The Operation of the Parliamentary Standards Act 2009

Written evidence from Martyn Taylor, Compliance Officer for IPSA

Background and governance

1. The Constitutional Reform and Governance Act 2010 amended the Parliamentary Standards Act 2009 (the Act) to establish the statutory post of the Compliance Officer for the Independent Parliamentary Standards Authority (IPSA).

2. The amendment was made following a recommendation by the Committee of Standards in Public Life (CSPL) that responsibility for investigating allegations about breaches of the rules of expenses should be vested in the independent regulator (IPSA), which should be able to appoint its own compliance officer for this purpose.

3. The amendment also sought to address concerns raised during and following the passage of the 2009 Act about the extent to which the originally enacted Commissioner for Parliamentary Investigations would stray into the territory of Parliamentary Privilege.

4. The Compliance Officer is, as determined by statute, appointed by IPSA’s Board and reports to the Board. The Compliance Officer is functionally independent because of the officer’s quasi-judicial role. The office holder is not part of IPSA’s executive branch. IPSA’s Board cannot direct the office holder in respect of any investigations or reviews he/she carries out, although the office holder must act within the statutory framework and procedures in respect of investigations and reviews, which, inter alia, establish a process for information sharing with IPSA.

5. The Compliance Officer’s period of office is limited to one five-year term. When a vacancy arises, this may be filled by an interim Compliance Officer for a period of six months.

6. The Act stipulates that IPSA is responsible for providing the Compliance Officer with procedures for investigations. IPSA must consult the Speaker of the House of Commons, the Leader of the House of Commons, the Standards and Privileges Committee and any other person IPSA considers appropriate before determining these procedures. In practice, IPSA consults more widely and has worked closely with both previous Compliance Officers and the current office holder in developing these procedures.

Remit

7. The Compliance Officer’s remit is clearly defined in statute and is relatively limited. It is:

· to review, at the request of an MP, a determination by IPSA to refuse a claim in whole or in part, but only after the MP has first asked IPSA to reconsider the determination and giving it a reasonable opportunity to do so; and

· to conduct an investigation if the Compliance Officer has reason to believe that an MP may have been paid an amount under the MPs’ allowances scheme (i.e. IPSA’s MPs’ Expenses Scheme) that should not have been allowed.

Reviews

8. The Compliance Officer for IPSA will, at the request of an MP, conduct a review into a decision by IPSA to refuse an expense claim in whole or in part.

9. A request for a Review may be submitted to the Compliance Officer only once an MP has asked IPSA to reconsider its initial decision to refuse a claim.

10. The Act stipulates clearly a number of actions the Compliance Officer must take when conducting a Review.

11. MPs may appeal the Compliance Officer’s decision to the First-tier Tribunal.

Investigations

12. The statute states that the Compliance Officer may conduct an investigation if he has reason to believe that a Member of the House of Commons may have been paid an amount under the MPs’ allowances scheme that should not have been allowed.

13. The Compliance Officer may conduct an investigation on his own initiative, at the request of IPSA, at the request of the Member or in response to a complaint by an individual. The Compliance Officer, by implication, therefore should not actively look for payments that should not have been allowed.

14. The statute further sets out various actions the Compliance Officer must take at various stages, in particular with regard to giving both MPs and IPSA an opportunity to make representations prior to making provisional findings, and again prior to making a statement of findings.

15. The statute includes an extensive Schedule about the recovery of overpayments and the issuing of repayment directions and penalty notices. MPs may appeal such directions or notices to the First-tier Tribunal.

16. The statutory framework also includes a duty on IPSA to determine procedures to be followed by the Compliance Officer in relation to investigations. These procedures (attached at Annex C) are subject to consultation and carry near-statutory force. They set out in some detail the actions the Compliance Officer must follow when conducting an investigation, in addition to those on the face of the Act.

Brief chronology

17. Following passage of the Constitutional Reform and Governance Act 2010, an interim Compliance Officer, Alan Lockwood, was appointed by IPSA’s Board on 10 May 2010. His principal duties were to set up the compliance function and put in place policies and procedures relating to compliance and investigatory matters, and to recruit staff to ensure the office was capable of handling investigations.

18. In December 2010, shortly after IPSA began publishing details of MPs’ expense claims made since the May 2010 General Election, the compliance function received a number of complaints. Compliance staff carried out the assessment and preparatory work required before complaints are progressed to the investigatory stage, and tested the various processes.

19. On 13 April 2011, following the arrival on 31 March 2011 of the permanent Compliance Officer, Luke March, the first Preliminary Investigations were opened.

20. During his tenure Mr March closed 15 Preliminary Investigations and progressed 21 to Substantive Investigations, with five Preliminary Investigations remaining open. Mr March also carried out one Review of a determination made by IPSA at the request of an MP.

21. On 27 July 2011 Mr March left and IPSA’s Chairman, Sir Ian Kennedy, invited me to take on the Compliance Officer’s duties on an interim basis from 28 July.

22. I have since completed 20 of the 21 Substantive Investigations opened by my predecessor, and have opened and completed one further Substantive Investigation. Details of these were published on 11 October 2011 on the Compliance Officer’s website (www.parliamentarycompliance.org.uk).

23. I have also closed three further investigations at the Preliminary stage and am currently considering conducting the two remaining Preliminary Investigations as well as considering a number of complaints. A full breakdown of cases is attached at Annex A.

Is the legislative framework enabling the Compliance Officer to carry out his functions?

24. The question has been asked whether the current legislation and consequential procedures enable the Compliance Officer to carry out his functions with sufficient discretion to consider matters in a proportionate and judicious manner.

Reviews

25. Firstly, and briefly, it is my view that the statutory requirements in respect of Reviews (i.e. requests from MPs that the Compliance Officer review a determination by IPSA to refuse a claim) are concise and straightforward. They provide an effective framework within which the Compliance Officer can operate and should not cause any problems to the office holder in carrying out Reviews.

Investigations

26. Turning to investigations, it is my view that the Act gives the Compliance Officer the necessary discretion on whether or not to open an investigation.

27. In deciding whether or not to do so, the Compliance Officer must weigh up a number of factors when deciding whether or not to conduct an investigation, not least whether it is a matter that is appropriately and proportionately dealt with through the investigatory process or whether an alternative resolution should be considered.

28. Once the Compliance Officer has decided that a referral to him warrants an investigation, he must look both at the requirements of the Act and those set out in the Procedures for Investigations, as handed to him by IPSA.

29. The requirements under the Act are, to my mind, clear and un-contentious. A number of the provisions are mandatory whereas others provide the Compliance Officer with a degree of discretion.

30. IPSA’s Procedures for Investigations set out further provisions about the way in which investigations are to be carried out.

31. IPSA has confirmed that the Procedures for Investigations were intended to provide the Compliance Officer with a degree of flexibility over how he carries out an investigation, whilst setting out a number of necessary actions he must take, such as keeping complainants informed and publishing information about the investigations to provide transparency and enhance confidence in the system. In practice, however, the current procedures have made conducting investigations more inflexible than intended.

32. Specifically, the requirements around conducting Preliminary Investigations before carrying out a Substantive Investigation are burdensome, both for the Compliance Officer and for MPs who may be subject to investigations for minor, technical breaches.

33. The compliance function and IPSA have worked together to develop alternative procedures to address the problems identified. On 11 October 2011, IPSA began consulting on a revised set of Procedures for Investigation. The proposed changes should, in my view, address these problems and will provide my successor with the room for manoeuvre required to carry out his or her duties successfully and proportionately. A copy of the consultation paper is attached at Annex D.

Is the compliance framework achieving its policy aims?

34. To answer these questions, it is helpful, briefly, to consider the context within which the Compliance Officer was legislated into being and what Parliament hoped to achieve by doing so.

35. The Committee on Standards in Public Life recommended, following the passage of the Parliamentary Standards Act 2009 that the provisions for a Commissioner for Parliamentary Investigations, as created by the Act, should be repealed and that IPSA should be able to appoint its own compliance officer to conduct investigations.

36. There were good reasons why the envisaged Commissioner post would have been problematic, not least because of the lack of clarity about the proposed Commissioner’s functions as compared with those of the Parliamentary Commissioner for Standards, and the difficulty in the proposed Commissioner’s remit straying into the territory of Parliamentary Privilege.

37. Parliament was, however, legislating in a vacuum – both when it enacted the 2009 Act and when it was amended in 2010. It did not know what kind of scheme IPSA would put in place and the extent to which additional oversight would be required to prevent contraventions of the system. Parliament, therefore, adopted a belt-and-braces approach and put in place an additional regulatory backstop.

38. The Compliance Officer and associated compliance framework that Parliament consequently put in place provides reassurance on a number of levels:

· It allows MPs to appeal decisions by IPSA where they feel IPSA is at fault;

· It ensures real and visible separation from the administrator-regulator that is IPSA’s executive function, enabling the independent post-holder to comment freely on IPSA’s actions and processes – something an employee may feel inhibited from doing;

· It provides a transparent process for the conduct of investigations; and

· It provides MPs with a route to challenge the Compliance Officer’s decisions by way of appeal to the First-tier Tribunal.

39. The presence of this degree of reassurance may play a contributory part in the overall effort to improve public trust in the wider question of MPs’ costs and expenses – a key aspect of Parliament’s consideration when enacting these provisions.

40. From my perspective, the priority is to ensure that the compliance function manages to provide this level of reassurance in a workable manner within the statutory remit, whilst also being cost-effective.

41. The experience of the current Procedures for Investigations given to the Compliance Officer by IPSA – which have near-statutory force – has, as set out above, shown them to be over-prescriptive, resulting in investigations taking longer than might be necessary, proving unnecessarily unsettling to Members under investigation, and – on a strict reading of the procedures – not providing the degree of flexibility the Compliance Officer may need when deciding how to progress an investigation.

42. Nevertheless, the procedures do not significantly impede the Compliance Officer from achieving the policy aims.

43. The proposed revisions to the Procedures for Investigation, currently under consultation, will, however, make the process simpler and clearer, and should significantly ease the way in which investigations are carried out in future.

44. The cost of the Compliance Function is also being significantly reduced (see details on resourcing at Annex B) with the operation now consisting of a part-time Compliance Officer and a full-time member of staff, down from a part-time Compliance Officer and three members of staff in June 2011.

45. IPSA and the Compliance Officer function are both relatively young and it feels premature to form a settled viewpoint on the post in its current legislative guise.

46. Moreover, the more reviews and investigations the Compliance Officer handles, the more internal "case-law" is created. This case-law will, in time, provide a valuable source of information – for MPs and for members of the public – for making a more useful assessment of the value of the function, as well as setting precedents which may allow cases to be dealt with more swiftly and consistently in future.

47. For these reasons, I do not believe that legislative changes at this time are either necessary or desirable. That is not to say that time will not demonstrate that a different approach and framework would be more satisfactory, simply that it is too early to make that call.

11 October 2011

Annex A: Breakdown of Compliance Officer’s cases

Annex B: Resources

Annex C: Procedures for Investigations

Annex D: Consultation paper on the Procedures for Investigations

ANNEX A – Breakdown of Compliance Officer’s cases

Reviews

To date, there have been just two requests by MPs for reviews of IPSA’s determinations.

Of these, only one formal Review was conducted.

The other case was resolved by IPSA on reconsidering its own internal review of the matter.

Investigations

To date, some 41 investigations have been opened.

· 39 investigations have been closed:

o 18 of these after a Preliminary Investigation, and

o 21 after a Substantive Investigation.

· 2 investigations are currently open:

o 1 Preliminary Investigation, and

o 1 Substantive Investigation.

Categories of Investigations

The investigations were into the following expense categories:

Accommodation	2
Constituency Office Rental Expenditure	1
General Administrative Expenditure	32
Staffing	2
Travel & Subsistence	4

Complaints

Since 7 May 2010, the Compliance Officer has received some 36 qualifying [1] complaints. Of these complaints:

· 35 were received from members of the public, and

· 1 from a Member of Parliament.

The number of complaints received in each quarter is as follows:

May – June 2010	1
July – September 2010	1
October – December 2010	9
January – March 2011	7
April – June 2011	5
July – September 2011	13

Of these complaints:

· 10 required no action;

· 7 were referred to the Parliamentary Commissioner for Standards as they related to matters for which he is responsible;

· 12 have resulted in investigations:

o 9 of which were closed following a Preliminary Investigation,

o 2 of which were closed following a Substantive Investigation, and

o 1 of which is currently the subject of a Preliminary Investigation; and

· 7 are currently being assessed by the Compliance Officer.

Categories

The complaints can be broken down into the following categories [2] :

Parliamentary Commissioner for Standards	7
Accommodation	5
Constituency Office Rental Expenditure	1
General Administrative Expenditure	11
Staffing	8
Travel & Subsistence	8

ANNEX B – Resourcing the compliance function

Past

1. During the set-up period, the office was staffed by an interim Compliance Officer, Alan Lockwood, working three - four days per week, alongside two full-time members of staff.

2. Following the recruitment of the permanent Compliance Officer, Luke March, some 38 preliminary investigations were opened simultaneously. These had been in preparation in the period running up to Mr March taking up his position.

3. To deal with the large number of simultaneous investigations, the compliance function took on an additional temporary member of staff for a period of three months. This member of staff left the office at the end of June 2011.

Current

4. Following my appointment on 28 July 2011, I reviewed the office’s staffing composition. Based on the number of active investigations and the number of complaints, I took the view that the existing staffing arrangements were not sustainable and decided not to extend the contract of one staff member beyond the end of August 2011.

5. Following a further assessment, I took the view that the role of the Compliance Officer itself should not be a full-time post and at the start of October I reduced my hours to three days per week.

6. The current staffing component of a part-time Compliance Officer and a full-time Investigations Officer in my view places the compliance function on a realistic and manageable footing, although there should be provision in the Compliance Officer’s budget to bring in, on short-term contracts, expert investigators should cases merit it. IPSA’s Board has agreed this approach.

Future

7. A significant increase in complaints is a distinct possibility in the period running up to a General Election campaign. Although many of these are likely to be vexatious or without merit and, principally, politically motivated, it is quite possible that a number of issues of substance may be brought to the Compliance Officer’s attention.

8. I have therefore recommended to IPSA’s Board that both IPSA and the permanent Compliance Officer take this into account when planning the Estimate in both the year before and the year of the next scheduled General Election (2014-15 and 2015-16). IPSA’s Board has accepted this recommendation.

Budgets

9. The cost of the Compliance Operation in 2010-11 was £307,000. This figure includes the cost of staffing, professional services and set-up costs, and a fair apportionment of overheads from IPSA for the cost of office rental, IT equipment and services, utilities and janitorial services.

10. The estimate for 2011-12, approved by the Speaker’s Committee for IPSA, was £340,000. Current projections point to the necessary funding falling to around £265,000, a reduction of approximately £75,000, or 22 per cent. On staffing alone, the reduction is likely to be in the region of 25 per cent.

11. Although no estimates have yet been prepared for 2012-13, the expectation is that the sum required will be significantly below the 2011-12 estimate, and is likely to be in the region of £190,000, a reduction of around 45% in total, and around 50% on staffing.

ANNEX C – Current Procedures for Investigation of the Compliance Officer

1. These procedures apply to an investigation conducted by the Compliance Officer to determine whether a Member of the House of Commons may have been paid an amount under the MPs’ Expenses Scheme (entitled "The Expenses Rules") that should not have been allowed. A Glossary will be found at paragraph 45.

Initiating an investigation  

2. An investigation may be conducted:

a. on the Compliance Officer’s own initiative;

b. at the request of IPSA;

c. at the request of the MP concerned; or

d. in response to a complaint by an individual.

3. The Compliance Officer shall not normally commence an investigation more than 12 months after the claim in question was paid to the Member concerned unless, in the opinion of the Compliance Officer, exceptional circumstances justify commencing the investigation after more t han twelve months have elapsed.

4. For the purposes of paragraph 3, except where an investigation commences on the Compliance Officer’s own initiative, an investigation shall be regarded as commencing when the Compliance Officer receives a request or complaint from any of the persons specified at paragraph 2(b) to (d).

Requesting an investigation

5. Where a member of IPSA, the MP or another person requests the Compliance Officer to conduct an investigation, the request shall:

a. be made in writing on the approved standard form signed by the person making the request;

b. set out in detail the reasons why the person making the request considers that the MP should not have been allowed the amount in question;

c. be delivered to the Compliance Officer personally or by post to the Compliance Officer, IPSA, 7th Floor Portland House, Bressenden Place, London SW1E 5BH or by email to compliance@parliamentarystandards.org.uk .

6. Failure by a person to comply with these procedures when making a request to the Compliance Officer to conduct an investigation shall not be a bar to the Compliance Officer proceeding with an investigation.

Preliminary investigation

7. Paragraphs 8 to 12 shall apply in any case where it comes to the attention of the Compliance Officer that the MP may have been paid an amount under the Scheme that should not have been allowed.

8. The Compliance Officer shall notify the MP and IPSA that a preliminary investigation is to be undertaken to ascertain if there is reason for the Compliance Officer to believe that the MP may have been paid an amount under the Scheme that should not have been allowed.

9. For that purpose, in cases where a complaint or allegation about the MP has been made, the Compliance Officer may decide to reject the request for an investigation if:

a. the Compliance Officer considers the complaint to be trivial or vexatious;

b. the complaint does not relate to a claim by the MP for payment of an amount under the Scheme;

c. the complaint is about a matter that is time-barred under these procedures;

d. the complaint substantially repeats allegations that have already been the subject of an investigation by the Compliance Officer (unless there is significant fresh evidence material to the complaint); or

e. the complaint has been made anonymously, and there is no other good reason to investigate.

10. For the purposes of conducting the preliminary investigation the Compliance Officer may request information from any source that the Compliance Officer deems appropriate.

11. At the conclusion of the preliminary investigation the Compliance Officer shall write to the MP and IPSA and, if applicable, any person who requested the investigation, to inform them whether the Compliance Officer has reason to believe that the MP may have been paid an amount under the Scheme that should not have been allowed.

12. The Compliance Officer shall maintain a record of the preliminary investigation.

Substantive investigation

13. Paragraphs 14 to 16 shall apply where the Compliance Officer is satisfied that there is reason to believe that the MP may have been paid an amount under the Scheme that should not have been allowed.

14. The Compliance Officer shall notify the MP and IPSA and, if applicable, any person who requested the investigation, that a substantive investigation into the circumstances is to be conducted.

15. The notification to the MP shall include an outline of the matters that are to be investigated, in sufficient detail to enable the MP to understand the nature of the case to be answered.

16. The notification to IPSA shall include a copy of the outline given to the MP of the matters that are to be investigated.

Gathering information

17. The Compliance Officer may by notice require the MP and IPSA to provide:

a. information in the form of a written statement; or

b. any documents in their custody or under their control that relate to a matter being investig ated by the Compliance Officer.

18. The MP and IPSA shall, in the absence of any indication to the contrary, comply with any such request within 15 working days of the request being made unless an application for an extension of time is agreed by the Compliance Officer.

19. A request for information may be satisfied by the production of copies of the documents requested, provided that originals (where available) are retained for inspection if required.

20. The Compliance Officer may make a request in writing to the MP and IPSA to provide further information in writing or, if the Compliance Officer considers it appropriate, verbally by way of a meeting.

21. The Compliance Officer may provide to each of the MP and IPSA copies of any information and documents which the other has provided to the Compliance Officer in response to a request made under paragraphs 17 or 20.

22. For the purposes of conducting the substantive investigation the Compliance Officer may request information from any source the Compliance Officer deems appropriate.

Representations and hearings

23. Before the Compliance Officer makes any provisional findings about the matter being investigated, the MP and IPSA may make representations in writing to the Compliance Officer within such period as the Compliance Officer may reasonably specify.

24. The Compliance Officer may by notice indicate to the MP and IPSA any specific points that the Compliance Officer considers that they should address in their representations.

25. The Compliance Officer shall in every case give the MP the opportunity to be heard in person by the Compliance Officer for the purpose of making representations. Exceptionally, however, the Compliance Officer may decide that it is appropriate to hold a hearing with the MP even though the MP has not requested to be heard in person.

26. The MP shall also be given the opportunity, to request that another person attend the hearing with the Compliance Officer to represent the MP or to be asked about the matter in question.

27. Where the MP requests another person attend to be asked about the matter in question the Compliance Officer shall send a written request to that person to attend.

28. In any case where the MP is heard in person, the Compliance Officer shall offer IPSA the opportunity to attend the hearing and be heard in person.

29. The Compliance Officer shall maintain a record of the substantive investigation.

Statement of provisional findings

30. Following any representations made under paragraphs 23 or 25, the Compliance Officer shall prepare a statement of provisional findings as to whether the MP has been paid an amount under the Scheme that should not have been allowed.

31. The statement of provisional findings may include:

a. a finding that the MP failed to comply with any requirement specified by the Compliance Officer under paragraphs 17 or 20; and

b. findings about the role of IPSA in the matter under investigation, including findings that it was wholly or partly IPSA’s fault that the MP was paid an amount under the Scheme that should not have been allowed.

32. The Compliance Officer shall send the statement of provisional findings to the MP and IPSA, who shall each be offered the opportunity to make representations in writing about the provisional findings within such period as the Compliance Officer may reasonably require.

33. Exceptionally, where it appears appropriate to the Compliance Officer to do so, representations may be made verbally.

34. Representations shall normally be made only in relation to matters that have been considered by the Compliance Officer during the course of the investigation. In the event that, exceptionally, the Compliance Officer permits one party to introduce new information in written representations, the Compliance Officer shall send that party’s representations to the other party, who will be permitted to respond within such period as the Compliance Officer may reasonably decide.

Statement of findings

35. Following any representations made under paragraphs 32 or 33, the Compliance Officer shall, except where paragraph 36 applies, prepare a statement of findings as to whether the MP has been paid an amount under the Scheme that should not have been allowed.

36. The Compliance Officer may determine not to prepare the statement of findings referred to in paragraph 35 where the MP:

a. accepts the Compliance Officer’s provisional findings;

b. agrees to repay to IPSA in such manner and within such period as the Compliance Officer considers reasonable, such amount as the Compliance Officer considers reasonable (and makes the repayment accordingly); and

c. makes the repayment accordingly.

37. The statement of findings may include findings relating to the matters set out in paragraph 31.

Combined investigations

38. Where, during the course of an investigation, it comes to the Compliance Officer’s attention that the MP may have been paid other amounts under the Scheme that should not have been allowed, the Compliance Officer may give notice to the MP and IPSA of the Compliance Officer’s intention to join all such investigations into a single investigation.

39. If the MP disagrees with the Compliance Officer’s proposal to combine one or more investigations into a single investigation, the MP shall notify the Compliance Officer in writing of the reasons why the MP considers that separate inve stigations should be conducted.

Public access to an investigation

40. Subject to paragraph 44, where the Compliance Officer is satisfied that there is reason to believe that the MP may have been paid an amount under the Scheme that should not have been allowed, the Compliance Officer shall publish, in such manner as the Compliance Officer considers appropriate, the following information:

a. the name of the MP; and

b. particulars of the matter that is to be investigated.

41. Subject to paragraph 42, in any case where the MP is heard in person, the Compliance Officer shall take reasonable steps to secure that members of the public are able to attend the meeting.

42. The Compliance Officer may impose restrictions on attendance by members of the public at any meeting referred to in paragraph 41, or any part of it, where it appears appropriate to do so having regard to all the circumstances and, in particular, any guidance provided by IPSA.

43. Subject to paragraph 44, the Compliance Officer shall publish, in such manner as the Compliance Officer considers appropriate, the following information:

a. a record of the discussion at any hearing referred to in paragraph 41;

b. all written and verbal representations made to the Compliance Officer by the MP and IPSA;

c. any provisional finding made under section 9(4) of the Act;

d. any agreement by the MP under section 9(8)(c) of the Act to repay to IPSA such amount as the Compliance Officer considers to be reasonable, following a provisional finding that the MP was paid an amount under the Scheme that should not have been allowed; or

e. any finding made under section 9(5) of the Act.

44. The Compliance Officer may defer or withhold publication of the information set out in paragraphs 40 and 43 where it appears to the Compliance Officer appropriate to do so having regard to all the circumstances and, in particular, any guidance provided by IPSA.

Suspending an investigation

45. The Compliance Officer may at any time, by notice to the MP and IPSA, suspend an investigation for such period as appears to the Compliance Officer to be necessary for:

a. the completion of any other investigation relating to any of the matters to which the investigation relates; or

b. the determination of any civil or criminal proceedings arising out of those matters.

Glossary

46. In this document-

a. "the Act" means the Parliamentary Standards Act 2009, as amended by the Constitutional Reform and Governance Act 2010;

b. "the Compliance Officer" means the officer for the time being appointed under section 3 (3) of the Act (or any person authorised by IPSA under paragraph 9(2) of Schedule 2 to the Act to carry out the functions of the Compliance Officer if the office of Compliance Officer is vacant);

c. "IPSA" means the Independent Parliamentary Standards Authority;

d. "the MP" means a member of the House of Commons or (as the case may be) a former member of that House;

e. "the Scheme" means the scheme, entitled "The Expenses Rules", for the payment of expenses to Members of Parliament made by IPSA in the exercise of the powers conferred on it by section 5(3)(a) of the Act to pre pare an MPs’ allowances scheme.

Guidance on Recovery of Overpayments

 

Charging of interest

1. Paragraph 1(6)(a) of the 2009 Act provides that where the Compliance Officer issues a repayment direction to an MP, the Compliance Officer may require that the MP pay to IPSA interest on the amount that a member must repay under the direction.

2. In determining whether to use this provision, the Compliance Officer shall be guided by the principles of fairness, proportionality and the public interest. The Compliance Officer shall have regard to all the circumstances of the case, and in particular to whether:

a. the amount to be repaid is substantial; and

b. the MP was at fault in making the claim.

3. The rate of interest payable by the member shall be specified in the repayment direction, and will be determined by the Compliance Officer, having regard to the extant base rate and commerc ially available interest rates.

Charging of costs

4. Paragraph 1(6)(b) of the 2009 Act provides that where the Compliance Officer issues a repayment direction to an MP, the Compliance Officer may require that MP to pay to IPSA an amount reasonably representing the costs incurred by IPSA in relation to the repayment, including the costs of the Compliance Officer in conducting the investigation.

5. In determining whether the repayment direction should include such a requirement, the Compliance Officer shall be guided by the principles of fairness, proportionality and the public interest. The Compliance Officer will have regard to all the circumstances of the case, and in particular to some or all of the following factors; whether:

a. the MP was at fault in making the claim;

b. it was the first error by the MP in question; and

c. the MP was the cause of any time wasting or obstruction during the investigation.

6. Where the Compliance Officer finds that the payment of a wrongful claim was wholly or partly IPSA’s fault, the MP shall not generally be required to pay costs under the repayment direction.

7. The scheme for the calculation of costs is below.

Length of the Investigation	A sum – to be determined by the Compliance Officer - allocated per eight hour slot spent exclusively on the investigation.
Information -gathering costs	A proportion – to be determined by the Compliance Officer – of the costs incurred in obtaining, recording and/or administering information gathered by the Compliance Officer for the purpose of the investigation.
Meeting and/or hearing costs	A proportion – to be determined by the Compliance Officer – of the costs incurred in arranging and holding meetings and/or hearings with the MP during the investigation.
Any other costs of the investigation	A proportion – to be determined by the Compliance Officer – of the other costs incurred during the investigation not provided for elsewhere in the scheme for the calculation of costs.
Any other costs incurred by IPSA in relation to the investigation	A proportion – to be determined by IPSA and agreed by the Compliance Officer – of the costs incurred by IPSA during the investigation.

Guidance on Penalty Notices  

   

Failure to comply with a reque st for provision of information

1. If the Compliance Officer makes a finding under paragraph 9(5) that the MP has without reasonable excuse failed to comply with a requirement under paragraph 9(3) (provision of information to Compliance Officer), the Compliance Officer may, by a penalty notice, impose a penalty on the MP.

2. The penalty will be a sum of money payable by the member to the IPSA, who shall p ay it to the Consolidated Fund.

3. In determining the amount of the penalty, the Compliance Officer will take into account whether the MP has previously failed to comply with a request under paragraph 9(3) for provision of information.

4. In determining the amount of the penalty, the Compliance Officer will normally be guided by the following:

a. a penalty of the amount of 250 pounds (or, in the event that the maximum amount of the penalty, as provided for in paragraph 7(2) of Schedule 4, is increased pursuant to paragraph 7(3) of Schedule 4, one quarter of the maximum amount of the penalty) on the first occasion that an MP fails to comply with a request for provision of information;

b. a penalty of the amount of 500 pounds (or, in the event that the maximum amount of the penalty, as provided for in paragraph 7(2) of Schedule 4, is increased pursuant to paragraph 7(3) of Schedule 4, one half of the maximum amount of the penalty), on the second occasion that an MP fails to comply with a request for provision of information; and

c. a penalty of the amount of 1000 pounds (or, in the event that the maximum amount of the penalty, as provided for in paragraph 7(2) of Schedule 4, is increased pursuant to paragraph 7(3) of Schedule 4, the maximum amount of the penalty), for the third and all subsequent occasions that an MP fails to comply with a request for provision of information.

Failure to comply with a repayment direction

5. If the Compliance Officer is satisfied that the MP has without reasonable excuse failed to comply with any requirement contained in a repayment direction, the Compliance Officer may, by a penalty notice, impose a penalty on the MP.

6. The penalty will be a sum of money payable by the member to the IPSA, who shall pay it to the Co nsolidated Fund.

7. In determining the amount of the penalty, the Compliance Officer will take into account whether the MP has previously failed to comply with any requirements contained in a repayment direction.

8. In determining the amount of the penalty, the Compliance Officer will normally be guided by the following:

a. a penalty of the amount of 250 pounds (or, in the event that the maximum amount of the penalty, as provided for in paragraph 7(2) of Schedule 4, is increased pursuant to paragraph 7(3) of Schedule 4, one quarter of the maximum amount of the penalty) on the first occasion that an MP fails to comply with any requirement in a repayment direction;

b. a penalty of the amount of 500 pounds (or, in the event that the maximum amount of the penalty, as provided for in paragraph 7(2) of Schedule 4, is increased pursuant to paragraph 7(3) of Schedule 4, one half of the maximum amount of the penalty), on the second occasion that an MP fails to comply with any requirement in a repayment direction;

c. a penalty of the amount of 1000 pounds (or, in the event that the maximum amount of the penalty, as provided for in paragraph 7(2) of Schedule 4, is increased pursuant to paragraph 7(3) of Schedule 4, the maximum amount of the penalty), for the third and all subsequent occasions that an MP fails to comply with any requirement in a repayment direction.

ANNEX D – Consultation on proposed changes to the Procedures for Investigations

PROCEDURES FOR INVESTIGATIONS OF THE COMPLIANCE OFFICER FOR IPSA

CONSULTATION – OCTOBER 2011

CHAPTER ONE: INTRODUCTION  

 

1. The Independent Parliamentary Standards Authority (IPSA) is a statutory body established by the Parliamentary Standards Act 2009 to devise and administer a regime for reimbursing MPs for expenditure incurred in the performance of their parliamentary functions. The MPs’ Expenses Scheme ("the Scheme") came into effect on 7 May 2010. The Third Edition of the Scheme came into effect on 1 April 2011.

2. The Compliance Officer is a statutory office holder created by the Constitutional Reform and Governance Act 2010 ("the Act"). One of the Compliance Officer’s functions is to investigate circumstances where he or she has reason to believe that an MP may have been paid an amount under the Scheme that should not have been paid.

3. The Act requires IPSA to provide the Compliance Officer with procedures to follow when conducting these investigations, and sets out the investigatory powers available to the Compliance Officer. In July 2010, following a public consultation, IPSA published the Procedures for Investigations of the Compliance Officer. These are attached in Annex A.

4. Creating a new set of Procedures inevitably required assumptions about how they would work. These Procedures have now been in force for a year, resulting in a body of experience about how they are operating in practice. The time is therefore right to review the Procedures to ensure that they are effective for the long-term.

5. As part of this review, IPSA must consult with the Compliance Officer, the Leader of the House, the Speaker of the House, and with the Committee on Standards and Privileges. IPSA has also decided to consult publicly. This consultation document sets out IPSA’s proposals to amend the Procedures, and invites comment on these. It also includes, in Annex B, a flowchart representing how the Procedures would work if the proposals were adopted. Once the consultation is closed, IPSA will analyse the responses and use them to decide whether and how to amend the Procedures. New Procedures will be published in January 2011.

How to respond to this consultation

6. This consultation runs from 11 October 2011 to 25 November 2011. Please ensure that you send your response before the closing date as responses received after 25 November 2011 may not be considered.

7. The responses will be published in full, including the identity of the respondent, unless the respondent indicates otherwise. IPSA will also publish its analysis of the responses.

8. IPSA asks for emailed responses if possible, to: complianceofficerconsultation@parliamentarystandards.org.uk.

9. Please mark the email with the subject "Compliance Consultation Response". Responses should be in plain or rich text format, with as little use of colour or logos as possible. If you do not have access to email, you may send a paper copy of your response to:

Compliance Consultation Response, Independent Parliamentary Standards Authority, 7th Floor, Portland House, Bressenden Place, London SW1E 5BH

CHAPTER TWO: ASSESSING COMPLAINTS  

 

10. The current Procedures for Investigations of the Compliance Officer mandate a three-stage investigations process:

a. An initial assessment: the complaint [1] is assessed to establish whether it falls within the Compliance Officer’s regulatory remit.

b. The Preliminary Investigation: where, following the initial assessment, the Compliance Officer considers that an MP may have been paid an amount that should not have been allowed, a Preliminary Investigation is opened to examine the circumstances.

c. The Substantive Investigation: if, following the Preliminary Investigation, the Compliance Officer has reason to believe that an MP has been paid an amount that should not have been allowed, a Substantive Investigation is opened. The Compliance Officer may then use the information-gathering powers provided in the Act, and make provisional and, if appropriate [2] , determinative findings on the matters under investigation.

11. This three-stage process has led to confusion about the purpose of each stage and about when an investigation, as defined in the Act, begins. IPSA proposes to replace the initial assessment and the Preliminary Investigation with one Assessment stage. The Substantive Investigation would then become the Investigation. Under these proposals, every complaint received by the Compliance Officer would be subject to an Assessment. The Assessment would have two purposes:

a. To enable the Compliance Officer to take an informed decision about whether he or she has reason to believe that an MP may have been paid an amount under the Scheme that should not have been allowed.

b. To enable the Compliance Officer to decide whether to open an Investigation.

12. When conducting the Assessment, the Compliance Officer would be able to draw on his or her own records and any relevant publicly available information (such as the claims published by IPSA), and to ask for information from the complainant, if appropriate, IPSA and the MP.

13. Under the Act, the Compliance Officer may decide not to open an investigation if he or she considers it would be disproportionate. In this case, IPSA proposes that the Compliance Officer should inform IPSA of his or her decision. IPSA may, in appropriate cases, review its decision to pay those claims. Any alteration in the status of a claim would be published by IPSA.

Consultation Question

A: Do you agree that the initial assessment and Preliminary Investigation should be streamlined into one Assessment stage?

CHAPTER THREE: PUBLICATION OF INVESTIGATIONS  

 

14. The current Procedures require the Compliance Officer to publish both the name of the MP and the matters under investigation at the point when a Substantive Investigation is opened. The Compliance Officer has discretion, in individual cases, to defer or withhold publication of these details if he or she considers it appropriate to do so.

15. IPSA considers the need for transparency and openness in the activities of the Compliance Officer to be a persuasive argument for retaining the presumption that these details will be published (unless there are good reasons not to). The question then becomes: when should they be published?

16. The arguments are finely balanced as to when to publish details of an investigation. Publishing the name of the MP at the start of the investigation avoids speculation about whether an investigation, which is a matter of public interest, is underway. However, media speculation may result in an MP being ‘accused’ of wrongful expense claims before a full and fair investigation is completed. Conversely, the Compliance Officer could release the name of the MP at the point when the Compliance Officer publishes his Provisional or Determinative Findings [1] . This would be at the conclusion of an investigation, and would ensure that the full facts and findings are made known at the same time as the details of the investigation. Publication at the conclusion of the investigation would therefore respect the need for transparency and prevent speculation that might unfairly impact on Compliance Officer’s investigation or the MP’s reputation [2] .

17. Other options include leaving the decision when to publish details of an investigation in each case to the Compliance Officer, although this could lead to different approaches being taken in different investigations. Finally, IPSA could require the name and expense type only to be published at the start of the investigation, and details of the actual expense(s) investigated at the conclusion.

Consultation Question

B: When should the Compliance Officer publish the name of an MP and details of a matter under investigation?

CHAPTER FOUR: OTHER PROPOSALS  

 

18. IPSA proposes a number of minor changes to the Procedures in order to improve their clarity and streamline processes. These proposals are below.

a. Make explicit in the Procedures the requirement that where the Compliance Officer exercises his or her discretion, it is done lawfully, fairly and proportionately. This mirrors the inclusion of such a provision in the latest edition of the Scheme, relating to the exercise of MPs’ discretion.

b. Make clear that the Compliance Officer may decide not to open an investigation on the ground that to do so would be disproportionate.

c. Clarify that where the MP under investigation or IPSA are asked formally by notice to provide information to the Compliance Officer for the purpose of an investigation, this information must be provided in writing.

d. Introduce timeframes for various stages of the investigation, including 15 working days for the MP and IPSA to make representations to the Compliance Officer, and five working days for the Compliance Officer to share those representations with the other party.

e. Re-order the Procedures relating to hearings to make clear that these are distinct from meetings held during the investigation. A hearing is a formal mechanism to make representations about the Compliance Officer’s provisional findings.

f. Make clear that the Compliance Officer will only call a hearing if the MP agrees that is the best way for his or her representations to be made.

g. Include in the Procedures the legal framework relating to Repayment Directions, which may be issued in the event that the MP rejects a provisional finding that he or she must repay funds to IPSA. While these provisions have always been set out in the Act, it will bring clarity to the investigative process for them to be included in the Procedures.

h. Make explicit that where during the course of an investigation a new matter comes to light that may also require examination by the Compliance Officer, he or she can decide either to open a new investigation, or bring the new matter into the current one.

Consultation Questions

C: Do you agree with these proposals?

D:Are there any other changes that you think should be made to the Procedures for Investigations of the Compliance Officer?

Flowchart of proposed procedures