London. An accommodation address was also used to forward 21 false construction industry scheme applications to HMRC. The examples go on and on.

Investigation into a further fraud involving a self-assessment record duplicated for the purpose of generating fraudulent repayment showed an agent acting on behalf of the taxpayer from a recorded address in Middlesex. Again, inquiries made at the address established that it was an accommodation address providing a mail forwarding service on the agent’s behalf. That business had no record of the person purporting to be the agent, but records showed that the mail was being forwarded to another accommodation address in Manchester. Inquiries made at the Manchester address established that it in turn operated as an accommodation address. Fortunately, that provider kept records enabling officers to identify the person abusing the service. That is one of the reasons why I mention HMRC examples—they show that legitimate organisations that keep good records can easily assist officers from enforcement agencies, and that we would place no great extra burden on such organisations.

There are also examples of accommodation addresses being used by cigarette smugglers. One provider is a parent company that runs a number of franchised shops. Local HMRC officers have an excellent relationship with the parent company and its chief executive, who has written to franchisees to tell them to co-operate fully with HMRC. However, one refuses to do so, which demonstrates again why we need the sort of regulation available in London.

We have tried voluntary regulation, but it has clear limitations. Although it has been suggested that unfair commercial practices and money laundering directives might have some impact on the abuse of accommodation addresses, closer scrutiny indicates that they will have very little. Some trading standards services promoted the mail, accommodation, internet and locations fair trade scheme—MAIL—which is free of charge for traders to join and was designed to generate co-operation between trading standards departments and its members. Members are required to keep accurate records of their clients and assist trading standards departments in following up complaints.

The scheme, voluntary as it is, has been extremely limited in its impact. In Westminster, only 30 accommodation address providers of the 200 in the borough engaged with it—mainly those who were already operating their businesses to quite a high standard—and in my area, the West Yorkshire trading standards service has been able to persuade only two operators to register with the voluntary scheme.

My hon. Friend the Minister will be aware that the regulation of mail forwarding businesses is not unique. Stringent controls have been introduced in the USA over the past few years, and, as I said, the London Local Authorities Act now gives boroughs the power to introduce such regulations. The London regulations encompass all that we want to see.

It is not rocket science, and it is not a major burden: we seek the registration of mail forwarding businesses and the addresses used to receive mail. We want to see the maintenance of records, with inspection powers for enforcement officers and the police. We want there to be a requirement to carry out reasonable steps to verify information and identities, a requirement for businesses to report suspicious activities and a statutory code of practice to give guidance on how agencies should operate and on what steps would be considered reasonable to verify information and identity. We also want a requirement to keep records for at least five years.

I accept that I am calling for more regulation—or at least its extension. I fear that over the years regulation has become an illogical phobia in some Government quarters, and that deregulation is sometimes a mindless mantra. However, although we should avoid over-zealous and disproportionate regulation, we should not use such a laudable objective for the bathwater in which we throw out the baby. Some regulation will always be necessary; based on the evidence that I have given to my hon. Friend previously, I would say that this is one case that calls out for the extension of regulation beyond the boundaries of London.

Today’s debate is a follow-up to an Adjournment debate that I secured in April 2006, and to subsequent meetings with my hon. Friend and his predecessor, my right hon. Friend the Member for Makerfield. Following a meeting in October 2006, we were told that departmental officials and the Better Regulation Commission were drawing up terms of reference for a cross-Government group to discuss the issue, but I have not heard a great deal since. I hope that my hon. Friend will be able to confirm that some progress has been made, and that the commission is not acting as a funeral director for such regulations.

There we have it—a clear picture of how a range of criminal enterprises, from the highest level to the lowest, have abused accommodation and mail forwarding services. A range of major crime fighting organisations have identified such abuse in their day-by-day battle with criminals, and a range of organisations have subsequently called for the regulation of businesses to be extended throughout the country. The fact that regulations are being introduced in London shows an acceptance of their desirability. The logic of extending them to the rest of the country should be obvious, so I hope that I am pushing at an open door.

I begin in the traditional fashion by congratulating my hon. Friend the Member for Pudsey (Mr. Truswell) on securing this debate and on raising the extremely important subject of accommodation addresses and mail-forwarding services.

I know that my hon. Friend is passionate about the subject; indeed, he has been assiduous in using all the parliamentary tools at his disposal to ensure that my predecessors and I did not allow the issue to fall off the agenda. His interest was sparked by a number of horror stories in his constituency, which he described today. I say at the outset that I am sympathetic to the concerns that he has raised not only in this debate but in our meetings just before Christmas, to which he referred. I recognise also that his concerns are shared by the wider trading standards and enforcement community. The matter is serious and distressing for the victims; and the addresses have—in some cases inadvertently—helped the abuse to be perpetuated. I echo his view that we must not allow criminals engaged in scams and other fraudulent activity to continue to do so undetected. They must not be allowed to hide and to profit from their dishonesty, of which my hon. Friend gave examples.

I am sympathetic to the concerns of enforcers, who may be frustrated in their wish to carry out their duty to target those who perpetuate scams. As Minister with responsibility for consumers affairs, I have seen at first hand trading standards officers tackling people who deliberately set out to defraud consumers. I therefore know the difficulties that those officers often face in carrying out their enforcement activities.

I hope the House will indulge me, and allow me to record my appreciation of the work of Ron Gainsford and his staff at the Trading Standards Institute. Trading standards staff generally do not receive the recognition that they deserve for their work, upon which we all, as consumers, depend. They do their job with great rigour, skill and professionalism, and I believe that that is not sufficiently recognised. We have an opportunity to record our collective appreciation for their work, and I hope the House will endorse that. I am therefore supportive of the principles behind my hon. Friend’s proposal.

My hon. Friend raised a series of issues, and possible routes to deal with the problem. He mentioned the Enterprise Act 2002 and the London Local Authorities Act 2000, and I shall return to the points that he made. It would be wrong of me not to stress that the majority of those using the services that we are considering today are responsible and honest businesses, many of them small and medium-sized enterprises, and I know that my hon. Friend would not want us to handle the issue with an iron fist or a heavy hand. As I said earlier, I had an opportunity to meet my hon. Friend just before the Christmas recess to discuss the problem. I promised to give careful consideration to the issues that he raised, as it was clear that further work was needed. However, I hope that he will understand that I have to consider all options before encouraging the Government to embark on a particular legislative route.

I welcome the fact that, since 15 December, some business accommodation address providers have been covered by the Money Laundering Regulations 2007. Those regulations are designed to ensure that the United Kingdom’s regime against money laundering is effective and proportionate, and that it consolidates best practice. The regulations strengthen the supervision of business services at registered, business, correspondence or administration addresses. For example, such businesses now have to know their customers and have procedures in place, using appropriate checks and keeping records to help us tackle money laundering and terrorist financing. They are also required to register with Her Majesty’s Revenue and Customs. Regulations will therefore have an impact on criminals who use this sector.

I realise that those provisions do not go far enough for my hon. Friend, because they do not apply to individuals who use such services. However, I hope that he and other hon. Members acknowledge that they go some way towards addressing the issue. In so doing, they send a clear message to the criminals that there is nowhere to hide if they get involved in money-laundering scams. I noted with interest my hon. Friend’s point that the regulations may assist in the gathering of information without imposing further burdens on business. We would be interested in exploring that further and will consider it as part of my Department’s work in assessing the appropriate tools to tackle the problem that he outlined.

My hon. Friend mentioned the unwitting part that business accommodation addresses can play in scams. The Government are committed to improving Britain’s consumer regime further—we want to protect and empower consumers as well as being fair to business. He will recognise that a delicate balance needs to be struck. We recognise that our consumer regime needs to be more effective in stopping the rogues. Those who set out to deliberately defraud consumers and, in so doing, target the most vulnerable in society must be tackled. We must keep under continuous review the tools at our disposal to do so.

That is one reason why the Government have committed £1.8 million over the past two years to pilots on a new regional approach to deal with dishonest and rogue trading practices. As a result, three specialist trading standards teams have been set up that can work across local authority boundaries, and they have begun to deliver benefits to consumers affected by scams in the pilot areas. We will continue to support the three Scambuster pilot projects to target conmen preying on the most vulnerable members of our society. We seek to extend the initiative to other parts of the country. Furthermore, we are funding a national network of analysts, led by the Office of Fair Trading, to ensure smarter and quicker identification of problems affecting consumers through the gathering of stronger intelligence.

My hon. Friend mentioned unfair commercial practices. To help strengthen our consumer regime, in April, we will implement the unfair commercial practices directive, which will help to simplify complicated UK law and hopefully make it easier for consumers and businesses to understand their rights and obligations. That will make it easier to tackle rogue practices and unscrupulous traders, some of whom have become adept at exploiting loopholes in the legislative framework. My hon. Friend made it clear that the use of accommodation addresses goes far beyond the scams tackled by Trading Standards. A number of other agencies and Departments across Government are responsible for investigating a far wider range of crime than that which affects consumers. He highlighted the possibility that accommodation addresses could be used by people who wish to conceal their identity or are involved in activities such identity theft, by organised criminal gangs, and by those who wish to evade paying taxes, to conceal benefit fraud, and to camouflage financial swindles and other activities.

Given the range of potential criminal activity that accommodation addresses can help to facilitate, other Departments and agencies have an interest in this issue and have a perspective on the available solutions. I have therefore asked officials from the Better Regulation Executive to facilitate a series of cross-Government meetings to improve our understanding of the extent of the problem and of the need for Government intervention; to identify the regulatory tools available and alternatives, if any, to regulation; and to begin to assess the costs and benefits of regulatory options, including statutory registration requirements. The first meeting will take place shortly, and I shall continue to track the progress of those discussions.