Considered in Grand Committee
My Lords, the Tribunals, Courts and Enforcement Act 2007 (Consequential Amendments) Order 2012 unsurprisingly makes consequential amendments to various pieces of primary and secondary legislation, which already disqualify a person from holding certain positions in the event of their bankruptcy. This order extends those disqualifications to persons subject to debt relief orders and to debt relief restrictions orders or undertakings.
It has long been held that going bankrupt should disqualify a person from holding certain offices and positions, and legislation is in place to provide for this. Debt relief orders were introduced in 2009 and in many ways have a similar impact to bankruptcy. Both provide individuals with debt relief and subject them to certain automatic restrictions. It makes sense to introduce consistency between the further restrictions that apply to bankrupt individuals and those that apply to people subject to a debt relief order. That is what the order seeks to achieve. It will prevent individuals subject to a debt relief order holding certain positions, for example that of pensions trustee. It also prevents their holding some board memberships—for example, acting as a school governor or member of a local authority. The order will add a debt relief order to the existing list of formal insolvency procedures, primarily bankruptcy, in around 120 separate pieces of legislation.
These disqualifications are necessary as bankruptcy will often have been caused by some form of financial mismanagement. It is therefore considered prudent that individuals subject to bankruptcy should not hold specific high-profile positions of trust in which financial judgment may be required. This measure will also result in better governance of the bodies in question as it will reduce the risk of someone who has become insolvent being appointed to one of the specified positions.
The list of disqualifications to which a bankrupt is subject was reviewed in 2006 as part of provisions introduced following the Enterprise Act 2002. Any disqualifications thought unnecessary were removed at that time. Those that remain are still felt to be relevant and necessary. I commend the order to the Committee.
My Lords, I thank the Minister for his concise but comprehensive explanation. I must admit that, again, I have learnt something. I was a school governor and we asked the governors to declare their interests. Most are CRB checked but we never thought to ask them about this area—it may be that we should have done so.
I do not have any arguments against what seem to be sensible changes but I draw something to the Committee’s attention. I went through the impact assessment, the end of which says:
“I have read the Impact Assessment and I am satisfied that … it represents a fair and reasonable view”.
I cannot read the signature of the Minister but it does not look like the noble Lord’s. However, the front page includes two typographical errors that mean it does not make sense. It states:
“This statutory instrument will make such necessary changes and ensure that where it is appropriate for particular public posts”—
I think it means “post-holders”—
“to have been personally insolvent”.
It does not make sense. I think there is also a typographical error in the last sentence of the next paragraph. It is somebody’s responsibility to check them; I just draw them to the Minister’s attention. Other than that, I am happy to agree to these changes.
Committee adjourned at 6.10 pm.