The government is preparing to bring in new laws to create an offence of ‘failure to prevent fraud’ that could put solicitors at risk of facing prosecution.
Home Office minister Tom Tugendhat said yesterday that the government ‘intend to address the need’ for a failure to prevent offence in the House of Lords as part of the Economic Crime and Corporate Transparency Bill.
The legislation proposes to lift the statutory cap on the Solicitors Regulation Authority’s power to issue fines for disciplinary matters relating to breaches of the economic crime regime. A new clause also allows the SRA to ‘proactively request information’ from solicitors for the purpose of monitoring compliance.
But pressure has grown in recent weeks for the government to put in place extra measures to make failing to prevent economic crime a criminal offence, as opposed to a regulatory issue.
Former lord chancellor Robert Buckland MP moved an amendment in the House of Commons this week to create a new offence as part of the bill, admitting that the progress of corporate liability reform since the Ministry of Justice issued a call for evidence in 2017 had been ‘exceedingly slow’.
‘I do not want the government to adopt new criminal offences only to find that their use becomes sporadic or ineffective,’ said Buckland. ‘However, the offences I propose help to further drive a culture of compliance and lawfulness where corporates behave responsibly.’
Buckland said he wanted to make failure to prevent an ‘individual liability’ and added that prosecutors ‘should not seek to focus exclusively on the corporate at the expense of bringing individuals to book’.
Tugendhat said the government-commissioned Law Commission review of corporate criminal liability had showed the need to clamp down on wrongdoing by commercial organisations.
He added: ‘We have been working closely across government and with prosecutors in carefully considering its recommendations and how improvements can best be made. It is vital that any reform can be used by law enforcement agencies, does not duplicate what already exists and avoids placing unnecessary burdens on legitimate businesses.’
On fining powers, the government has made clear that it does not believe the SRA’s current £25,000 fining limit is sufficient to act as a deterrent in economic crime matters. The alternative of moving cases to the Solicitors Disciplinary Tribunal is seen as ‘time-consuming and resource intensive’.
Implementation will proceed following royal assent of the bill. Once the change comes into effect the SRA will consult with the SDT on the levels of financial penalty it can set, which will then require the LSB’s approval.
The bill cleared its third reading and will now progress to the House of Lords.
This article is now closed for comment.
13 Readers' comments