Introduction

The Treasury Committee has published a review of the use of the Maxwellisation process in financial inquiries, setting out guidelines for the use of the process in the future. The review was commissioned by the Committee following concerns that recent inquires, such as the review into the failure of HBOS plc, have been too slow and that the Maxwellisation or representations process has caused or contributed to a delay in producing inquiry reports.

“Maxwellisation”, which derives its name from litigation in the early 1970s involving Robert Maxwell, is the process by which a person who faces criticism in a public report is given the opportunity to respond prior to publication, even if that person has already had an opportunity to respond to the substance of the proposed criticism during the evidence-gathering stage of the inquiry.

The Maxwell litigation confirmed that a person should not be criticised in a public report without first having a fair opportunity to respond to that criticism but that, if such an opportunity had already been given, there was no requirement for further circulation of any proposed criticism. However, those conducting subsequent company investigations and public inquiries have nonetheless adopted a “Representations Process”.  The public inquiry into the collapse of the Bank of Credit and Commerce International in 1991 allowed those subject to criticism with an opportunity for comment prior to publication and such a process has since become a familiar feature of public inquiries.

Key Findings

The review concludes that, although it has become “standard practice”, the process goes beyond the common law requirement on the basis that there is no need to give a person who has already been given a fair opportunity to respond, any further opportunity.[1]

The review recognises the potential tension between the need for fairness and the need for expedition and cost containment but concludes that the Maxwellisation process is an “error of approach” since it inhibits flexibility and is capable of disproportionately slowing down the publication of an inquiry report. The key recommendation is that the process should be used  “considerably more sparingly” and restricted to a “sweeping-up” exercise to ensure fairness to specific people in particular circumstances.  One example given is where a person has already had the opportunity to respond to the substance of three out of four points of criticism in a draft report and Maxwellisation provides an opportunity respond to the fourth point which has not already been afforded.

Guidelines

The report advises those commissioning and conducting inquiries that there is no common law requirement for the Maxwellisation process to be carried out and that the “Chair” of an inquiry should seek to meet the needs of both fairness and expedition. The report recommends establishing a procedural protocol which gives focus to actions taken prior to a person giving evidence to the inquiry, to ensure as great an opportunity as possible for responses during the evidence-gathering stage and minimise the need for Maxwellisation.  It is also suggested that the Cabinet Office should maintain an online resource containing the protocols for use in future inquiries.  However, if a Chair decides Maxwellisation is necessary, the Chair should:

• adopt the shortest time limits consistent with providing the person with a fair opportunity to respond;
• consider whether it is appropriate to provide the person with a copy of parts, a summary or the entire draft report containing the criticism;
• consider the circumstances (if any) in which a person should be permitted to make further representations (more than one round should be exceptional);
• consider whether a person should be informed as to whether the responses have resulted in changes being made to the draft report and should be provided with a subsequent report in whole or in part (generally such information should not be provided);
• consider whether representations should be presented in a template and within a reasonable word limit; and
• resist any attempt to negotiate the conclusions of the report.

Next Steps

The Committee is seeking comments on the review which can be submitted through its online portal at any point up to 29 January 2017 at this address.

[1] Note, this review does not relate to rules 13 and 15 of the Inquiry Rules 2006 which impose an obligation to conduct a Maxwellisation process whenever an inquiry is conducted under the Inquiry Act 2005. The report does however recommend that the Government revokes rules 13 and 15, following a similar recommendation by the House of Lords considered in 2015.