MPs have launched an inquiry into the way public reviews are carried out, in a bid to curb the so-called ‘Maxwellisation’ process which has delayed the report into the Halifax Bank of Scotland collapse for years.
In a letter dated 31 March, chair of the committee Andrew Tyrie wrote to chancellor George Osborne to outline the probe into the process which gives the individuals being investigated the right to reply before the final report is published.
Maxwellisation is so called after former newspaper proprietor and MP Robert Maxwell, who sparked a change in the way the government carries out investigations when, in 1969, he won a case against the Department of Trade and Industry after it said he was “unfit to hold the stewardship of a public company”, with the judge ruling the DTI had “virtually committed the business murder” of Maxwell.
But Mr Tyrie blamed this process for the “unnecessarily” long wait in the publication of the inquiry into the banking and insurance giant.
The Financial Conduct Authority published the report in November, seven years after the Halifax Bank of Scotland was bailed out by taxpayers at a cost of £20.5bn.
HBoS’s leadership, including former chairman Lord Stevenson and ex-chief executives Andy Hornby and James Crosby, were found to have caused the bank’s failure, and could be banned from the finance industry or even from directing any company.
But Mr Tyrie said the process had taken too long.
“Evidence taken by the Treasury committee suggests that a balance needs to be struck,” Mr Tyrie wrote. There is a risk that very lengthy Maxwellisation proceedings could undermine confidence in the public review process.”
His comment followed a string of criticism about how the bank was run, with the FCA initiating further investigations into former senior managers in January to decide whether prohibition proceedings should begin against them.
In November, Andrew Green QC - who also published a report on the failure of HBoS - said investigations into the conduct of former chief executive Andy Hornby should have started from early 2009.
The newly-announced review will have a particular focus on inquiries of a financial nature, setting out what the law requires and the typical problems which arise from Maxwellisation.
This includes addressing the public’s concerns over the extra time and costs incurred by undergoing the often lengthy procedure.
In his letter, Mr Tyrie said the aim is to make recommendations to guide future public financial inquiries, and to ensure any Maxwellisation process is conducted in a “fair and proportionate manner”.