appendices to a review of 'maxwellisation' · appendices to a review of ‘maxwellisation ......

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APPENDICES TO

A REVIEW OF MAXWELLISATION

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CONTENTS

(1) Appendix 1: Terms of Reference............................................................................................... 50

(2) Appendix 2: List of respondents............................................................................................... 51

(3) Appendix 3: List of reports ........................................................................................................ 52

(4) Appendix 4: Author Questionnaire.......................................................................................... 54

(5) Appendix 5: Responses to the Author Questionnaire ........................................................... 55 (6) Appendix 6: Call for Evidence .................................................................................................. 92

(7) Appendix 7: Responses to Call for Evidence .......................................................................... 93

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APPENDIX 1

TERMS OF REFERENCE

To produce a report for the Treasury Committee on the process whereby those who stand to be criticised in a public report are given an opportunity to respond to such criticisms prior to publication (sometimes known as Maxwellisation).

The report will focus particularly on the application of this process in cases of public reports covering financial matters, including for example reports of inquiries and investigations under Part 5 of the Financial Services Act 2012, and set out:

(1) What the law requires;

(2) The typical problems that arise during the process, including addressing the publics concerns around the additional time and financial costs incurred, and;

(3) Recommendations or a set of principles to identify ways to ensure the use of this process in relation to public reports covering financial matters is fair and proportionate.

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APPENDIX 2

LIST OF RESPONDENTS

1. Ann Abraham 2. Mark Ballamy 3. Sir Louis Blom-Cooper QC 4. British Bankers Association 5. Sir John Chilcot 6. Clifford Chance 7. Deloitte LLP 8. Financial Conduct Authority 9. Financial Reporting Council 10. Financial Services Lawyers Association 11. Sir Robert Francis QC 12. Lord Grabiner QC 13. Tom Kark QC 14. Lloyds Banking Group plc 15. Lord Penrose 16. Prudential Regulation Authority 17. Lord Saville of Newdigate 18. Lord Scott of Foscote and Christopher Muttukumaru CB 19. Edward Sparrow 20. Lord Thomas of Cwmgiedd 21. Lord Woolf, CH

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APPENDIX 3

LIST OF REPORTS

Reports covering financial matters

Report Published Chair/author Commissioning person/organisation

Legal basis Representations Process conducted?

1. The failure of HBOS plc (HBOS)1 November 2015

FCA and PRA FCA and PRA Non-statutory Yes

2. Report of the Inquiry into the events of 27/28 March 2014 relating to the press briefing of information in the Financial Conduct Authoritys 2014/15 Business Plan2

December 2014

Clifford Chance FCA Non-statutory Yes

3. Bank of England Foreign Exchange Market November Lord Grabiner QC Oversight Non-statutory Yes Investigation3 2014 Committee of the

Bank of England

4. A review of the extent of awareness within the FSA of inappropriate LIBOR submissions4

March 2013

FSA FSA Non-statutory Yes

5. The failure of the Royal Bank of Scotland5 December 2011


6. Equitable Life: a decade of regulatory failure6 July 2008

Ann Abraham (Parliamentary and Health Service

n/a Parliamentary Commissioner Act 1967,

Yes

Ombudsman) section 10(4)

1 http://www.bankofengland.co.uk/pra/Documents/publications/reports/hbos.pdf 2 https://www.fca.org.uk/publication/corporate/davis-inquiry-report.pdf 3 http://www.bankofengland.co.uk/publications/Documents/news/2014/grabiner.pdf 4 http://www.fsa.gov.uk/static/pubs/other/ia-libor.pdf 5 http://www.fsa.gov.uk/pubs/other/rbs.pdf 6 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/248490/0815.pdf

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http://www.bankofengland.co.uk/pra/Documents/publications/reports/hbos.pdfhttps://www.fca.org.uk/publication/corporate/davis-inquiry-report.pdfhttp://www.bankofengland.co.uk/publications/Documents/news/2014/grabiner.pdfhttp://www.fsa.gov.uk/static/pubs/other/ia-libor.pdfhttp://www.fsa.gov.uk/pubs/other/rbs.pdfhttps://www.gov.uk/government/uploads/system/uploads/attachment_data/file/248490/0815.pdf

7. The supervision of Northern Rock: a lessons learned review7

March 2008


8. Report of the Equitable Life Inquiry8 March 2004

Lord Penrose HM Treasury Non-statutory Yes

9. Report of the Financial Services Authority on the Review of the Regulation of the Equitable Life Assurance Society from 1 January 1999 to 8 December 20009

October 2001

Ronnie Baird (Director FSA internal audit)

FSA Non-statutory Yes

10. Mirror Group Newspapers plc: Report10 March Sir Roger Thomas, Secretary of State for Companies Act Yes 2001 Raymond Turner Trade and Industry 1985, sections

432 and 442

Further reports

Report Published Chair Commissioning person/organisation

Legal basis Representations Process conducted?

11. Iraq Inquiry11 July 2016 Sir John Chilcot Prime Minister (Gordon Brown)

Non-statutory Yes

12. Mid Staffordshire NHS Foundation Trust Public Inquiry12

February 2013

Robert Francis QC Secretary of State for Health (Andrew Lansley MP)

Inquiries Act 2005

Yes

13. Bloody Sunday Inquiry13 June 2010 Lord Saville Prime Minister (Tony Blair)

Tribunals of Inquiry (Evidence) Act 1921

No

7 http://www.fsa.gov.uk/pubs/other/nr_report.pdf 8 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/235298/0290.pdf 9 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/235514/0244.pdf 10 http://webarchive.nationalarchives.gov.uk/20070603164510/http:/www.dti.gov.uk/cld/mirrorgroup/full.pdf 11 http://www.iraqinquiry.org.uk/the-report/ 12 http://webarchive.nationalarchives.gov.uk/20150407084003/http:/www.midstaffspublicinquiry.com/report 13 https://www.gov.uk/government/publications/report-of-the-bloody-sunday-inquiry

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http://www.fsa.gov.uk/pubs/other/nr_report.pdfhttps://www.gov.uk/government/uploads/system/uploads/attachment_data/file/235298/0290.pdfhttps://www.gov.uk/government/uploads/system/uploads/attachment_data/file/235514/0244.pdfhttp://webarchive.nationalarchives.gov.uk/20070603164510/http:/www.dti.gov.uk/cld/mirrorgroup/full.pdfhttp://www.iraqinquiry.org.uk/the-report/http://webarchive.nationalarchives.gov.uk/20150407084003/http:/www.midstaffspublicinquiry.com/reporthttps://www.gov.uk/government/publications/report-of-the-bloody-sunday-inquiry

APPENDIX 4

AUTHOR QUESTIONNAIRE

1. Was a Maxwellisation process conducted for your report? If not, why not?

2. Did any protocol or other statement of the procedure to be followed for your report require a Maxwellisation process to be conducted?

3. How many persons (individual or otherwise) were invited to make representations as part of the Maxwellisation process? How many persons made representations?

4. Were they given a set time in which to provide their representations and, if so, what was the length of time given? Were representations submitted within the set time?

5. Do you have any comments on the length, quality and relevance of the representations submitted to you?

6. Following your receipt of the representations (and any consequential changes to the draft report), were there any further rounds of the Maxwellisation process? If so: (1) why, (2) how many persons were invited to, and did, provide further representations, and (3) were time limits set, and adhered to?

7. How long did the inquiry/report take from start-to-finish, and how much time was taken up by the Maxwellisation process?

8. What was the overall cost of the inquiry/report, and what was the cost attributable to Maxwellisation?

9. What, if any, problems arose during the Maxwellisation process?

10. Did you ask recipients of the draft report/sections of the draft to keep the contents confidential during Maxwellisation? Were these requests respected or were there leaks (if so, how did you deal with these leaks)?

11. Do you consider that the Maxwellisation process improved the quality of your report? If so, please explain.

12. Do you: (1) regard the Maxwellisation process as desirable (why/why not), and (2) have any general observations in relation to the Maxwellisation process?

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APPENDIX 5

RESPONSES TO THE AUTHOR QUESTIONNAIRE

1. Ann Abraham ...........................................................................................................56

2. Sir John Chilcot.........................................................................................................61

3. Clifford Chance .......................................................................................................64

4. Financial Conduct Authority .................................................................................67

5. Sir Robert Francis QC ..............................................................................................72

6. Lord Grabiner QC ....................................................................................................76

7. Tom Kark QC ...........................................................................................................79

8. Lord Penrose.............................................................................................................81

9. Prudential Regulation Authority ..........................................................................83

10. Lord Saville of Newdigate ......................................................................................87

11. Lord Thomas of Cwmgiedd ...................................................................................90

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TREASURY COMMITTEE REVIEW OF MAXWELLISATION

RESPONSE FROM ANN ABRAHAM

PARLIAMENTARY OMBUDSMAN NOVEMBER 2002 TO DECEMBER 2011

INTRODUCTION

Thank you for the invitation to contribute to this review.

You have asked specifically for my response in relation to my investigations into the regulation of Equitable Life, which were conducted in accordance with the provisions of the Parliamentary Commissioner Act 1967, and on which I reported to Parliament in June 2003 and July 2008.

As the Committee will see, my response relates solely to the second investigation and report. As I said in the Foreword to Part one of my July 2008 report (HC 815-i), the conclusions in the second report supersede and replace those set out in the first report, which can no longer be regarded as having any validity. The reasons for that are set out in detail on pages (vii) and (viii) of the Foreword.

In preparing this response I have not had access to the original investigation papers, which have long since been archived and are not quickly or easily accessible. As a result, I have not been able to answer all the Committees questions in detail,

although I hope I have addressed most of the substantive issues.

I have referred to Part one of my July 2008 report, Equitable Life: a decade of regulatory failure. I would suggest that the Committees review might benefit from reading in full two sections of this report:

The Foreword (pages (v) to (xii) of the report, which includes a section on The time taken to publish the report, and some preliminary observations on fairness and due process.

Chapter 3 (pages 35 to 42 of the report) which explains the events leading to the decision to conduct the investigation, and sets out the legal and administrative framework for the investigation and the process used to conduct it, including the stages involved and the associated timescales.

Part five of my report: Guide to the main report and summary of findings and recommendations (HC815-v) may also be of interest to the Committee.

Finally, by way of introduction, I would say that the term Maxwellisation was never used during my time as Ombudsman, although the processes we followed clearly accord with the Committees definition. We described our processes as acting fairly and in accordance with principles of natural justice.

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The legal and administrative framework for the investigation is set out in detail in Chapter 3 of Part One of my July 2008 report, paragraphs 23 to 28 on page 38.

There is no specific requirement in statute to provide anybody whom the Ombudsman is minded to criticise with the relevant parts of the draft report or a summary of the proposed criticism in order to allow them to make representations.

Section 7 of the Parliamentary Commissioner Act 1967 states that where the Ombudsman proposes:

to conduct an investigation pursuant to a complaint under this Act, [she]

shall afford to the principal officer of the department or authority concerned, and to any other person who is alleged in the complaint to have taken or authorised the action complained of, an opportunity to comment on any

allegations contained in the complaint.

The Parliamentary Commissioner Act 1967 gives the Ombudsman considerable discretion as to procedure and the Courts have recognised the width of the discretion granted in this respect.

Nonetheless the PHSO procedure at the time was (and as far as I know still is) to provide, prior to the issue and/or publication of a final report, a full draft of the report to those whose actions had been investigated (whether or not the Ombudsman was minded to criticise those actions). Draft reports were also provided to complainants (or their representatives); and to any affected third parties, such as the Equitable Life Assurance Society itself.

3. How many persons (individual or otherwise) were invited to make

representations as part of the Maxwellisation process? How many persons made representations?

The public bodies involved were: HM Treasury Department of Trade and Industry Financial Services Authority Government Actuarys Department

HM Treasury, the Financial Services Authority and the Government Actuarys Department provided a joint response, co-ordinated by HM Treasury. The Department for Trade and Industry confirmed that it wished to make no separate submissions from those made by HM Treasury.

I also received additional representations from three former Financial Services Authority managers.

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4. Were they given a set time in which to provide their representations and, if so, what was the length of time given? Were representations submitted within

the set time?

Yes, approximately two months, with advance notice. Yes.

5. Do you have any comments on the length, quality and relevance of the

representations submitted to you?

See response to Question 6 below

6. Following your receipt of the representations (and any consequential changes to the draft report), were there any further rounds of the Maxwellisation process? If so: (1) why, (2) how many persons were invited to,

and did, provide further representations, and (3) were time limits set, and adhered to?

Yes.

(1) At the end of January 2007 I sent the public bodies a first draft of my provisional views on relevant facts, whether maladministration had occurred and, if so, whether it had resulted in any injustice to the complainants. I also disclosed to them the provisional report of my actuarial advisers. In April 2007 the public bodies made substantial representations about both the draft report and about the content of the professional advice that had informed the report. In light of those representations I agreed to conduct a fundamental review of my draft report and to seek further professional advice. Supplementary submissions were made by the public bodies in September 2007 at the request of the investigation team.

(2) The revised draft report that resulted from that review was issued in February 2008 to the four public bodies listed above. Again, a joint response was co-ordinated by HM Treasury.

(3) Time limits were set and adhered to.


Chapter 3 of Part One of my July 2008 report, paragraphs 29 to 66, pages 39 to 42, set out the stages of the investigation and the associated timescales.

In summary: July 2004 to March 2005 - the preliminary stage April 2005 to January 2007 the investigation proper January 2007 to July 2008 - draft reports and review.

3 58

Overall the investigation took four years, of which around 18 months was taken up with what the Committee describes as the Maxwellisation process.


The overall cost of the investigation, as reported to Parliament in the PHSO Resource Accounts for 2008/9, was 3.743 million. No separate calculation was done of the cost attributable to Maxwellisation.


A considerable amount of further evidence came to light that had not previously been provided by the bodies under investigation, which then had to be reviewed.

10. Did you ask recipients of the draft report/sections of the draft to keep the

contents confidential during Maxwellisation? Were these requests respected or were there leaks (if so, how did you deal with these leaks)?

Yes, because Section 7(2) of the Parliamentary Commissioner Act requires investigations to be conducted in private.

These requests were broadly respected. There was some speculation in the media and in Parliament but we did not have to deal with any leaks.


Yes. See response to 12 (1) below.

12. Do you: (1) regard the Maxwellisation process as desirable (why/why not),

and (2) have any general observations in relation to the Maxwellisation process?

(1) Yes, because otherwise it would be unfair to those potentially subject to criticism. As importantly, from the perspective of the investigator, it provides an opportunity to test ones understanding and interpretation of the evidence and ultimately makes for a more robust and authoritative report. I believe that was the case with the Equitable Life investigation. It took four years, but even with the benefit of hindsight, I find it hard to see how it might have taken less, given the period under investigation, the volume of evidence, the number of interested parties and the significance of the outcome to the Government and the public purse. The report stood up to considerable scrutiny, including in Parliament and the Courts.

4 59

(2) I agree with the statement by the Chairman of the Committee in his letter of 31 March 2016 to the then Chancellor of the Exchequer that a balance needs to be struck in order to deliver an authoritative report in a reasonable

timescale. At the same time, fairness and due process cannot be compromised because to do so would compromise the integrity, and therefore the value, of the report.

CONCLUSION

I hope that my response is helpful to the Committee and I would be happy to assist the Committee further with its review in any way I can.

I would like to make one further general observation, if I may, which does not relate specifically to the issue of Maxwellisation but may be of interest to the Committee in developing its recommendations to guide future public financial inquiries.

In the Foreword to Part One of my July 2008 report (pages x to xii) I made some observations about the absence of a single inquiry covering all aspects of what was termed the Equitable life affair and made reference to the extended series of reports, published following various inquiries, investigations and other proceedings

relating to Equitable Life. I commented that a comprehensive and fit for purpose inquiry was never established into the Equitable Life affair. I went on to say that ensuring inquiries are fit for purpose at the outset is critical to their success and public confidence in them. I set out some principles which I thought could underpin the fitness for purpose of any inquiry. If these principles are of any interest to the Committee, they may wish to read this section of the Foreword to Part One of my report in full.

Ann Abraham August 2016

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Address 35 Great Sm th Sl!ee London SW1 P 3BQ

T H F Webs,te www.iraqinquiry.org.uk

IRAQ Email secretanat@iraq111qu11y org uk INQl)IRY Committee Sir John Chilcot (Chairman) Sir Lawrence Freedman

Sir Rodenc Lyne Baroness Usl1a Prasl1ar

I

Mr Andrew Green QC Blackstone Chambers Blackstone House Temple London EC4Y 9BW I+ June 2016

~LV~\

RE: MAXWELLISATION REVIEW

Thank you for your letter of 17 May, and attached questionnaire. I would be pleased to assist your review, and responses are enclosed.

I should be grateful to be consulted, before the end of July, if you intend to publish or to refer with attribution to any of the points enclosed.

Yours sincerely

SIR JOHN CHILCOT

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RESPONSES TO MAXWELLISATION QUESTIONNAIRE

1. Yes, the Iraq Inquiry did conduct a Maxwellisation process.

2. The Inquiry made acommitment to Maxwellise when witnesses agreed to give evidence. Paragraph 30 of the Protocol for witnesses giving evidence to the Iraq Inquiry said:

"If the Inquiry expects to criticise an individual in the final report, that individual will, in accordance with normal practice, be provided with relevant sections of the draft report in order to make any representations on the proposed criticism prior to publication of the final report."

3. I regret to say that details of the Inquiry's Maxwellisation process are confidential, including the number of participants. I can confirm, however, that the Inquiry only Maxwellised individuals who had appeared before it in evidence. All those who were engaged in the process made representations to the Inquiry.

4. Maxwellees were given a time period within which they were asked to respond. The length of that period varied between individuals based on the amount of material sent to them. The Inquiry agreed a number of requests for that time period to be extended which it considered to be reasonable and justified.

5. Representations received varied considerably, but all addressed points relevant to the material supplied.

6. In a limited number of cases, Maxwellisation prompted some follow-up correspondence with individuals including provision of a small amount of text.

7. The Iraq Inquiry was commissioned by the then Prime Minister, Mr Gordon Brown, in July 2009 and will report on 6 July 2016. Maxwellees were initially notified that they would be part of the process in summer 2013. Ultimately, as set out in my letter to the Prime Minister of 4 November 2013 (which can be read on the Inquiry's website) Maxwellisation could not begin until issues surrounding the declassification of very sensitive material were finally resolved; it was under way by the end of the 2014.

8. The Inquiry's total cost to the end of financial year 2014/15 was 10,375,000. Final costs will be published on the Inquiry's website after publication of the Report. It is not possible to disaggregate the specific costs of Maxwellisation, which has consumed varying proportions of Secretariat and Committee time since 2013. Cash costs, for delivery and printing, were minimal.

9. The most challenging aspect of the process was ensuring safe return to the Inquiry of all material provided to Maxwellees and their advisers, but engagement with the process was, in general terms, consistently constructive.

10. All Maxwellees and their advisers were asked to sign a Confidentiality Undertaking, and were asked to return material supplied to them once they had submitted their representations. We are not aware of any leaks of draft report text.

11. The Inquiry Committee is collectively of the view that the Maxwellisation process provided constructive input to the Inquiry's Report. The submissions received were, on the whole, detailed and helpful and the Inquiry Committee was able to review its findings in the light of them. Some additional material, which had not previously been supplied to the Inquiry, was also identified.

2

62

12. As regards the Iraq Inquiry, Maxwellisation wasan important component of our procedure and was necessary to ensure that those who might oe criticised in the report were provided with an opportunity to comment on potential criticism of them.

3

63

TREASURY SELECT COMMITTEE MAXWELLISATION REVIEW

QUESTIONNAIRE FOR AUTHORS OF FINANCIAL REPORTS

RESPONSES FROM CLIFFORD CHANCE

INTRODUCTION

This document sets out the responses of Clifford Chance LLP ("Clifford Chance") to the

questionnaire received by Greg Choyce of the Financial Conduct Authority (the "FCA") from

Andrew Green QC of Blackstone Chambers by a letter dated 11 May 2016.

These responses relate to the conduct by Simon Davis and Clifford Chance of the inquiry into

the disclosure by the FCA of its Business Plan 2014/2015 and of its proposed supervisory work

on the fair treatment of long-standing customers in life insurance on 27 and 28 March 2014

(the "Inquiry").

RESPONSES TO THE MAXWELLISATION QUESTIONNAIRE


1.1 Yes.


2.1 Yes, Section E of the protocol agreed with the FCA and published on 2 May 2014 (the "Protocol"), stated as follows:

"E. Maxwellisation

22. Insofar as you intend in your report to make criticism of individuals, groups of identifiable individuals or organisations (including the FCA), (1) you will identify those individuals, groups or organisations, who will be given a reasonable opportunity to make representations in relation to such proposed criticisms and, having received any responses, (2) you will consider those responses prior to producing your report.

23. The contacts listed in clause 4 above1 (1) will assist you (if so requested) in deciding which individuals, groups or organisations should be given an opportunity to make such representations, and (2) will provide you with such administrative assistance as is reasonably required by you for the purpose of conducting this Maxwellisation process."

3. How many persons (individual or otherwise) were invited to make representations as part of the Maxwellisation process? How many

persons made representations?

1 Being the individuals specified by the FCA as the individuals with whom Clifford Chance should liaise in respect

of the Inquiry.

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3.1 We invited 23 persons (including as representatives of institutions) and their legal advisers to make representations. 20 replied.

4. Were they given a set time in which to provide their representations and, if so, what was the length of time given? Were representations

submitted within the set time?

4.1 Individuals and/or their legal advisers were asked to provide their representations within 21 days of the date on which they saw the Report.

4.2 The majority of representations and factual comments were submitted within the set time. There were a small number of extensions given to individuals in extenuating

circumstances.


5.1 We considered the majority of the representations we received to be relevant and of reasonable quality, assisted by the fact that the majority of the representations were

made by legal advisers.

5.2 The comments and representations we received varied in length but were, in general, proportionate to the level of involvement the relevant individual had in the events that

were the subject of the Inquiry and the number and weight of the criticisms to which

the relevant individual was subject.

6. Following your receipt of the representations (and any consequential changes to the draft report), were there any further rounds of the

Maxwellisation process? If so: (1) why, (2) how many persons were

invited to, and did, provide further representations, and (3) were time

limits set, and adhered to?

6.1 No.

7. How long did the inquiry/ report take from start-to-finish, and how much time was taken up by the Maxwellisation process?

7.1 The Inquiry took approximately seven months and two weeks from the appointment of Simon Davis on 8 April 2014 to the delivery of the Report to the FCA on 20 November

2014. The FCA published the Report on 10 December 2014.

7.2 The Maxwellisation process took approximately seven weeks.

8. What was the overall cost of the inquiry/ report, and what was the cost attributable to Maxwellisation?

8.1 The Inquiry cost approximately 2 million. Approximately 60,000 of this was attributable to Maxwellisation.


9.1 No problems arose.

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10. Did you ask recipients of the draft report/ sections of the draft to keep the

contents confidential during Maxwellisation? Were these requests

respected or were there leaks (if so, how did you deal with these leaks)?

10.1 All persons invited to review the Report were asked to sign a non-disclosure agreement

in advance. In addition, they were asked to keep confidential the fact of the

Maxwellisation process. We are not aware that there were any leaks.

11. Do you consider that the Maxwellisation process improved the quality of

your report? If so, please explain.

11.1 Yes. In particular, the Maxwellisation process was useful in ensuring that the wording

of the Report matched the underlying facts and that its account of the facts and the

knowledge of the various individuals at the time was accurate.

11.2 Not only was the quality of the Report improved but the lack of any challenge

subsequently to the facts or conclusions of the Report speaks volumes.

12. Do you: (1) regard the Maxwellisation process as desirable (why/why not),

and (2) have any general observations in relation to the Maxwellisation

process?

12.1 We consider that natural justice and fairness requires an inquiry to allow those

potentially criticised to respond prior to publication of the final report. However

thorough an inquiry might be there is always a risk that a material fact may be missed

or misunderstood or misinterpreted. The consequences of the report may destroy an

individual's reputation and lead to criminal and civil proceedings. It would be too late

for any material correction to be made after the publication of the report. Furthermore,

as mentioned above, the process increases the quality of the report and, indeed, its

validity. For example, if the report was shown to be materially wrong in even one

respect, that could undermine its validity and credibility as a whole.

12.2 As a general observation, the problem is not so much that a Maxwellisation process

exists which is fundamentally important for the reasons given but that it can be allowed to become unwieldy. By way of examples, an overly prescriptive approach to

those extracts which an individual can see may lead to confusion and delay, allowing

individuals and their legal advisers to review emailed drafts at their leisure (rather than

inspecting a document in a meeting room) may lead to overly-extensive representations,

having too limited resources available for the process, e.g. one meeting room with

individuals being obliged to review the report consecutively over many weeks, can lead

to delay. The overall purpose of the process must not be overlooked: to allow those

running the inquiry to be satisfied that relevant representations on facts and conclusions

have been sought, obtained and considered within a reasonably short and reasonably

inexpensive timeframe. Our firm view overall is that the problem with Maxwellisation

is likely to be poor process rather than the process of Maxwellisation itself.

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REVIEW OF MAXWELLISATION BY ANDREW GREEN QC:

RESPONSE OF THE FINANCIAL CONDUCT AUTHORITY TO THE AUTHOR'S QUESTIONNAIRE

The table below relates to the following financial reports:

'Internal Audit report: A review of the extent of awareness within the FSA of inappropriate LIBOR submissions', published in March 2013 ('LIBOR')

'The failure of the Royal Bank of Scotland', published in December 2011 ('RBS')

'The supervision of Northern Rock: a lessons learned review', published in March 2008 ('Northern Rock')

'Report of the Financial Services Authority on the Review of the Regulation of the Equitable Life Assurance Society from 1 January 1999 to 8 December

2000', published in October 2001 ('Equitable Life')

[Note: The table below provides answers to the factual questions in the Questionnaire. For the FCA's general comments and observations on the

Maxwellisation process, please refer to the FCA's Response to the Call for Evidence]

QUESTION

1 'Was a Maxwellisation process conducted for your reoort?'

2 'Did a protocol or other statement of the procedure to be followed for your report require a Maxwellisation process to be conducted?'

'How many persons (individual or otherwise) were invited to make reoresentations as oart of the

LIBOR Yes

There was no published Protocol for this review. Internal FSA records show that a Maxwellisation process was to be carried out before the Report could be published.

25 persons (individuals or otherwise) were invited to make representations.

INFORMATION FOR RESPONSE

RBS Yes

There was no published Protocol for this review. Internal FSA records show that a Maxwellisation process was to be carried out before the Report could be published (and see para. 26 of the Report). 48 persons made representations.

Northern Rock Yes (referred to as a 'disclosure exercise')

There was no published Protocol for this review. Internal FSA records show that a Maxwellisation process was to be carried out before the Report could be published.

57 persons were invited to make representations.

E

4

Maxwellisation process?'

'How many persons made representations?'

'Were they given a set time in which to provide their representations and, if so, what was the length of time given?

Were representations submitted within the set time?'

'Following your receipt of the submissions (and any consequential changes to the draft report), were there any further rounds of the Maxwellisation process?

16 persons made representations.

Yes. A deadline of two weeks was given. All but three of the respondents submitted responses within the set time.

There were no further requests rounds of the Maxwellisation process.

Yes. Maxwellisation took place in two stages, by way of giving access to extracts from the draft report. At the first stage, representations were invited within one week. At the second stage, some six months' later, representations were invited within three weeks. Representations continued to be received after these time limits, particularly at the first staqe. See the answer to Question 4.

28 persons made representations.

This appears to have been the case. The time between the process starting and the publication of the Report suggests that a deadline of no more than four weeks was given and all representations were received within that period.

There were no further rounds of the Maxwellisation process.

certain of the inquiry's preliminary findings and opinions, and inviting representations from the FSA and certain divisions within it and the Government Actuary's Department (see para. 1.7.5 of the Report).

Representations were made on behalf of the FSA and other oarties. Responses were requested within 2 weeks. Correspondence with some parties continued after this initial period.

There were no further rounds of the Maxwellisation process.

2

68

6

7

8

If so: (1) why, (2) how many persons were invited to, and did, provide further representations, and (3) were time limits set, and adhered to? 'How long did the inquiry/ report take from start to finish, and how much time was taken up by the Maxwellisation process?

'What was the overall cost of the inquiry/ report, and what was the cost attributable to Maxwellisation?'

'What, if any, problems arose durina the Maxwellisation

The review started in July 2012 and its Report was published in March 2013. The Maxwellisation process lasted for about four weeks.

No external costs were incurred by the review team.

There were no significant oroblems encountered. The

The review started in December 2010 and its Report was published in December 2011.

In relation to Maxwellisation, see the answer to Question 4.

The cost of external legal, accountancy and communication support for the review team was advice was 132,132 {including VAT).

Legal support for the Treasury Committee's Independent Reviewers was 60,697 {including VAT).

No separate breakdown for the cost of Maxwellisation has been found . There were no sianificant oroblems

The review started in October 2007 and its Report was published in March 2008. The Maxwellisation process lasted for about four weeks.

No external costs were incurred by the review team.

The review started in January 2001 and its Report was published in October 2001. It appears that the core Maxwellisation process lasted for about six weeks, taking into account the time spent drafting the Maxwellisation schedules and considering resoonses. The cost of external legal and actuarial support for the review was 2.2mn {including VAT) .

No separate breakdown for the cost of Maxwellisation has been found.

3

69

9

process?'

10 'Did you ask recipients of the draft report/ sections of the draft to keep the contents confidential during Maxwellisation?

Were these requests respected or were there leaks (if so, how did you deal with these leaks)?'

11 'Do you consider that the Maxwellisation process improved the quality of your report? If so, please explain'

FSA's method of Maxwellisation was to provide hard copies of extracts from the draft report in a "data room" in its premises. This required a considerable amount of time to be spent on the practical arrangements in order to make the process work smoothly.

Yes - all respondents signed confidentiality undertakings with the FSA.

The process did not result in substantial changes to the report. The changes made improved factual accuracy and overall readability . A number of these can be attributed to

encountered. The FSA's method of Maxwellisation was to provide hard copies of extracts from the draft report in a "data room" in its premises. This required a considerable amount of time to be spent on the practical arrangements in order to make the process work smoothly. In addition, the large number of comments received from respodents (over one thousand at each stage of the process) took a considerable amount of time and resource to orocess. Yes - all respondents signed confidentiality undertakings with the FSA.

The two processes carried out in this review resulted in a large number of changes being made to the reoort. which

Yes - all respondents signed confidentiality undertakings with the FSA.

The process resulted in only minor changes being made to the report.

Yes - letters to the recipients of Maxwellisation schedules asked them to ensure that the contents of the letters and enclosures were kept strictly confidential.

Yes - as the process allowed the review team to consider the points made by relevant parties and to make changes where aoorooriate prior

4

70

editorial refinements rather than improved its accuracy, to publication of the to the Maxwellisation process. comprehensiveness and Report.

overall readability . It should be noted however that changes were also made to the report as a result of input received from the two Independent Reviewers appointed by the Treasury Select Committee in April 2011 .

5

71

RESPONSE TO MAXWELLISATION QUESTIONNAIRE BY SIR ROBERT FRANCIS QC

Please note that these answers are given without access to inquiry records other than those in the public domain and are therefore from recollection.

1. Was the Maxwellisation process conduced for your report?

Yes, pursuant to rule 13, 14, 15 of the Inquiry Rules


Yes. See paragraphs 42-48 of the Procedures Protocol [http://webarchive.nationalarchives.gov.uk/20150407084003/http://www.midstaffs publicinquiry.com/sites/default/files/Mid_Staffs_Public_Inquiry_-_procedures_protocol_-_updated_19_Jan_2012.pdf]

And the Addendum to the Procedures protocol: Warning Letters [http://webarchive.nationalarchives.gov.uk/20150407084003/http://www.midstaffs publicinquiry.com/sites/default/files/Addendum_to_procedures_protocol_-_warning_letters_6.7.12.pdf]


I have no recollection as to the numbers, and would in any event regard that number as confidential. The number was not published in the report. From recollection a significant number of those sent letters offered a response.


Yes. Generally 14 days was allowed. However the Protocol setting this out as the time limit was published several months before the letters were sent out. The vast majority of responses were submitted within the specified time although from recollection a small number of requests for short extensions were made [and granted]

721

http://webarchive.nationalarchives.gov.uk/20150407084003/http://www.midstaffshttp://webarchive.nationalarchives.gov.uk/20150407084003/http://www.midstaffs


Generally the responses were helpful although in some cases lengthy. Those that were lengthy tended to repeat points made during the evidence previously submitted to the inquiry rather than focusing on the points of possible criticism.


No, not to my recollection. Please note that the warning process did not involve sharing drafts or draft extracts of the report with the recipient but a schedule summarizing the potential criticism listing the evidence references it was considered were capable of supporting the criticism.


The Inquiry was announced and I was appointed to chair it, on 9 June 2010, and the report was delivered to the Secretary of State on 5 January 2013. It was published on 6 February 2013. The warning letter process occurred between August and October 2012. However a significant period of time before then was devoted to deciding to whom such letters should be sent and their content, based on drafts of the report as they were produced. Following receipt of the letters a period of some 2 months was largely devoted to digesting the content of the responses.


The overall cost of the inquiry was approximately 13 million. No separate figures were published or to my recollection kept with regard to the warning letter process.


A considerable period of time was taken up in considering the requirements of confidentiality imposed by rule 14 of the inquiry Rules, which in my opinion is obscure and difficult to construe, let alone apply.

This resulted in correspondence with one large institutional core recipient as to whom they were permitted to share the warning letter and whether they should be entitled to see warning letters sent to other recipients.

The entire process was a logistical challenge for the inquiry requiring considerable input from the legal team and secretariat.

732


As explained above the draft report/extracts were not shared with recipients of warning letters. They were required to keep confidential the fact and content of the letters in accordance with the protocol see above for references] There was general permission to share with legal advisers, but a requirement that permission be sought from the inquiry before sharing the letter with any other person, who would be required to give an undertaking of confidentiality in a form prescribed by the inquiry. Such requests were made and some were granted.

I am not aware of any leaks contrary to the requirements of the procedure.


I believe a small number of factual errors were corrected as a result. Few, if any, potential criticisms were changed or withdrawn as a result of the process. My personal opinion is that the process was disproportionate to the value it brought to the inquiry and the public interest, but I should add that my inquiry was not one in which primary facts were generally in dispute.


See above. I consider the requirements of the process need substantial review. The terms of rules 13 are very broad and do not allow for proportionality. The task facing an inquiry jn deciding whether a criticism can be inferred from evidence that has been given during the inquiry, for example requires an extensive hypothetical exercise. The prohibition on including in the report any explicit or significant criticism is opaque. What is the intended difference between an explicit and a significant criticism? Does it mean that a minor but express criticism requires a letter? Why is the process required at all if the criticism has been contained in evidence made available to the subject during the course of the inquiry, either by way of being a core participant with access to the evidence [and the ability to submit responses during the course of the inquiry], or a witness to whom criticisms have been put?1 Surely all that is required is to give the chairman the discretion to send a warning letter where it is considered necessary in the interests of fairness to an individual or corporate body.

I observe that the practice of some inquiries is to offer recipients of warnings drafts of the report. In my view this is an unnecessary practice so long as the letter

Because more the potential criticisms were with regard to core participants or individuals who had attended the inquiry as witnesses I felt that a very short period within which to respond to warning letters [preceded by a warning that this was the intention] was justified.

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1

contains a fair summary of the point being made and some signposting to the evidence which it is considered may support the criticism.

24 August 2016 Sir Robert Francis QC 85 Fleet Street London EC4Y 1AE

754

The Lord Grabiner QC

Andrew Green QC Blackstone Chambers Blackstone House London EC4Y 9BW

26 May 2016

Dear

Thank you for your email of 11 May 2016 requesting that, in light of my report ('Bank of England Foreign Exchange Market Investigation'), I answer your questionnaire on the Maxwellisation process I followed. Please find attached my answers to those questions.

Please let me know if I can provide any further assistance.

Yours sincerely,

Lord Grabiner QC

One Essex Court, Temple, London EC4Y 9AR

Tel: 020 7583 2000 Fax: 020 7583 0118 Email: [email protected]

76

mailto:[email protected]

MAXWELLISATION QUESTIONNAIRE


Yes.


No.


2 people were invited to make representations. Both did so.


The relevant people were given a week to provide representations. All representations were submitted within the set time.


No. The representations made were of appropriate length and quality, and were relevant to the issues raised.


No.


The inquiry took 8 months from start to finish. The Maxwellisation process took approximately 3 weeks of that time.


The overall cost of the report was 2.93 million (excl. VAT). Costs were not recorded according to whether or not they were attributable to Maxwellisation and so a precise figure for the costs of the

77

Maxwellisation process cannot be provided. I understand from Travers Smith, who supported me in the inquiry, that 15,000 is a fair estimate of the costs attributable to Maxwellisation.


No problems arose.


Recipients were asked to provide assurances before receiving the draft sections, including that they would be held under the strictest terms of confidence. These assurances were respected.


Yes. It gave the relevant people an opportunity to consider carefully the precise comments being made about them and, if they wished, to try to dissuade me from making those comments. Where those representations were unpersuasive, it gave me comfort that my provisional conclusions were correct. Where those representations were persuasive, they enabled me to amend and improve my provisional conclusions.


I regard the Maxwellisation process as, in general, desirable but the precise process followed must be tailored to the relevant circumstances. The guiding principle should be that, where an investigator intends to criticise a person in a published report, the investigator should ensure that person has been given an opportunity to address the criticism(s) proposed to be made and the investigator should consider those representations before coming to a final conclusion. This can be achieved in a number of different ways and there is no requirement that it is achieved by providing extracts of a near final draft of a report to the relevant person for comment (for example, it was sufficient in the original case of Maxwell v DTI that the criticisms had been put orally to Mr Maxwell in interviews). However, in my opinion, there are two particular advantages of providing extracts of a near final draft of the report to the relevant persons. First, where those criticisms are not materially changed followed representations by the relevant person, there can be no dispute that the criticisms have been properly put to that person. Secondly, providing the provisional criticisms in writing gives the person the opportunity to consider the precise criticisms proposed to be made than would be the case if those criticisms had merely formed part of a wide-ranging oral interview.

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Response by Tom Kark QC Counsel to the Inquiry into the Mid Staffordshire

NHS Trust (the Francis Inquiry)

1. Was a Maxwellisation process conducted for your report? If not, why not? Yes it was

2. Did any protocol or other statement of the procedure to be followed for your report require a Maxwellisation process to be conducted? Yes. With Sir Robert Franciss

permission I can provide you with the relevant protocol.


I have checked the schedules and approximately 73 letters of potential criticism were sent

out. A number of those made representations but I would need to check each one to see the

extent to which criticisms were challenged.

4. Were they given a set time in which to provide their representations and, if so, what was the length of time given? Were representations submitted within the set

time?

According to the protocol each recipient was given fourteen days from the day following

despatch of the letter with some applying for a short extension.

5. Do you have any comments on the length, quality and relevance of the representations submitted to you? My team read the responses and then reduced those

responses to a schedule for SRF. In general my recollection is that the responses were

sensible although not always successful in resisting criticism.

6. Following your receipt of the representations (and any consequential changes to the draft report), were there any further rounds of the Maxwellisation process? If

so: (1) why, (2) how many persons were invited to, and did, provide further

representations, and (3) were time limits set, and adhered to? To my recollection

there was no second round of letters.

7. How long did the inquiry/report take from start-to-finish, and how much time was taken up by the Maxwellisation process? We opened the inquiry in July 2010.

Our first day of hearing evidence was 8th November 2010, our last day of evidence was 7

October 2011. We had one extra day of late evidence on the 29th November 2011. The

inquiry therefore heard 134 days of evidence. Warning letters were sent out to my

recollection in late August and early September 2012 and in general the time limits were

complied with. The responses were scheduled by my team and presented to SRF who then

considered them. My recollection is that the responses were discussed with SRF and he

made a decision as to whether to accept the explanation or continue with his criticism.

79

8. What was the overall cost of the inquiry/report, and what was the cost attributable to Maxwellisation? My recollection is that the total cost of the inquiry was 14 million.

I am not able to attribute how much of that was due to Maxwellisation but I would guess

that it would be less than 5% of the total costs.

9. What, if any, problems arose during the Maxwellisation process? Some late responses.

10. Did you ask recipients of the draft report/sections of the draft to keep the contents

confidential during Maxwellisation? Were these requests respected or were there

leaks (if so, how did you deal with these leaks)? Yes. The protocol required complete

confidentiality and only a prcis of the draft section of the report relevant to the individual

being criticised was revealed to them. No individual saw anyone elses potential criticism

nor did any individual see the precise wording of the report but only CTTIs prcis of the

criticism. It was not in their interests to reveal them publicly. Furthermore each criticism

was referenced in the schedule which the participant received to the evidence upon which

that criticism was based. I do not recall there being any leaks. SRF may have a better

recollection.

11. Do you consider that the Maxwellisation process improved the quality of your

report? If so, please explain. Yes, very much so. We had made some factual errors which

were corrected and some criticisms were mitigated. Other responses revealed the criticism

was well founded. The report had greater validity because of this process.

12. Do you: (1) regard the Maxwellisation process as desirable (why/why not), and (2)

have any general observations in relation to the Maxwellisation process? For my

part as Counsel to the Inquiry I think the process was critical to the success of the report.

We ensured as far as possible that no one was unjustly criticised. In oral evidence it is easy

to make an error or to mis-speak and the process gave people a chance to reflect and provide

an explanation. On some occasions the criticism was altered or softened as a result of a

sensible explanation. To publish publicly personal criticism of professional people when

they have no recourse to law where that criticism is wrong or unfounded may lead to

injustice. The report in my view had greater weight and SRFs recommendations had

greater weight and validity because of the care taken to ensure the criticisms were well

founded. Maxwellisation was an essential component of that process. However it is critical

that firm control is kept over the timing of Maxwellisation and that the onus is put upon

the participants to ensure they respond very promptly. My recollection is that no one, even

with an extension, took more than 28 days to respond. We created our own procedure using

prcis of criticisms and schedules with referenced evidence.

I would only add that throughout our inquiry it astonished me that we had to reinvent the

wheel and there was no sensible way of learning the pitfalls of previous inquiries. I would

be happy to expand on this if required.

Tom Kark QC 17 July 2016

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MAXWELLISATION AUTHOR QUESTIONNAIRE

RESPONSE FROM LORD PENROSE

Was a Maxwellisation process conducted for your report? If not, why not?

A Maxwellisation process was conducted.

Did any protocol or other statement of the procedure to be followed for your report require a

Maxwellisation process to be conducted?

No. The inquiry was not a statutory process. It had no statutory powers, nor was it subject to

any procedural rules or regulations other than those dictated by fairness.

How many persons (individual or otherwise) were invited to make representations as part of

the Maxwellisation process? How many persons made representations?

I do not have access to the inquiry files. These are in the possession of HM Treasury. I cannot

answer this question from memory. The report was delivered in December 2003.

Were they given a set time in which to provide their representations and, if so, what was the

length of time given? Were representations submitted within the set time?

To the best of my recollection a time limit of eight weeks was set for responses, and most, if not

all, of the individuals contracted met the time limit.

Do you have any comments on the length, quality and relevance of the representations

submitted to you?

I was appointed on 31 August 2001. At that stage litigation was already in progress. Many of

the central characters in the Equitable Life drama had already adopted firm positions in written

pleadings, affidavits and other statements of position prepared for the purposes of litigation.

The representations I received were carefully crafted by legal advisers and, in the case of those

involved in the litigation, reflected their positions in those documents. Since they repeated

positions already well known, they were generally of no use whatsoever.

Following your receipt of the representations (and any consequential changes to the draft

report), were there any further rounds of the Maxwellisation process? If so: (1) why, (2) how

many persons were invited to, and did, provide further representations, and (3) were time

limits set, and adhered to?

There were no further rounds of the process.

How long did the inquiry/report take from start-to-finish, and how much time was taken up

by the Maxwellisation process?

The inquiry process took two years and four months. I cannot recollect how much time was

taken up by Maxwellisation. It was carried out while other work was in hand and it would be

difficult to allocate time without detailed contemporary records. There was no allocation of cost,

so far as I can now recollect.

81

What, if any, problems arose during the Maxwellisation process?

I did not have statutory or other powers of compulsion. Parties were free to co-operate or not

as they thought best suited their circumstances. The frustration that characterised the evidence

collecting process throughout the inquiry continued during the Maxwellisation process. In the

circumstances, the problems associated with Maxwellisation were related to the limitations of

the informal procedure rather than to Maxwellisation as such.

Did you ask recipients of the draft report/sections of the draft to keep the contents

confidential during Maxwellisation? Were these requests respected or were there leaks (if so,

how did you deal with these leaks)?

To the best of my recollection parties were asked to keep confidential the material sent to them

for comment. I do not recollect any significant leaks.

Do you consider that the Maxwellisation process improved the quality of your report? If so,

please explain.

No. Since the most important individuals had already adopted fixed positions, it was inevitable

that the responses to Maxwellisation would be repetitive of material already in the litigation

proceedings. It did not add anything to the exercise as a whole, and did not affect the final

report.

Do you: (1) regard the Maxwellisation process as desirable (why/why not), and (2) have any

general observations in relation to the Maxwellisation process?

1. Some form of Maxwellisation is essential in most, if not all, inquiries. At one extreme, when the processes adopted reflect judicial proceedings in ordinary litigation, and the parties

have been represented throughout by competent lawyers, Maxwellisation allows an

individual to reflect on the implications of impending publication and may allow nuancing

of the final report in ways that add to its acceptability, and perhaps its authority. At the

other, when significant parts of the procedure may have involved extensive examination of

documents or of publications, taken as read in the course of public hearings, the inferences

that might be drawn by the panel can remain obscure until they are reduced to writing.

Maxwellisation would be essential. Apart from such considerations, fundamental fairness

requires that individuals should know the criticisms likely to be directed against them by an

inquiry panel and have an opportunity to respond.

2. Equitable Life is the only financial inquiry I have conducted. I do not consider it an appropriate basis for informed views on the Maxwellisation process in such inquiries.

82

Maxwellisation Questionnaire Response of the Prudential Regulation Authority

The Failure of HBOS plc (2015)

The Prudential Regulation Authority (the PRA) welcomes the opportunity to provide comments to the

review of Maxwellisation commissioned by the House of Commons Treasury Committee (the

Review). This document constitutes the PRAs response to the Questionnaire for the authors of the

report by the PRA and the Financial Conduct Authority (the FCA), The Failure of HBOS plc

published in November 2015 (the HBOS Review). This document should be read together with the

PRAs submission to the Review, dated 29 July 2016.


A Maxwellisation process was conducted for the HBOS Review.

2. Did any protocol or other statement of the procedure to be followed for your report require

a Maxwellisation process to be conducted?

The Detailed Terms of Reference for the HBOS Review, published in July 2014, expressly

contemplated a Maxwellisation process.

3. How many persons (individuals or otherwise) were invited to make representations as part

of the Maxwellisation process? How many persons made representations?

During the first round of Maxwellisation in the HBOS Review, 82 affected parties and/or their legal

representatives were invited to participate in the Maxwellisation process. They were provided with a

template for submissions of representations which was intended to allow the HBOS Review Team to

see clearly which representations related to which specific paragraphs of the HBOS Review.

During this first round, 1,425 representations were received from 35 different individuals and their

legal representatives.

4. Were they given a set time in which to provide their representations and, if so, what was

the length of time given? Were representations submitted within the set time?

For the first round of Maxwellisation in the HBOS Review, relevant parties and their legal

representatives were invited to review relevant extracts in hard-copy form in a secure physical data-

room, from 30 July 2014 to 20 August 2014, with 27 August 2014 being the deadline for providing

representations. As this period fell over the summer and some parties were on holiday, after

discussions with relevant parties and/or their legal representatives, the deadline for the data-room

availability was extended to 5 September 2014 and the deadline for providing representations was

extended to 19 September 2014. The majority of representations were received in line with this

extended deadline, however, certain parties reserved the right to make further representations to the

Maxwellisation process for the HBOS Review after they had taken part in the Maxwellisation process

for the report by Andrew Green QC into the FSAs enforcement actions following the failure of HBOS,

published in November 2015 (the Green Review) (the Maxwellisation process for the Green Review

took place in October 2014).

83

1

5. Do you have any comments on the length, quality and relevance of the representations

submitted to you?

In any complex, high-profile review where individuals are criticised, the report-writer is likely to receive

a significant volume of representations from individuals involved in the Maxwellisation process. The

HBOS Review experience was that some Maxwellisees were represented by the same firm of lawyers

and, in some cases, produced joint (or overlapping) representations.

However, certain responses received during the Maxwellisation process for the HBOS Review were,

in the PRAs view, unduly long and, on occasion, unnecessarily repetitive. Many of the

representations were not submitted on the supplied template, but were of a more narrative character.

In addition, some representations were not tied to specific paragraphs. This led to additional work for

the HBOS Review Team in determining to which parts of the HBOS Review the representations

related, and how they should be dealt with. In addition, on occasion cross-references to the HBOS

Review were unclear, necessitating further work on the part of the HBOS Review Team to tie them

into specific parts of the HBOS Review. Both of these issues complicated, and therefore may have

lengthened, the Maxwellisation process.

6. Following your receipt of the representations (and any consequential changes to the draft

report), were there any further rounds of the Maxwellisation process? If so: (1) why, (2)

how many persons were invited to, and did, provide further representations, and (3) were

time limits set, and adhered to?

The Maxwellisation process for the HBOS Review was made up of two stages. Following the first

round of Maxwellisation (see above), a second round of Maxwellisation was subsequently conducted.

This was primarily due to responses received in the first round which had resulted in either: (i) more

significant criticisms being made of individuals involved in the initial stages of Maxwellisation; or (ii)

new criticisms being made of individuals who were not involved in the initial stages of Maxwellisation.

As such, the second round involved Maxwellisation of some individuals for the first time as well as a

degree of re-Maxwellisation of other individuals.

In the second round of Maxwellisation and re-Maxwellisation, 34 parties and/or their legal

representatives were invited to participate, and a further 227 representations were received from 30

different individuals and their legal representatives.

The second round commenced in September 2015. A two week deadline of 18 September 2015 was

given for submitting representations, which was extended to 25 September for a number of

Maxwellisees upon specific reasoned request. A secure on-line data-room facility was used to allow

access to relevant text from any location.

7. How long did the inquiry / report take form start-to-finish, and how much time was taken up

by the Maxwellisation process?

The HBOS Review commenced in September 2012 and the final report was published in November

2015 (a total of three years and two months). During the two months of June and July 2014, the PRA

84

2

took the final steps in preparation for Maxwellisation to begin, including seeking the consents required

under section 348 of the Financial Services and Markets Act 2000 to disclose material protected by

that section to Maxwellisees. The Maxwellisees were then invited to view the criticisms relating to

them, submit their representations, and the PRA then considered the representations received. The

final three steps (when Maxwellisation was actually in train) started in July 2014, and took 14 months.

The HBOS Review Team continued to refine the HBOS Review throughout the Maxwellisation

process, in addition to dealing with representations from Maxwellisees.

8. What was the overall cost of the inquiry / report, and what was the cost attributable to

Maxwellisation?

As Andrew Bailey set out in his foreword to the HBOS Review, the cost of producing both the HBOS

Review and the Green Review is estimated to be 7 million. This represents the costs incurred by the

authorities in addition to their regular budgets. Due to the fact that the HBOS Review was run as a

single project, it has not been possible to determine the total cost attributable to the Maxwellisation

process, as distinct from the overall cost of the HBOS Review.


No significant problems arose during the Maxwellisation process for the HBOS Review.

However, due to the significant number of people involved, the Maxwellisation process for the HBOS

Review was logistically complex. This complexity was intensified by the lack of certainty as to what

the law in fact requires in terms of process. Further comments on this uncertainty are provided in the

PRAs submission to the Review, dated 29 July 2016.

10. Did you ask recipients of the draft report/sections of the draft to keep the contents

confidential during Maxwellisation? Were these requests respected or were there leaks (if

so, how did you deal with these leaks)?

All participants of the Maxwellisation process for the HBOS Review were asked to sign a

Confidentiality Agreement and a Data Room Rules Agreement, requiring them to keep information

obtained during the Maxwellisation process confidential.

Nonetheless, there were leaks of confidential information during the HBOS Review. These leaks

appeared to have occurred at the same time as the process of Maxwellisation, but it was not possible

to identify with any certainty the source of the leaks or whether they were attributable to the

disclosures made during the Maxwellisation process.

11. Do you consider that the Maxwellisation process improved the quality of your report? If so,

please explain.

The PRAs experience in the HBOS Review was that, even though the Maxwellisation process was

complicated and time consuming, Maxwellisation responses did lead to amendments being made

which, in the PRAs opinion, made the final report a more robust account of the failure of that firm and

the FSAs actions as a regulator.

85

3

12. Do you: (1) regard the Maxwellisation process as desirable (why / why not), and (2) have

any general observations in relation to the Maxwellisation process?

The PRA considers that some form of Maxwellisation process is important in protecting the rights of

individuals. The PRAs experience is that the process also acts to improve the quality and robustness

of the final report. However, a lack of certainty as to what the law requires in terms of process has

meant that the Maxwellisation process can become lengthy and labour intensive, requiring a

significant amount of time and resource. Further general observations in relation to the

Maxwellisation process are set out in the PRAs submission to the Review, dated 29 July 2016.

The PRA welcomes the opportunity afforded by this Review to obtain further clarity as to certain

aspects of the Maxwellisation process. The PRA would welcome a set of guidelines or

recommendations for Maxwellisation that encourage consistency in the design of Maxwellisation

processes, balancing fairness, transparency and efficiency. The PRA considers that guidance may

assist future report-writers to produce robust reports that appropriately take into account the views of

individuals subject to potential criticism.

Prudential Regulation Authority

30 September 2016

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4


With regard to the Bloody Sunday Inquiry, I set out below my answers to Questions 1 and 12 of the Maxwellisation Questionnaire. Since we did not use any form of Maxwellisation in the inquiry,

the other questions do not apply.

Was a Maxwellisation process conducted for your report?1 If not, why not?

No. We took the view that provided those who might be criticized were given a fair and reasonable opportunity to consider and reply to criticisms during the course of the inquiry, there was no legal or other basis for providing them with any further opportunity. Thus we made clear from the outset of the inquiry that we would not consider criticisms unless they were made in sufficient time and detail to give those concerned such an opportunity. In our Ruling dated 12th October 19991, before any witness were called, we gave the following direction: -

Procedure in respect of allegations

101 Lastly we deal with the procedure that is to be followed if the interested parties intend to make

allegations, in the course of the proceedings, against witnesses to the Inquiry. By allegations we

mean allegations of misconduct, improper behaviour, irresponsibility or incompetence. The

procedure that we propose to lay down is this:

i. If any of the interested parties seek to make an allegation against any of the Inquirys witnesses

they must give details to the Inquiry of the allegation that they intend to make.

ii. The Inquiry will give notice to the interested parties and to the relevant witness or witnesses of

any allegations of which it is informed, unless any such allegation is clearly without sensible

foundation, or is not within the Tribunals remit, or there is some other sound reason why it should

not be entertained.

iii. The Inquiry may require further information as to the nature of the allegation, or the evidence in

support of it, or the basis upon which it is made before notifying the interested parties of it.

iv. None of the interested parties will be allowed, without the permission of the Tribunal, which is

unlikely to be given save for very good reason, to pursue an allegation against any of the witnesses

unless it has been the subject of a notice given to the Inquiry in good time, as to which see

paragraph (v) below. Nor will they be allowed to pursue an allegation, which the Inquiry has

declined to notify to the interested parties on one of the grounds set out in (ii) above.

1 Bloody Sunday Inquiry Report, Volume X Appendix 2, A2.9.

1

87

v. Any allegations that are to be made must be notified to the Inquiry so soon as is reasonably

practicable and, in any event, in such time as will enable the Inquiry to give notice to the witness

concerned at least 3 weeks before the witness is first due to give evidence. The Tribunal

appreciates that it will be necessary to have a rolling witness programme so that the interested

parties know when any given witness or category of witnesses is first due to give evidence. The

Tribunal appreciates that the making of allegations is something that requires careful thought and

judgment; that there is much material to consider; and that it may be inappropriate to make an

allegation without considering more material than that which prima facie appear to justify the

allegation in question. That said, the Tribunal is not prepared to countenance a situation where

allegations are made that could and should appropriately have been made at an earlier stage. It will

be for those making allegations to satisfy the Tribunal that they were made at the earliest

practicable moment. The Tribunal believes that it can trust in the good sense and judgment of

Counsel for the interested parties and their instructing solicitors to ensure that any allegations that

are to be made are, indeed, made as soon as is reasonably practicable, having regard to the

considerations outlined above, and in accordance with the overall objective of this ruling which is

that of preventing ambush and surprise.

vi. It is not necessary for the interested parties to adopt for themselves the issues referred to in

Counsels Report No 1, which identifies, with different degrees of specificity, a number of issues

that are likely to arise in the course of the Inquiry. But it is necessary for them to use the procedure

laid down above if they intend to make a positive case that, for instance, a particular lettered or

numbered soldier shot a particular victim. Similarly, if any of the interested parties intends, for

instance, to make a positive case that a particular witness was shot whilst throwing a nail bomb,

they should make an allegation to that effect.

vii. It may be that allegations are sought to be made against witnesses whom the Inquiry had not

intended to call. If that is so the party seeking to make the allegation will be expected to have asked

that the witness should be called, and to have given notice of the allegation as the reason, or one of

the reasons, for him or her being called.

viii. If allegations are to be made against persons who are deceased they must be made as soon as

is reasonably practicable and in any event in sufficient time to enable the witnesses who have

relevant evidence to give in relation to that deceased to give evidence in the knowledge of that

allegation. In practice that means no later than 3 weeks before the first witness whose evidence

relates to the death of that deceased. What we have said in (v) above applies, of course, in this

context.

ix. This procedure is not intended to be limited to allegations of misconduct on the day. If the

interested parties intend to make a positive case in respect of, for instance, the planning for the

day, e.g. that there was a deliberate plan to engage the IRA, they should make use of this

procedure.

x. The fact that the Inquiry notifies any person of an allegation does not imply any view by the

Inquiry as to the strength or validity of that allegation. Nor does it imply that the Tribunal or its

Counsel will adopt any particular position in respect of it.

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xi. Any interested party, who has made an allegation, is at liberty to withdraw it, in whole or in part,

at any time. This should be done by notice in writing to the Inquiry. The Inquiry will give notice of the

withdrawal of any allegation.

xii. The Tribunal will make any alterations to this procedure that prove to be necessary or desirable

in order to secure the overall objective mentioned in (v) above. It will, also, be the arbiter in the

event of any dispute in relation to the procedure.

The procedure set out in this ruling applied to allegations made by interested parties.

In addition, before the oral hearings began, counsel to the Inquiry had prepared and

circulated the report referred to in paragraph 101(vi) of the ruling (see above), which

identified a number of important issues on which witnesses might be at risk of adverse

findings and which the witnesses would be expected to address in their evidence; and, more

generally, it was part of the responsibility of counsel to the Inquiry, in their questioning of

witnesses, to deal with matters that might in their view give rise to criticism of the witnesses

in the Tribunals report, so as to ensure that the witnesses had been given a fair and

reasonable opportunity to address any such potential criticisms before the end of the oral

hearings.

Do you: (1) regard the Maxwellisation process as desirable (why/why not), and (2) have any general observations in relation to the Maxwellisation process?

I regard the Maxwellisation process as undesirable, given the circumstances are such that the people concerned can be given a fair and reasonable opportunity, during the course of the inquiry, to consider and reply to criticisms made of them. In such circumstances I see no legal or other basis for providing them with any further opportunity. The Maxwellisation process provides ample scope for delay. It is also one sided and can be said to be unfair, since those advancing criticisms are given no opportunity to reply to answers provided during the process. In our inquiry, the criticisms were advanced during the course of the inquiry, giving both those criticized and those advancing criticisms a fair and reasonable opportunity to put their respective cases.

Mark Saville

May 2016

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TREASURY SELECT COMMITTEE: MAXWELLISATION REVIEW BY ANDREW GREEN, QC

Maxwellisation Questionnaire: Mirror Group Newspapers plc Report


Yes. The use of the term Maxwellisation was not used by us. The sons of Robert Maxwell strongly objected to its use.


No.


176 witnesses were interviewed overall. Records of the exact process followed are not readily available; however, on the face of the report, at least 25 individuals or entities were criticised to a greater or lesser extent. As I recall, they all made representations.


Yes, a set time was given and responses chased.


I cannot recall.

6. Following your receipt of the representations (and any consequential changes to the draft report), were there any further rounds of the Maxwellisation process? If so: (1) why, (2) ho