That the Grand Committee do report to the House that is has considered the Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2009.

Relevant Document: 22nd Report from the Joint Committee on Statutory Instruments.

My Lords, in moving this Motion, I intend to deal also with the Company, Limited Liability Partnership and Business Names (Public Authorities) Regulations 2009.

I should perhaps first explain that both sets of regulations relate to both business names and registered names. By business names, I mean the name under which any person, whether or not incorporated, carries on business in the UK. By registered names, I mean the name under which a company or limited liability partnership is registered at Companies House. This may or may not be the same as its business name or, indeed, its business names.

The UK has few restrictions on business names. There are restrictions over the use of certain words under, for example, the Medicines Act 1968 and the Architects Act 1997. Since the abolition of the business names register in 1981, the Secretary of State’s prior approval has been required for certain business names. This requirement does not apply if the business name is simply the trader’s surname or partners’ surnames with or without forename and/or initials or, if the trader is incorporated, if the name is not its registered name.

Under the Companies Act 2006, the Secretary of State’s prior approval is needed for either a business name or a registered name that suggests a connection to Her Majesty’s Government, a devolved Administration, a local authority or any public authority specified in regulations. The draft Company, Limited Liability Partnership and Business Names (Public Authorities) Regulations, which we are considering today, specify 26 public authorities where prior approval is required for business names that suggest a connection to them.

Both Houses of Parliament are specified in the regulations, as are the devolved legislatures, government auditors and financial regulators. The other six specified public authorities are ones where the relevant government department has advised that there is a risk of harm to the public from persons purporting to be connected with them. Non-departmental public bodies are not listed unless they have functions under the Crown.

The reason for specifying a public authority is to prevent the unscrupulous from adopting names that suggest a connection to it in order to trick the public into revealing sensitive information. The 26 listed public authorities are only those where there is seen to be a real risk of a scam—attempts to defraud and so on.

Someone wishing to use a name that suggests a connection to one of the specified bodies must ask it to indicate whether and, if so, why it has any objections to the proposed name, although, as is made clear in the regulations, in the case of seven bodies, the applicant must seek the views of another body. The applicant must enclose a copy of any response with the request for prior approval for the name. This ensures that the decision whether to approve the name is well informed.

The Secretary of State’s prior approval is also required if a business or registered name includes certain words or expressions. The Committee will be pleased to know that the Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2009 has a list of those words and expressions. There are also six words for which prior approval is required for their inclusion in a registered name but not for inclusion in a business name. I will come back to this later.

These regulations, which replaced the Company and Business Names Regulations 1981, were made on 25 September and came into force on 1 October. We are considering them today as they will fall unless approved by Parliament.

It has been suggested that a list of words requiring prior approval is no longer necessary and that trade mark law and the law on passing off might somehow be sufficient. However, this civil law protects only the private rights of the person who alleges that their name is being impersonated; trade mark law and the law on passing off do not and cannot protect the public directly. That is the purpose of these regulations.

About half the sensitive words and expressions in these regulations were prescribed previously. The newly prescribed words and expressions are primarily those that convey authority or status. The purpose is not to protect a sector, body or person; the purpose is to protect the public. This is because names that include these words might be used to induce members of the public to pass money or personal information. We also prescribe the Welsh and Scots Gaelic versions of words where these are considered to create a similar risk to the public as the word does in the English.

The six words prescribed only in relation to registered names are “Cymru”, “Alba” and the related adjectives. Both these words are in widespread use in business names, without any evidence of harm to the public. However, we consider that, in future, they should be permitted only in registered names to companies and LLPs that satisfy both a pre-eminence criterion and one based on the location of the registered office.

The list does not include words associated with particular commercial activities. For example, it does not include “college”. This is because, since 1 October, it has been an offence to carry on business under a name that gives so misleading an indication of the nature of the activities of the businesses as to be likely to cause harm to the public. The words and expressions specified in these regulations are words and expressions that might be used to mislead as to the authority, status or pre-eminence of the business.

To conclude, I emphasise that the purpose of both these sets of regulations is to protect the public from harm as a result of being misled as to the authority, status or pre-eminence of a company, LLP or unincorporated business. They do not prohibit any names; rather, they make the prior approval of the Secretary of State a prerequisite. I commend the instruments to the Committee. I beg to move.

My Lords, I thank the Minister for introducing these two sets of regulations, which are to do with names that companies and limited liability partnerships are prohibited from using because, as he said, to do so could mislead the public. In that respect, of course we accept the regulations and welcome the intent to protect the public from harm.

I hope that the Minister will forgive me for slightly pulling his leg but, in the context of numerous pieces of legislation that we have debated in your Lordships’ House in recent years, I can recall frequently hearing Ministers dismissing amendments on the ground that they proposed lists, arguing instead for a comprehensive but simple set of principles against which something—in this case, a proposed name—should be assessed. Perhaps the Minister could comment on that and explain the process by which in this case two lists were arrived at, despite the Government’s distaste for such things.

One of the problems with lists is that you can find that you have forgotten to include something that you ought to have included. For example, the Association of Colleges has drawn the attention of some noble Lords to a problem that could, in its view, have been resolved by adding the word “college” to the list of prohibited names—the Minister has, of course, just referred to that. The association says that it is difficult to overestimate the damage that bogus colleges are doing to the good name of British education. It also points out that there is widespread concern that bogus colleges are set up with the express purpose of enabling prospective immigrants to bypass UK immigration controls and not to provide education and training. Will the Minister expand on the Government’s dismissal of adding that word to the list, given that words such as “polytechnic” and “university” are already protected?

It is interesting to observe that, over time, the process of checking the availability of names, when one is setting up a new business, has changed. Until about 30 years ago, one started with the register of business names. That was abolished in the late 1970s; thereafter, the place to start was Companies House. I have been recently involved in setting up a new business in precisely this situation and one is still advised that, even if setting up an unincorporated business, one should check the availability of the business’s name at Companies House. Ideally, one might then register a company with the same name as the business at Companies House in order to deter others from using it.

I hate to say this to the Government, because it might imply that what we are debating today has been overtaken by events, but the single most important place to reserve your name now is not Companies House but Nominet. Also, the single most important question in selecting a name for a new business is: is an appropriate domain name available as a web address on the internet? What control do the Government have, if any, over the unauthorised use of the prohibited names listed in these two sets of regulations in domain names, which, after all, can often be bought for a few pounds? It will be on the internet that the majority of fraudulent activity will take place in the future.

My Lords, I, too, thank the Minister for introducing these measures. As my colleague has said, there are still concerns. This seems to be a rather arbitrary list at times, particularly in relation to districts. The Minister referred to this in his introduction and perhaps he can explain it.

The Minister has already referred to the concern about colleges, which is fair enough, but an enormous number of bogus colleges still exist in this country. Indeed, in east London, for example, some of them are simply and solely shops with “College” tacked on to the front. People are induced to come to this country to study at colleges that are not colleges at all, which is bad for the reputation of the educational standards of our country. It is a desperate situation where students from overseas and from within this country come to colleges, supposedly to get a reasonable education or training, and find that what they are presented with is less than adequate. While the Minister has said that the Government are aware of this, I still do not see why there should not be a multifaceted approach of including named colleges in the list. I look forward to the Minister’s response.

The noble Lord, Lord De Mauley, quite rightly asked why, given our normal aversion to lists—I cannot think where he got that idea from, unless it was the subject of our recent debates together—we have this list. It is because we believe that it is clearer to those who wish to adopt a name. This approach is set out in the Companies Act 2006, as approved by Parliament. It is an extension of that approach and we believe that it is right in today’s circumstances. It may not be ideal but we believe, on a balance of what is best to protect the public, that there is value in the list.

Both the noble Lord, Lord De Mauley, and the noble Lord, Lord Cotter, asked about colleges and I shall give a more extensive answer on that issue. From 1 October 2009, it has been an offence under the Companies Act 2006 to carry on business in the UK under a name that gives so misleading an indication of the nature of the activities of the businesses as to be likely to cause harm to the public. The new offence addresses the issue of bogus colleges in a more inclusive and immediate way. We therefore decided against adding “college” to the list of words for which the Secretary of State’s prior approval is required for inclusion in either a company’s registered name or any person’s business name.

The issue of bogus colleges being used in visa scams and various other fraudulent activities has been addressed by the creation of the new UK Border Agency register of sponsors, which lists all organisations that the UK Border Agency has approved to employ migrants or sponsor migrant students. We have focused on that area specifically because it is where the major problem occurred. There are hundreds, possibly thousands, of businesses currently trading under names that include the word “college”. “College” is used not only by education providers but by many professional bodies—for example, the Royal College of Physicians—as well as by other businesses such as educational suppliers and, believe it or not, pubs. The vast majority do so without any suggestion of harm to the public. If “college” were prescribed, because of the savings provisions in the Companies Act 2006 all businesses that were lawfully using the word in their name on 30 September 2009 would be exempt from the requirement for prior approval. The exemption would also protect any bogus colleges already in existence. However, the new offence will catch all bogus colleges and so offers greater protection.

The noble Lord, Lord De Mauley, rightly drew domain names to our attention—in the 21st century, these are as key an asset to a business as the business name. A requirement for prior approval applies to the name used by any person to carry on business in the UK, including domain names. The noble Lord pointed out that for an unincorporated company there was a value in registering it, but I think that that was more by way of comment.

I hope that I have addressed all noble Lords’ concerns. I am grateful for their contribution to the debate. We are, I believe, all agreed that the rules for company and business names should be kept to a minimum. The purpose of the regulations is to protect the public from financial or other harm resulting from their being misled by a company or business name. The sensitive words regulations list words and expressions that might be used in names to convey authority, status or pre-eminence. The public authorities regulations list only those where an implied connection might be used to induce vulnerable persons to reveal private information or to make payments.

Motion agreed.