Bank of England and Financial Services Bill [HL]

Lord Grabiner Excerpts

Tuesday 15th December 2015 Lords Chamber

[Lord Brown of Eaton-under-Heywood]

That is by no means conclusive of the issue. However, for the most part I am not hinging my argument on the convention; it simply represents what I have already indicated is a common thread of our law—it is for those who accuse to prove. Generally, the burden of proving every ingredient, every element of any wrongdoing or offence—including the disproving of any legal defence to it—lies squarely on the prosecution.

Certainly, there are occasions when the law, including the European Convention on Human Rights, accepts a reverse burden of proof. However, in considering whether this is acceptable one must recognise that whenever an accused is required to prove a fact, as here he would be on the balance of probabilities, that permits him to be found guilty, even if the fact-finding tribunal has some reasonable doubt as to his responsibility. That is the whole essence of the burden of proof. Where there is a doubt, it is resolved in favour of he who stands to be criticised and held liable before the public. It is all very well to speak of the cultural impact of a change like this but the consequence is that in a case of doubt, because he has failed to discharge the reverse burden placed upon him, he is found guilty.

There is a great deal of law in all this, which I will not go through, but I will make just one or two points. First, there is all the difference in the world between the legal burden of proof and the evidential burden of proof. Realistically, the latter is of comparatively little importance. In relation to many defences, the evidential burden is said to be on the defence but this burden is found to be discharged whenever there is any evidence—basically, any evidence at all, wherever it comes from—which raises the possibility that such a defence may exist. For example, when somebody is accused of assault, if there is a suggestion that he may very well have acted in self-defence, the legal burden to disprove that immediately shifts back fully on to the prosecution. The fact is that courts—there are many cases to indicate this—do not like reverse burdens of proof and prefer this golden thread. It is by no means impossible, and I think it is quite likely, that under the 2013 Act—the one for which the certificate was given under the convention—that would be found to be consistent with the convention because the court would construe the legislation as involving not the legal burden of proof but the evidential burden of proof, in which case it would have precious little effect.

The legal burden of disproving guilt is only very rarely put on the defendant. It generally happens only in the case of statutory offences concerned with the regulation of conduct in the wider public interest, and generally in comparatively minor cases involving—I quote from an earlier judgment—

“no real social disgrace or infamy”.

That approach was applied in a trademark case where a trader in branded goods was required to prove that his sale of the goods did not involve any infringement of the trademark legislation. It was held to be in the nature of a regulatory offence with a minor degree of moral obloquy rather than a truly criminal case. Indeed, that was also the position in a case in this House in 2008 in which I was one of the judges. We held that it was not disproportionate to put the legal burden on employers to conduct their undertaking in such a way as to ensure that people were not exposed to health and safety risks. It was for them to establish on the balance of probabilities that it would not have been reasonably practicable for them to have done more than they had to achieve those requirements.

The effect of this amendment is conveniently and succinctly set out in paragraph 137 of the Explanatory Notes. It says that under the 2013 Act senior managers in the relevant area,

“are guilty of misconduct if there has been a breach of any regulatory requirement in an area for which they are responsible unless they can prove that they have taken reasonable steps to avoid the breach … This will be amended so that no senior manager will be guilty of misconduct unless the regulators can prove that the senior manager did not take reasonable steps to avoid the breach happening”.

I respectfully support the Government’s view that the offence being introduced by this legislation, prospectively from the coming March, should properly be considered to be not just a mere regulatory offence involving negligible obloquy—that is not how I understand that the bulk of those opposite would regard guilt of such an offence—but, rather, as constituting serious misconduct. It is the sort of offence, therefore, which should be fully proved and where any doubt as to whether it was committed should be resolved in favour of he who is accused.

[Lord Grabiner (Non-Afl)]

My Lords, I declare the interests shown under my name in the register. I should also declare that I am an authorised person under the regimes operated by the FCA and the PRA.

This part of the Bill is designed to extend the senior managers and certification regime, which replaces the much reduced—or, I should say, criticised—approved persons regime. It introduces a new statutory duty of responsibility for all senior members across the extended SMCR in place of the reverse burden of proof, which would otherwise have applied to deposit-takers and PRA-regulated investment firms. The new duty obliges the responsible senior manager to take reasonable steps to prevent regulatory breaches in her or his area of the business. As a result, if the complaining regulator shows that the senior manager has failed to take appropriate steps, she or he will be guilty of a breach of statutory duty. No doubt the Minister will assist us on this but I think that that will subject the individual to serious penalties, including an unlimited fine and/or a prohibition. These are very serious matters, whether they are offensive to Article 6 or otherwise.