§ Mr. Moate
I beg to move Amendment No. 13, in page 3, line 30, at end insert:'or(d) that so much of its business as consists of insurance broking is carried on under the management of a registered insurance broker'.The background to the amendment is a fairly extensive one. The clause was referred to in the Second Reading debate and a substantial amendment was introduced in Committee. It was not discussed, but was accepted. My hon. Friend the Member for Harrow, West (Mr. Page) was as persuasive as ever and the amendment was not dealt with at any length.
In my view, the Bill has still got it wrong. I hope that my hon. Friend, and the Minister, will make yet another effort to get it right. I hope that it will not be necessary to press this amendment to a Division, but I feel strongly that the Bill is wrong and that it needs amendment. If it is not amended, there will be quite unnecessary disruptions to businesses that are at present trading in a perfectly proper manner. That disruption would be of no possible benefit to the public and in that sense the Bill would be negative and damaging.
This may be a fairly mild and minor matter, but it is a fairly major principle. I would refer back to the original Clause 4 of the Bill which stated thatA body corporate shall be entitled to be enrolled in the list—It was pointed out, for example, that this meant that we had two categories of corporate insurance brokers and that a firm of brokers ought to have a majority of its directors as registered brokers. I do not think anyone quarrels with that, although I can think of substantial firms of brokers who might not always have a majority of persons on the board who were qualified as insurance brokers. They might well have a majority of lawyers, accountants or financial advisers. But there is no fundamental quarrel with that proposition.
- (a) if it satisfies the Council that a majority of its directors are registered insurance brokers or, in the case of a body corporate having only one director, that he is a registered insurance broker; or
- (b) if it satisfies the Council that the greater part of its business consists of activities other than insurance broking and that so much
605 of its business as consists of insurance broking is carried on under the management of a registered insurance broker."
A contrast was then made between that requirement and others. The case of Thomas Cook's was the fundamental example used. It was asked whether it was not wrong that broking firms should be required to have a majority of registered brokers as their directors whereas another organisation which has an insurance department need have only one registered manager in charge of its operations. This contradiction or unfairness was pointed out by a number of my hon. Friends and I pointed it out myself.
In Committee my hon. Friend the Member for Harrow, West introduced a new amendment which henceforth effectively deleted the right of a large organisation to have an insurance department under the management of an insurance broker. It means that such a company must set up a separate subsidiary company if it is to continue an insurance-broking operation. That is quite wrong. I can see no justification for that whatsoever.
Since then certain examples have been given to me where, in my view, the Bill would operate unfairly and detrimentally to the public interest. My hon. Friend the Member for Harrow, West should have gone exactly the other way and should have stated that any organisation, insurance brokers or otherwise, would simply have to prove that its business, or that part of its business consistent with insurance broking, was under the management of a registered insurance broker. That would have been simple and effective. Instead, my hon. Friend went the other way and said that insurance broking must be controlled by a majority of registered insurance brokers.
606 A specific case comes to mind. I shall not quote the name of the bank because it is not necessary, but it is one of the largest banks in this country, which has a very substantial insurance broking department. It is not a separate limited company but a department. It runs effectively, and while many insurance brokers may rather regret the competition offered by banks, I personally do not share their regret because I think it is quite legitimate and proper competition which offers an effective public service.
Banks and others operate such insurance broking divisions under the management of very skilled insurance brokers. There is no doubt that the manager of that department would qualify as a registered broker, indeed, many members of such departments might qualify. But we are told that this is not acceptable because under the Bill as it stands that bank either has to hive off that business or make sure that there is a majority of insurance brokers on the board of the bank. I do not think that makes sense. I cannot imagine any of the big banks insisting on a majority of registered insurance brokers running the bank. There could be conflict if other organisations, like travel companies, make similar regulations. What is the point of doing that? The public will not benefit by saying to the bank that it has to form a separate limited company.
In turn, if it does create a separate limited company we are still saying that a majority of its directors must be registered insurance brokers. That means that a majority of those on the board are registered brokers. I should have thought that the bank itself would like to continue to control the affairs of its subsidiary. That seems proper. But if it is obliged to have a majority of specified persons of the board it is no longer in control of the day to day running of its affairs. I should have thought that was undesirable.
My proposition simply states that henceforth it should be sufficient to prove that the insurance broking business is under the management of a registered broker. There is nothing wrong with that. That registered insurance broker, and the insurance broking operations, are just as much subject to the disciplines. codes of conduct and the financial requirements as all other registered brokers. 607 They still have to apply to be registered brokers. They are still a body corporate and have to make a submission for registration. They are as much subject to scrutiny and control as any other organisation. All we are saying is that the organisation needs to be under the management of a registered insurance broker.
That seems to be a strong case. I am not talking academically. I have copies—as I am sure my hon. Friend has—of the correspondence that I have had with one of the major banks. I do not believe that my hon. Friend would wish to make life more difficult for the major banks. I do not think he would argue that it is desirable to force a bank to create a separate subsidiary company, but that is what he is doing, and I shall be interested to hear his argument for what he proposes to do.
I have here a letter dated 28th March 1977, from the Department of Trade, signed by a Mr. Tucker. He concludes his case, which was against the proposition that I am putting forward, by saying:… it does seem to offend common sense to allow organisations principally operating in other fields such as travel agency (or indeed banking) to call themselves insurance brokers unless the organisation as a whole contains the requisite expertise.I think that that is a nonsensical argument. It is the letter that offends comon sense. Is anyone suggesting that a major bank, with a substantial insurance department, does not have the requisite expertise? If so, I do not think that it is an argument that can be sustained.
I cannot understand why my hon. Friend—or the Department—is not prepared to accept the much more flexible and sensible proposal that I have put forward. It may be that my hon. Friend will accept my case. Perhaps he will again surprise the House by accepting this proposition, but so far I have seen no sign of his doing that. My impression is that my hon. Friend and the Department are determined to ensure that a majority of directors of any organisation that is engaged in insurance broking shall be registered brokers, and I do not think that that is right.
I hope that the Minister, or my hon. Friend, can put forward a better case than has been made so far. In the expectation of a helpful and encouraging reply 608 I shall curtail my remarks and hope that my hon. Friend will find a way out of this dilemma.
§ Mr. John Page
When I moved the amendment in Committee which my hon. Friend is now trying to amend he was, unfortunately, in Bermuda, I believe and the Committee was unable to have the opportunity of the Committee speech that he has, in effect, made today.
My hon. Friend is a well-known expert on the Report stage of Private Members' Bills. When I last took a count, which was about an hour ago, I found that my hon. Friend had been on his feet for 40 per cent. of the time that the House had taken to debate this measure, and I think that there must be no possible shadow of doubt in the mind of the House and of the public that my hon. Friend is out to torpedo the Bill and to try to destroy it.
I say that more in anger than in sorrow, because there have been many opportunities for my hon. Friend to clear up these matters. The Minister was available throughout the Easter Recess. My hon. Friend enjoys trying to explode a depth charge without warning, instead of trying, as one might expect from a parliamentary colleague, to seek the co-operation that he has said he has not found it difficult to obtain from me.
We now face the fact that my hon. Friend is trying to destroy the Bill, and the strange ringing in my ears whenever he gets up to speak must, I think, be the echo of the Lutine Bell. My hon. Friend has chided myself and the Minister about the amendment that was passed in Committee. I have a suspicion that anyone who writes to my hon. Friend with any case against the Bill, however thin or feeble, finds in him someone who will launch that case as a major new unsatisfactory aspect of the Bill.
In this instance, my hon. Friend is asking for one rule for the rich, and another for the poor. The big banks must be allowed special privileges so that they are not hurt, whereas the reason for my amendment in Committee was to ensure that the regulations that apply to the High Street company apply to the banks, to the Thomas Cooks, and to others like them.
If the Bill goes through, I insist that the Midland Bank, Barclays, or whoever 609 is concerned, shall stand on all fours in the matter of the regulations for insurance broking with Joe Bloggs, Insurance Brokers Limited of Faversham, and it is right that that should be so. It would be iniquitous if any company could carry on insurance business by employing one registered insurance broker and saying "We are insurance brokers", and by that means drive a coach and horses through the objectives of the Bill.
I think that in taking the view that he has taken my hon. Friend has shown a shallow appreciation of what the Bill is trying to do and the fairness of myself and, I believe, a majority of the House in sponsoring this measure. The support that my hon. Friend has had from members of my party and from hon. Members on the Government Benches in trying to destroy the Bill has been very small. He will have the whole weight of responsibility on his shoulders if the Bill, which I believe is desired by a vast majority in the House—which is not so important—and in the insurance business as a whole, is torpedoed. The responsibility for the sinking will be wholly on his shoulders.
§ Mr. Moate
The Minister said that my hon. Friend was magnificent when roused, and I endorse that sentiment. I am sorry that the harmony that has so far assisted in our debates should be disrupted, and that the responsibility for that should be attributed to me, but I think that on this occasion my hon. Friend's ire has meant that he has failed to give to this proposal the proper consideration that he has generally given to other matters. I believe that there is a strong case for what I have proposed, and I am sorry that my hon. Friend has now dug in and entrenched himself in defence of what I regard as his indefensible proposition.
My hon. Friend is wrong when he says that the clause as drafted means that the same law will apply to the rich as to the poor. That is a grand phrase, but it is meaningless nonsense in this context. I shall go on to elaborate that, but before doing so I must make it clear that I oppose the principle of the Bill. I have made that clear at length.
It is not possible for one Member to torpedo a Bill in the way that my hon. 610 Friend says. It is possible for one Member to ensure that a Bill is scrutinised at great length, but if my hon. Friend has the support that he claims, there is no problem for him. He has only to take the votes. He has only to move closure motions. He has only to find other days on which to continue this Report stage. My hon. Friend laughs, but we know that there are other days on which he can bring this measure forward.
If my hon. Friend is suggesting that we should not scrutinise the Bill in this way, he is wrong. This must be one of the longest Private Members' Bills that the House has seen for some time. There are 30 clauses of detailed legislation. The Bill had a perfunctory Committee stage indeed, and hence it is essential for the House to give proper consideration to its detailed implications. My hon. Friend cannot blame me for the list of amendments. They are not all mine—
§ 2.0 p.m.
§ Mr. Clinton Davis
If the hon. Gentleman is anxious to continue proper scrutiny of the Bill, perhaps it would be helpful if we did not debate motives but actually got on with considering the provisions of the Bill. I am sure that he is anxious that we should complete consideration of this matter by 4 o'clock, because many people are dependent upon this matter.
§ Mr. Speaker
I am very grateful for the Minister's assistance, because I was about to intervene myself. I was merely allowing fair time for the exchange which was taking place. I think that we may now conclude that round one is over and return to the amendment.
§ Mr. Moate
I am grateful for the opportunity that you gave me, Mr. Speaker, to respond to my hon. Friend's suggestions. May I just conclude my sentence by saying that the amendment is only one of a small batch of 17—since six are identical, they number only 12 in fact—compared with 68 tabled by the Government? That must be nearly a record. If the Government are so anxious to table so many, it is up to them to find the time.
My hon. Friend referred to the lack of debate in Committee on the amended clause, which he attributed to my absence. I am gratified that the proceedings should 611 depend on my presence, but I was not aware that a Committee stage depended on one Member's attendance. One would like to think that scrutiny continued regardless. However, it is wrong to suggest that my absence on parliamentary duties elsewhere prevented proper scrutiny.
§ Mr. R. A. McCrindle (Brentwood and Ongar)
On a point of order. Is not that a wrong reflection on those of us who were not in Bermuda on the Wednesday morning when we continued to consider the Bill? Is not my hon. Friend casting aspersions upon the way in which we did our duty in his regrettable absence?
§ Mr. Moate
I apologise, Mr. Speaker. I thought that I was trying to correct the aspersions cast by my hon. Friend the Member for Harrow, West on other members of that Committee. Those of us who sometimes have to go on parliamentary delegations, even to organise them on behalf of the British-American Parliamentary Group, sometimes regret missing a Committee. My hon. Friend may not believe me, but I would rather have been on that Committee that morning, but duty decreed otherwise. If anyone thinks that there is any pleasure in transatlantic journeys on a short weekend, he has another think coming.
This matter was not properly examined in Committee and it is right to examine it now. I regret my hon. Friend's answer. It is not just the banks which are affected. Many commercial organisations have insurance departments and act as fully-fledged insurance brokers. It is nonsense to say that if we allowed them simply to have a registered broker in charge, they would escape the rules of the Bill. The rules will apply to the big as to the small. A registered broker will still have to prove his case before the Insurance Brokers Registration Council, establishing that he has met all the qualifications. Even a bank must establish that it has adequate reserves and keeps its insurance money in the right way.
612 My hon. Friend is achieving nothing in defence of the public interest by saying that these organisations have to change the way in which they operate so as to suit his preconceived idea about the rich and the poor, which is totally irrelevant.
Of course it would not be impossible for such organisations to set up subsidiary companies. It would be expensive, involving the creation of separate returns and reprinting of notepaper and signs, but these large organisations could swallow the cost. But why should they? What is my hon. Friend seeking to achieve?
In the letter which I quoted earlier, the bank also said:We have been watching the progress of this Bill, since its provisions could affect the operations of the Insurance Department of the Bank, which provides a service to our customers akin to that provided by an insurance broker. It has done so for some years, to the general satisfaction of our customers.So it has acted as a reputable insurance broker with no problems.If the Bill should become law as amended in Standing Committee, Clause 4 would seem to require that a change in our present practices should be made, and this might mean that the activities of the Insurance Department would have to be carried on by a subsidiary company formed for the purpose, with the majority of the directors being insurance brokers. We should clearly not be the only organisation affected in this way. There seems to be no advantage to the public in such a change and there would be some inconvenience to the Bank although a number of staff in the Insurance Department would themselves be eligible for registration as insurance brokers.The letter goes on to advocate a course of action direct to the Minister.
I have also suggested this course, although I have no wish to contaminate this proposition, as my hon. Friend would see it, with my own support. I wanted to see a constructive solution, but I am afraid that the Department has been as negative as my hon. Friend. They are quite wrong. The bank suggested this amendment direct to the Department and it has been rejected on totally specious grounds.
The bank replied to a letter from the Department:The suggestion in your penultimate paragraph that reprehensible actions by the Insurance Department of a body corporate such as a Bank could go unchecked, with all respect seems in our view to ignore the provisions of Clauses 12–14 of the Bill, which, of course, provide for disciplinary procedure against any body corporate enrolled under Clause 4 and for the erasure of the body corporate should 613 circumstances warrant it. With regard to your final paragraph, no organisation—travel agent, bank or 'pop group'—could call itself an insurance broker unless it did, as a whole, contain the requisite expertise as provided for in the Bill.Therefore, if my amendment is accepted, that corporate body will still be subject to the rules of the Council. My hon. Friend knows that that is true, with the one exception of the provision relating to a majority of the directors. In all other respects, the body would have to comply.
Where is the public interest at stake? The insurance department offers good broking services and will continue to do so if it has to be a registered broker. Yet my hon. Friend uses the nonsensical phrase that my amendment would drive a coach and horses through the Bill. That is an unsustainable argument. I think that he has allowed his wrath and indignation to lead him on this one occasion to take leave of reason.
I ask my hon. Friend again to consider this proposition. If he does not, I will, though without much prospect of success, seek to divide the House.
§ Question put, That the amendment be made:—
§ The House proceeded to a Division—
§ Mr. GRAHAM and Mr. WARD were appointed Tellers for the Noes but, no Member being willing to act as Teller for the Ayes, Mr. SPEAKER declared that the Noes had it.
§ Question accordingly negatived.
Manuscript amendment made: in page 3, line 33, leave out 'Section 11' and insert:
'rules under Section 12(1)'.—[Mr. Clinton Davis.]