Building Societies (Floating Charges and Other Provisions) Order 2016
Debate between Lord Lexden and Lord Tunnicliffe
Lord Lexden (Con)
My Lords, I have a few comments to make on this order, and I do so as a member of the Joint Committee on Statutory Instruments. Our committee reported this order in draft for defective drafting in our 20th report of the previous Session on 9 March 2016. We did so because Article 6 of the order provided for the amendment of provisions that had been revoked.
It seems clear that the revocation was accidental. In other regulations made last year, the Treasury had intended to make only one or two modest amendments to a financial services order relevant to these matters, but instead it revoked the whole of that order. Since our committee published our 20th report, the Bank of England and Financial Services Act 2016 has received Royal Assent, and Section 37 of that Act reverses the mistaken repeal with retrospective effect. As a result, the defect in the draft order identified by the JCSI has been dealt with, so the way is clear for it to be approved by both Houses and made by the Treasury. Although this story has a happy ending, the fact remains that the statutory instrument was originally laid prematurely and as part of a number of errors by the Treasury.
Lord Tunnicliffe (Lab)
My Lords, it is a pleasure again to be debating a Treasury statutory instrument with the Minister. It is an innovation for us to have more than two speakers, and I thank the noble Lord, Lord Lexden, for his contribution. I agree that this is a technical and non-controversial order and, despite the august surroundings of the Chamber, we will not be opposing it.
However, I have two or three questions. From the Minister’s speech, the essence of the problem seems to be that a court can reclassify a charge as a floating charge, thereby making the security void. I do not always understand these orders but this point has completely lost me. If the Minister could take us through it in a little more detail, I would find that useful. The essence seems to be that security becomes void and therefore there are concerns about it.
Secondly, the Minister said that there could be the appointment of a receiver but not of an administrative receiver. I cannot see why there is a distinction between the two types of receiver.
Thirdly, I think the offending area relates to paragraph 4 of Schedule 9 to the 2013 Act, which I understand was commenced on 26 March 2015. Presumably, this problem emerged on commencement. It seems an awfully long time since 26 March 2015, so I ask the Minister why this order was not brought forward earlier.