Access to Redress Schemes

Richard Foord Excerpts

Thursday 18th April 2024 Commons Chamber

[Richard Foord (Tiverton and Honiton) (LD)]

I beg to move,

That this House recognises the challenges faced by individuals and businesses in accessing effective dispute resolution and obtaining redress in cases of injustice; believes that the Government needs to address these specific challenges, namely a fragmented and inconsistent redress landscape; considers statutory guidance to be an essential measure to ensure compensation and redress schemes follow common principles and lead to fair and independent outcomes; and calls on the Government to create statutory guidance with common principles for setting up and operating a redress scheme.

It is my honour to move the motion that stands in my name and that of the hon. Member for Hazel Grove (Mr Wragg). I thank the Backbench Business Committee for granting this debate. I also thank the Chair of the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), for her recent correspondence with the Comptroller and Auditor General, calling on public bodies to have redress schemes that are effective, timely, proportionate and fair.

Samuel Beckett famously wrote:

“Try again. Fail again. Fail better.”

What if we learned nothing from our previous failure? What if we simply failed, failed again and approached the failure as in the past, only to fail a bit differently and with many of the same mistakes as before? That is the situation we face with compensation and redress following scandals.

I imagine that every Member of this House will have received correspondence from a constituent who has been failed and treated unfairly in the wake of a scandal. Rather than being able to access swift and fair redress, they have instead been subjected to further hardship, delays and unfair treatment. Sometimes that mistreatment can be as devastating as the pain caused initially by the scandal. There has rightly been significant attention nationally in recent months on the Post Office Horizon scandal, and in particular on the various schemes set up to provide redress to the victims of what was the most widespread miscarriage of justice in British legal history.

A sub-postmaster of a post office in my constituency was one of the hundreds wrongful convicted. Janine Powell was wrongfully accused of stealing £74,000 from her post office branch in Tiverton. She was subsequently sacked and arrested, before being convicted at a trial in Exeter in 2008. She described feeling “confused; dismayed; numb”. That is because Ms Powell was sentenced to 18 months in prison, serving five months. She was sent to prison just two days after her daughter’s 10th birthday. She said that the hardest part of her wrongful imprisonment was leaving her children. She said:

“I’ve missed out on doing things with them—I can’t get that back.”

No amount of money could ever make up for what happened to Ms Powell, but compensation can at least try to make up for some of the loss they faced. Sadly, the various Post Office compensation schemes that have existed have failed to provide swift and fair redress, as I know from another constituent case that I am dealing with.

According to the law firm Howe and Co, which represents 150 sub-postmasters, the compensation scheme

“continues to be exceptionally slow…and refuses to entertain applications from persons who are plainly entitled to apply”.

This afternoon, I hope to outline that the Post Office case is but one example of a wider problem. No guidance exists on when and how compensation schemes should be established or what an overseeing body should look like. That means that each scheme has its own unique and dysfunctional set of rules. Reinventing the wheel each time a scandal emerges means that victims are failed by the very system that is meant to right the wrongs of the past.

[Christian Wakeford (Bury South) (Lab)]

The hon. and gallant Member is making an important point about how we seem to have unique circumstances in trying to overcome some of these issues. For example, the sodium valproate issue was raised through Baroness Cumberlege’s “First Do No Harm” report. As with the infected blood scandal and the Horizon scandal, it has been outlined time after time that redress should be forthcoming. However, the Government again seem to be dragging their feet. Why does he think that would be?

[Richard Foord]

The hon. Member is exactly right to draw a thread between several of these scandals. That is partly because when a new scandal emerges, the organisation responsible is often the organisation charged with redress. Andrew Bailey, while chief executive of the Financial Conduct Authority, said in 2017 that

“it just does not seem to be sensible that, every time one of these things happens, we have to set up something new.”

Beyond the Post Office schemes, we have heard criticism both here and in the press on the infected blood inquiry, as the hon. Member mentioned, and Windrush. That criticism has pointed to intolerable delays or the problematic features that often let the offending firm or institution off the hook.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I am interested to develop my hon. Friend’s thought about the Financial Conduct Authority. If I am able, I will speak at greater length about it later in the debate. It administers the Financial Services Compensation Scheme, which is a fund set up by levies on financial services companies themselves. It is the maladministration of the FCA or a lack of proper regulation that often leads to these claims being brought. Essentially, the people paying for the scheme have to do so because of the incompetence of the FCA.

[Richard Foord]

My right hon. Friend is exactly right. The FCA is not directly accountable to Parliament, but is accountable to Parliament through the Treasury. I, too, have had constituents finding themselves in a David and Goliath scenario, trying to tackle issues of unfairness with the FCA.

Likewise, in finance, we have seen the mis-selling of interest rate hedging products and widespread financial misconduct against small and medium-sized enterprises by the Royal Bank of Scotland, for example. Last year, the all-party parliamentary group on fair business banking conducted the first systematic review of compensation schemes in the UK and found flaws common to several of them. Schemes are frequently blighted by unnecessary complexity, delays and a huge emotional and legal burden on victims. Often schemes are shrouded in secrecy and lack proper independence.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

I am listening to the hon. Gentleman’s speech carefully, and he is making some excellent points. Will he join me in deploring the methods by which organisations avoid their responsibilities to many of our constituents? For example, the business of my constituent George Dosoo, LD Partnership, took on a loan from RBS, now NatWest. In 2012, he discovered that a sum of £150,000 was removed without authority from the partnership account. Despite George obtaining recent legal opinion indicating that his case has merit, NatWest maintains that the case is time-barred and will not reopen it. Does the hon. Gentleman agree that time-barring is another device that is far too often used by businesses and institutions to deliberately undermine our constituents’ ability to obtain recourse?

[Richard Foord]

The hon. Member is right about time-barring. I have a similar case with a constituent of mine, which might chime with hers. Nigel Cairns is trapped in what he describes as a

“complete nightmare scenario, with no way of escape”

after egregious misconduct by a bank. In 2007, Nigel took out a loan of £350,000 from HSBC. He had his house demolished in readiness to rebuild. In preparation for the work, the bank declared the termination and return of the loan. That was in 2007, when the financial crisis was very much with us. The bank subsequently agreed to reinstate the loan, but altered some of the terms and conditions so that the interest rate became double what Nigel had originally agreed to. After 10 years of repayments, the bank declared that unless he could sell the property or repay the loan, it would have to foreclose on him. The Financial Ombudsman Service refused to look into the matter initially and subsequently Mr Cairns received only £1,500 for the stress and anxiety of the case.

The APPG’s review, looking across 12 compensation schemes, found that over the past 20 years, the number of people affected amounted to a little over 78,000 people. When we consider some of the harrowing cases we are describing today, that number is thankfully quite small, but it says to us that it is a small enough number that these people could have timely redress and compensation, if only we had a body that could sort it out. That brings me on to another example: infected blood. During business questions this morning, the right hon. Member for Kingston upon Hull North (Dame Diana Johnson), as she always does on a Thursday, drove home on behalf of her constituents the need to compensate promptly those people affected by the infected blood scandal. In the last 24 hours, we have heard of a proposed Government amendment to the Victims and Prisoners Bill to try to bring about compensation. I completely agree with the right hon. Member that by not setting a deadline for that compensation, we allow this issue to run and run. In the other place, the Liberal Democrat peer Baroness Brinton sought to take that up with the Government, and proposed an amendment that was much more vigorous in setting a timeframe for compensation, but the Government chose not to adopt it.

I have a constituent whose friend who has been affected by the infected blood scandal. Some of the tales that she has passed on are really harrowing. Her friend said:

“In my 20s I was planning my funeral and feeling like I was contaminated and filthy. I met and married someone prepared to date a woman with poisoned blood.”

She speaks of how it caused a

“host of long-term devastating side effects”.

She continued:

“I lost my career as an IT consultant, it made me infertile so I have been unable to have a family, and we had we had to stop IVF and surrogacy attempts because I became too ill to be a parent. I’ve had brain, body, psychological and emotional impacts from this virus. And then decades of exhausted fighting for an evasive and oft-denied justice, which caused its own damage, including most recently the end of my marriage.”

Such people deserve to be compensated promptly. They do not need the stress and worry of a scheme that always seems to roll out into the future, and of having to fight at every turn.

Mass redress schemes are set up on an ad hoc basis. They are voluntary, and established to tackle a specific scandal, following failure of a given organisation’s internal complaints procedures. How do we ensure that the victims of our largest and most damaging scandals, and any unfortunate future victims, are protected from unfair treatment and appropriately compensated? We need the framework for redress to be improved to ensure that we do not make the same mistakes again. This debate is a call to action for Ministers. The Government must establish a clear framework based on best practice.

The HBOS Reading compensation scheme is another example. In 2017, after 15 years, six individuals were sentenced to a cumulative 47 years in prison for their role in a fraud that left its victims, in the words of the sentencing judge, “cheated, defeated and penniless”. Eight years on, we have had more than two years of the discredited Griggs review, and a further two years reviewing the review and coming up with new recommendations. We are now in the fourth year of the Foskett panel. We would think that by now that we would have got it right, but all the perpetrators of the crime are out of prison, the victims have yet to be compensated, and serious questions remain about the panel.

There is a set of underlying principles that would establish a common-sense bedrock for any compensation scheme and how it should be built.

[Andrew Bridgen (North West Leicestershire) (Ind)]

On the composition of the Foskett panel and the huge delays in the compensation due to those defrauded in the HBOS scandal, there have been allegations that Lloyds bank had a big part in deciding who was appointed to the panel. Would that not explain the delays, and why people are not being paid the compensation that they believe they deserve?

--- Later in debate ---

[Richard Foord]

The hon. Member is right that in redress schemes, the perpetrator of the injustice is often charged with trying to put it right. Of course, the perpetrator has a vested interest—indeed, it is not even vested; it is just an interest—in trying to pay out as little as possible, and in accepting as little culpability as it can.

[Mr Kevan Jones (North Durham) (Lab)]

Does the hon. Member agree that many victims are annoyed by the way that these schemes become a feeding frenzy for lawyers, who in many cases are the only people who ultimately benefit? What really sticks in the throat of many victims is that many lawyers may be getting more out of the schemes than the individuals affected.

[Richard Foord]

I am grateful to the right hon. Member for his intervention. Probably nobody in this place knows more about the Horizon compensation schemes than he does. Lee Castleton, one of the sub-postmasters affected by the scandal, said that during the past 25 years,

“£135 million has been paid to some of the victims, but we’ve had £150 million plus paid to lawyers.”

We need a set of underlying principles. We need: a collaborative approach and process; timeliness; independence; recognition of adversity; transparency; broader eligibility; greater accessibility and legal costs; a clear appeals mechanism; and, finally, fairness and efficiency.

[Christian Wakeford]

The hon. and gallant Member is kind in giving way. Moving back to the sodium valproate scandal, we keep saying that justice delayed is justice denied, but in that case, it is not only children but grandchildren who are impacted, because it looks as though the effects of sodium valproate disorder are being passed on to grandchildren as well. Schemes need to be not only fair but pragmatic, so that once compensation is delivered, they can still be open to claims. I say that thinking of the further after-effects of one of the biggest scandals in the health service since thalidomide.

[Richard Foord]

The hon. Member is exactly right about how younger generations can be affected. We have recently seen attempts by some Horizon victims, and indeed children of victims, to seek compensation. The tragedy of his point about justice delayed being justice denied is that older victims of these scandals are dying before they see that justice, and before enjoying any of the compensation that they deserved.

I set out nine underlying principles that would establish a common-sense bedrock for a compensation scheme. To deliver those principles for fair redress and to guarantee independent oversight, we need an arm’s length body to design and adjudicate the schemes. The existing voluntary mechanisms for redress are far too fragmented. We need a standing, independent body that can provide consistency for victims of scandals—no matter the sector—which can be activated whenever a new scandal emerges. It should be constituted of experts, so that it guarantees independence of judgment, and should be accountable directly to Parliament for the expenditure of any public funds and for its overall conduct. Critically, victims must also have representation on the panels.

The structure would come at no extra cost to the taxpayer, as the current compensation framework often proves lengthy and costly for both victim and taxpayer. Taken together, the nine UK redress schemes—whether active or completed—studied by the all-party parliamentary group on fair business banking have cost at least £3.7 billion. That figure covers not only the amount of compensation that has gone to victims, but, as we have discussed, the fees to solicitors, accountants and firms that have engaged to undertake reviews—and indeed firms that are reviewing reviews. More often than not, victims are left feeling cheated. They eventually cling on to some sort of late, inadequate consolation of redress and compensation. In the case of the Post Office, many of the 555 sub-postmasters who were exposed to the scandal have still received little compensation, because most of the money was swallowed up.

We need lessons to be learned from the array of scandals that I have set out. I am curious to hear what the Minister has to say about the proposal for an arm’s length body to deal with situations of the kind that I and right hon. and hon. Members have described.

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[Alex Burghart]

I was going to come to that point. Although the right hon. Gentleman is right that there is currently no public guidance, that does not limit the sharing of knowledge between Departments and policy areas. There is a great deal of dialogue and shared learning between officials when schemes come into existence. The hon. Member for Tiverton and Honiton (Richard Foord) suggested in his opening remarks that the wheel was always being reinvented. That is not the case; a learning process happens within Government.

[Richard Foord]

I do not suppose that lessons are not being learned and that one set of civil servants is not passing lessons on to another set; rather, this is about victims having the reassurance that when there is a perceived conflict of interest, they have somewhere else to go.

[Alex Burghart]

The point I was making was very much that we have internal schemes of learning, and we ensure that each new scheme learns from the experiences of those that have gone before it.

--- Later in debate ---

[Richard Foord]

I am very grateful to all Members who have participated in today’s debate, often prompted by conversations that they have had with individuals in their constituencies and therefore often paying great heed to just one person’s case. In recent years, there have been one or two positive developments on accessing compensation—for example, the interim compensation awards that we heard about have helped to speed up redress—but there are still some serious problems that are common to so many of the cases that we have used to highlight the problem this afternoon.

We can no longer have the same organisations that are responsible for the original harm also responsible for adjudicating what is fair compensation. Even in cases where there is not a conflict of interest, victims might perceive that there is, and as we have heard, they have nowhere else to go, so there needs to be the right of appeal. We cannot have the ludicrous situation in which an individual or small business who was subject to mis-selling, for example, has no recourse but to go back to the very bank that lent them the money in the first place. We need an independent, expert arm’s length body that could oversee redress schemes and would provide a cost-effective way to tackle mass scandals. It would ensure speedy resolutions that place the burden on those who commit the wrongdoing, not the victims who are caught up in these appalling situations. The recommendations of the APPG on fair business banking are an excellent way of introducing that framework.

I conclude by thanking all Members who took part in today’s debate.

Question put and agreed to.

Resolved,

That this House recognises the challenges faced by individuals and businesses in accessing effective dispute resolution and obtaining redress in cases of injustice; believes that the Government needs to address these specific challenges, namely a fragmented and inconsistent redress landscape; considers statutory guidance to be an essential measure to ensure compensation and redress schemes follow common principles and lead to fair and independent outcomes; and calls on the Government to create statutory guidance with common principles for setting up and operating a redress scheme.