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Proceeds of Crime Act 2002 (References to Financial Investigators) (Amendment) Order 2009

Volume 715: debated on Monday 14 December 2009


On Monday 7 December, the Earl of Onslow moved a Motion,

“That this House notes with concern criticisms by the Chairman of the Police Federation of the powers contained in the Proceeds of Crime Act 2002 (References to Financial Investigators) (Amendment) Order 2009 (SI 2009/2707) laid before the House on 8 October and calls upon Her Majesty’s Government to revoke the order”.

The Motion was carried by 182 votes to 118.

The Government take seriously the concerns of the House and have considered the next steps for the statutory instrument. The Home Office Minister, Lord West of Spithead, and I will be having further discussions with the Earl of Onslow on the concerns that he expressed in the House.

As an immediate step, the Government will be drafting a circular to be issued to all accredited financial investigators to clarify the purpose and extent of the powers under the Proceeds of Crime Act so as to allay the House’s concerns about the potential for misuse of the powers. A draft will be cleared with the House’s Merits Committee before it is issued.

Concerns were raised during the debate over the lack of consultation on the order. In response to Lord Rooker’s point that there was an obligation to consult on the terms of the order, I said that the Cabinet Office rules in respect of consultation do not apply to negative SIs as such. Inadvertently, my response on this point was misleading, by implying that negative instruments may constitute a special category. The position is that the latest code of practice on consultation ( published by the Better Regulation Executive in July 2008,

“is not intended to create a commitment to consult on anything, to give rise to a duty to consult or to be relied on as creating expectations that the Government will consult in any particular case. The issues on which the Government decides to consult depend on the circumstances in each case”.

This applies across the board, including in the case of negative instruments. While consultation is an important part of policy development, there is therefore no general statutory duty on the Government to formally consult on statutory instruments. It is a matter of judgment for the Government as to when and how to engage stakeholders. I set out in the debate the consultation that was carried out on this order and the reasons for it. The concerns that were raised during the debate focused on the adequacy of that consultation and I undertook in the debate that the Government would take on board those concerns for the future.

Lord Thomas of Gresford and Baroness Buscombe queried where the burden of proof lies under the Proceeds of Crime Act. My answer on this point was challenged by the noble Lord and the noble Baroness and I undertook to seek further advice on the matter.

The answer that I gave referred to the powers in respect of the recovery of cash by, for example, an accredited financial investigator in Chapter 3 of Part 5 of the Act, where there is no transfer of the burden of proof. However, the query was in fact in relation to the “criminal lifestyle”/“general criminal conduct” confiscation regime in Part 2, which may have a transfer of the burden of proof. The relevant provision is Section 10 of the 2002 Act. The Explanatory Notes to the Act read:

“Section 10 applies where the court has decided that the defendant has a criminal lifestyle and it is, accordingly, considering the defendant’s benefit from general criminal conduct. The section requires the court to make certain specified assumptions to establish whether the defendant has benefited from general criminal conduct, and, if so, by how much. The court is not, however, permitted to make an assumption in relation to particular property or expenditure if it is shown to be incorrect or there would be a serious risk of injustice if it were made. Where for any reason the court does not make any of the assumptions specified in the legislation, it must nevertheless continue to decide whether the defendant has benefited from general criminal conduct and decide the recoverable amount, albeit without the assistance of the assumptions”.

The burden of proof in this kind of confiscation case does transfer to the defendant, but only in cases where the defendant has been convicted of a listed serious offence or has a pattern of convictions that is indicative of them being a career criminal. In such circumstances, it is reasonable to assume that everything that the defendant has and has had in the previous six years is the proceeds of crime.

In other confiscation cases for lesser offences that do not indicate career criminality, the “particular criminal conduct” regime applies. The confiscation order in these cases is set only to the value of the benefit from the instant offence of which the defendant has been convicted.

The noble Lord, Lord Thomas of Gresford, and the noble Baroness, Lady Buscombe, were therefore correct in challenging my original answer, and I apologise for having inadvertently misled the House on this point.

The Countess of Mar asked which organisations, other than the police and HM Revenue and Customs, had recovered assets. Trading standards officers have made the greatest contribution, but others have also contributed. These include the Department for Environment, Food and Rural Affairs, the Department for Work and Pensions, the Environment Agency, the Office of Fair Trading, the Serious Fraud Office, the Royal Mail, the Pensions Regulator, the Medicines and Healthcare Products Regulatory Agency and the UK Border Agency. The value of the assets that these bodies recovered were:







In due course I will make a further Written Statement to the House to report on the outcome of the steps that we have taken to respond to the House’s concerns on this order.