Call to improve People with Significant Control register

The People with Significant Control (PSC) register at Companies House could be a more powerful tool for financial investigations with a few changes to how it collects and organises information, users have said

Most organisations which took part in a survey of PSC register users said it had succeeded in simplifying the process of obtaining information about the beneficial ownership of companies.

However, some of the law enforcement and financial bodies which responded said the information on it was not reliable. Checks on data at the point of submission and verification of information once submitted would significantly improve the quality of information held, they said. And unique IDs would give users a way to quickly cross-reference all the companies that a person was listed as a PSC for, a feature that currently doesn’t exist.

As part of a wider review of the PSC register, the Department for Business, Energy and Industrial Strategy (BEIS) commissioned a survey of 500 businesses which was supplemented by in-depth interviews with 30 organisations and two members of staff from Companies House.

PSCs of a company generally hold more than 25% of shares, control more than 25% of voting rights or have the power to appoint or remove the majority of the board of directors. Someone can also be a PSC if they tell directors or shareholders what to do or if they control a trust or firm that controls the company. Companies must identify all of their PSCs or tell Companies House why they don’t have any. It is a criminal offence for a person who is a PSC of a company to refuse to supply their details for the register.

IFF Research, which conducted the study for BEIS, found that 92% of businesses had PSCs. Most businesses had one PSC (43%), while 37% had two and 13% had three or more. The most likely reason for businesses having no PSCs was size, with larger companies more likely to list no one on their register, and complexity, with businesses with complex ownership structures more likely to have no PSCs, the report said.

There are 4.88m PSCs on the register, with 3.84m companies on the register that have at least one PSC, according to figures from Companies House. The average number of PSCs per company is 1.29.

The median overall cost to business of their first submission to the PSC register was £125, with the cost varying by business size and complexity of the ownership structure. The median cost of maintaining the data was just £2 per year. Some 95% of businesses surveyed said the process of collecting and preparing the data had no impact on business operations.

Businesses that had used the PSC to look up information on other businesses (22% of respondents) generally found the information to be useful. The majority used it to research clients and customers (64%), with 93% finding it useful or very useful.

All law enforcement organisations surveyed said they had used the PSC register for criminal investigations, with most using it at least once a week. Financial institutions also use the register, predominantly to identify PSCs of corporate clients.

Investment associations and business organisations reported they had little cause to use the PSC register, but said they were aware of its use by members.

Individuals can apply under a protection regime to have their information suppressed from the PSC register if they have reason to believe they are at risk of violence or intimidation because of their involvement with a company. Some 903 applications for suppression were received by Companies House between April 2016 and January 2019, with 52% being approved, 24% awaiting a decision, 18% denied and 5% rejected due to errors in the application.

Survey respondents said the protection regime could be improved by broadening the range of risks and digitalising the application process.

Tom Reeve | 05-08-2019

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