📜 Delegated Legislation Committee

General Committees

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New regulations aim to combat fraud by enhancing identity verification for company directors and officials. The 2024 drafts will require individuals to verify their identity directly with Companies House or through authorized corporate service providers (ACSPs). These measures build on the Economic Crime and Corporate Transparency Act 2023, introducing stricter checks and unique identifiers to prevent misuse of identities. The process, expected to start in autumn, will be free for businesses but may incur small costs for individual verifications.

Summary

  • The session discussed two draft regulations: the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024 and the Unique Identifiers (Application of Company Law) Regulations 2024.

  • These regulations are part of implementing the Economic Crime and Corporate Transparency Act 2023, aimed at protecting the public from fraud and improving the business environment.

  • The first set of regulations focuses on setting up a legal framework for identity verification of individuals who set up, run, or control companies. Verification can be done directly with Companies House or through an Authorised Corporate Service Provider (ACSP), which must be registered and supervised for anti-money laundering.

  • The identity verification process will require individuals to provide their name, date of birth, and additional information as specified by the registrar’s rules. Verification can be done digitally using the gov.uk One Login platform or in person at a post office.

  • ACSPs must follow specific procedures when verifying identities and submit a verification statement to Companies House. They are also required to maintain records of verification for seven years and can be subject to suspension or de-authorisation if deemed unfit.

  • The second set of regulations extends the use of unique identifiers to individuals associated with various business entities, beyond just companies, to include limited partnerships and limited liability partnerships among others.

  • The implementation of these regulations is set to begin in the autumn, with voluntary verification starting soon to allow time for adjustment.

  • The cost to businesses for identity verification is estimated at an average of £10.50 per individual verification and £2.10 per appointment confirmation, with an annual cost to UK businesses of about £19.5 million.

  • No impact assessment was required for the second set of regulations as it did not exceed the £5 million threshold, unlike the first set which had an impact assessment.

  • The session concluded with both sets of regulations being considered and agreed upon by the Committee.

Divisiveness

The parliamentary session displayed minimal disagreement. Throughout the session, the discussions focused primarily on clarifications and the provision of information about the draft regulations. The only Member who spoke apart from the Minister was Greg Smith, who expressed general support for the measures taken by the Government and the previous Government. His questions were aimed at seeking clarity on administrative costs and impact assessments rather than expressing opposition or disagreement with the substance of the regulations. The Minister responded to these queries in a straightforward manner, providing the necessary information without any signs of contention. The session concluded with the regulations being agreed upon unanimously, indicating a lack of significant disagreement.