Written evidence submitted by Ashurst LLP (MWL0002)

Ashurst LLP welcomes the opportunity to make the following comments on the Review of "Maxwellisation" submitted by members of Blackstone Chambers to the Treasury Select Committee in November 2016.

introduction

  1. We welcome the Review's recognition that

"it is self-evident that the procedures to be adopted by an inquiry which produces a public report must ensure fairness to those who may be criticised in that report."

That requirement is absolute and cannot be compromised by any perceived public interest in producing a public report expeditiously or economically.  Both of these requirements are important but, as the Review acknowledges, are qualified by the need for reasonableness which includes the need for fairness.

  1. We agree with the Review's conclusion that:

"If a person has already been given a fair opportunity to respond to the substance of a proposed criticism contained in the draft report … … there is no need to give that person a further opportunity to make any representations prior to the publication of the report."

  1. However, the Review does not identify some of the practical difficulties that will arise if the Review's preferred course is adopted: of having the substance of criticisms put to a witness, and requiring the witness to address those criticisms, as part of the evidence-gathering process.  We set out some of those practical difficulties in the following paragraphs.

Practical Difficulties of combining evidence gathering and criticism

  1. The Review draws a justifiable distinction between Lord Saville's "Bloody Sunday" Inquiry, which is characterised as "adversarial", and the more "inquisitorial" inquiries typically conducted in the Financial Services Sector.  Our experience is that, in the latter case, the current process of taking evidence focuses on fact-finding and is largely uncontentious.  In our experience, witnesses are usually accompanied by legal advisors but the role of those legal advisors tends to be to facilitate the interview process and the collection of facts rather than acting as an advocate in their client's cause.  If the interview process is to be used for the dual purpose of fact-finding and the putting of, and responding to, criticisms, its nature will change.  For example:

(a)               Witnesses are likely to require, in advance of any evidence-gathering interview, a written summary of the substance of any criticism of them and the basis of that criticism, including any relevant documents.  The reasonableness of such a requirement is implicitly acknowledged by the Review and, in particular, by section K of the Guidelines for inquiries on page 11 of the Review, but is not expressly acknowledged.

(b)              Those conducting an inquiry will need, if they are to secure the time and cost benefits outlined in the Review, to identify and formulate criticisms of a witness prior to their first interview.  This will require the analysis of material gathered by the inquiry to be started earlier in the process than is currently necessary and to run in parallel with the gathering of evidence.  This has potentially important consequences for the structuring and conduct of inquiries.  It is also likely to result in less precise and well-formulated criticisms with the resulting loss of fairness to those criticised.

(c)               If witnesses are to be given the substance of criticism and to have to address that criticism in interview, the interview process will become more complicated, longer and more adversarial.  Currently, a witness is typically advised to concentrate, in interview, on giving the best accurate answer that they can give to each question and not to seek to advocate a case.  This will change.  It will become more difficult to separate factual evidence from argument.  Interviewers will need to be clear whether they are asking factual questions or are putting criticisms and will need to test witnesses answers.  Their role will become more like that of a cross-examiner.  Lawyers acting for witnesses will have a greater role to play in interviews, particularly where criticisms involve legal issues or mixed legal and factual issues.  The process will, inevitably, become longer and more adversarial with interviewers proposing and defending criticism and witnesses and their lawyers rebutting it.

(d)              As a consequence, the role and the skills of interviewers will need to change.  Conducting an interview that seeks to outline criticisms and receive and test answers to those criticisms (as well as establish facts) needs interviewers to have additional skills to those needed for an interview that focusses on fact-finding.  Ultimately, it may lead to a greater use by inquiries of external lawyers (either barristers or solicitors) to conduct interviews.  This will increase cost.

(e)               Currently, the process of reviewing a transcript of an interview is usually straightforward.  In addition to making factual corrections to a transcript, a witness is typically asked to provide any comments or corrections to their evidence.  That is not usually a lengthy or contentious process.  If a transcript of interview is now to record the substance of any criticism and the response to that criticism, witnesses and their lawyers will wish to use the opportunity of commenting on a transcript to produce written submissions in response to any criticism.  This is likely to be the first opportunity that a witness has to give a considered response to criticisms imparted during an interview. 

  1. These developments are likely to lengthen the interview stage of any inquiry even if it proves possible to put the substance of criticisms to a witness in their first interview.  If, as the Review acknowledges, a second or further interview is necessary as a result of the subsequent emergence of adverse material or criticisms or the refinement of criticisms, then the interview process will be further lengthened. 
  2. Generally, the combining of evidence-taking and a Representations Process into one interview process may deliver speed and cost benefits but it may not and it will increase the risk that those to be criticised will not be given a fair opportunity to address criticisms. 

timing

  1. The Review concludes in relation to any Representation Process that:

"In general representees should be given a relatively short period to make representations after receiving notification of potential criticisms. The Chair will need to have flexibility, but rarely would considerations of fairness justify a period exceeding 21 days (subject of course to the possibility of granting justified requests for extensions of time in particular cases)".

  1. In an otherwise balanced report, that is an unjustifiably firm conclusion.  Fairness requires the Chair to consider the appropriate reasonable period for representations in all the circumstances of his or her inquiry.  He or she should not be trammelled by such a generalised limitation.  The appropriate reasonable period in a particular case will depend upon many factors including:

(a)               whether the person criticised is legally represented;

(b)              the nature and seriousness of the criticisms;

(c)               the potential consequences of the criticisms (for example is regulatory action or litigation likely);

(d)              the length of the draft report;

(e)               whether the draft of the report is to be made available to the criticised person in hard or electronic form or whether he or she will have to attend the inquiry's office to read it, which may increase security but increases the practical challenges faced by those reading the report; and

(f)                whether necessary documents are made available at the same time as the report or have to be requested by the person being criticised and supplied later, which delays the process.

  1. The length of time that an inquiry reasonably needs to amend its draft report in the light of the comments received by those criticised will depend upon the extent and quality of those comments.  If extensive amendments are necessary and appropriate, considerable time may be needed and should be taken.

The RBS and HBOS Enquiries

  1. The genesis of the Review was the perceived unreasonable delay to the publication of the HBOS Report caused by Maxwellisation.  Having represented clients in the production of both the RBS Report and the HBOS Report we can offer the following corrections to the comments made in the Review.

The RBS Report

  1. The suggestion that the total time taken by the Maxwellisation Process was four weeks and the deadline for Representations Process responses was a week is wrong and is inconsistent with the FCA's evidence.  The first version of the RBS Report (39 pages), produced by the Supervision Division of the FSA, was provided to our clients on 22 February 2011.  Comments were given on 1 March 2011.  A second draft was provided on 24 March 2011 and comments were provided about a month later.  On 5 May 2011 Independent Reviewers were appointed to assist in the production of the Report.  A letter was received on 10 August 2011 outlining the proposed Maxwellisation Process suggesting that a draft report would be available on 9 September and comments would be required by 3 October.  In the event, it was delayed.  A draft (450 pages) was inspected on 16 September with comments being provided on 7 October.  A further draft was inspected on 17 November and comments were provided on 25 November. 
  2. This chronology shows that the Maxwellisation Process lasted for nine months rather than four weeks.  It also shows that comments were requested in the second phase within a month not a week and that comments were received promptly from witnesses. 

The HBOS Report

  1. It is correct that the Maxwellisation Process for the HBOS Report lasted for approximately 14 months.  However, care needs to be taken with that figure.  The clients, for whom we acted, were given access to the draft PRA/FCA part of the report in the middle of August 2014 and to the relevant documents in the middle of September.  Initially, comments were sought a month after the draft part of the report became available but subsequently the PRA/FCA unilaterally offered that witnesses could delay their comments on the draft PRA/FCA part of the report until after they had seen a draft of  Mr Green's part of the report.  A draft of Mr Green's part of the report was received in the middle of November.  Comments were provided on the PRA/FCA part of the report in the middle of November.  Comments on Mr Green's part and further comments on the PRA/FCA part in the middle of December 2014.  We do not know the reason for the year's delay between that date and the publication of the Report at the end of 2015.  Re-Maxwellisation of the PRA/FCA part of the report was limited, both in scale and time.  We were given access to extracts of the report at the beginning of September 2015 and to relevant documents in the middle of September.  We provided comments on 25 September.
  2. Again, the chronology shows that comments from witnesses were received within the deadlines set by the authors of the HBOS Report and that those deadlines were proportionate to the lengths of the draft report.

Evidence obtained by the Review

  1. We are surprised that it appears that the Review did not obtain evidence from the Independent Reviewers appointed to oversee the production of the RBS and the HBOS Reports.  These individuals will have a valuable independent insight into the Maxwellisation processes behind both of those Reports.

select committee reports

  1. Reports produced by Parliamentary Select Committees are public reports and they frequently criticise individuals.  However, the procedures adopted by those Committees for taking evidence from, and criticising, individuals do not comply with the historic requirements or procedures set out in the Review or recommended for the future in the Review.  We would hope that any new or amended process for ensuring fairness to those criticised in public reports will be adopted by Parliamentary Select Committees.
  2. If we can be of any further assistance to the Committee, please do not hesitate to contact Edward Sparrow.  We have sent a copy of this document to the authors of the Review.

10 January 2017

 

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