FFI scheme – HSE consult on dispute resolution process

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2017-07-14

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By Regulation 24(5) of the Health and Safety and Nuclear (Fees) Regulation 2016, the Secretary of State granted the Health and Safety Executive (HSE) the duty and power to create a procedure to resolve disputes in relation to the fees it may claim under these regulations.

Lawyers were not satisfied that the procedure, originally introduced by the HSE in 2012, was fair or compliant with natural justice and the requirements of Article 6 of the European Convention on Human Rights.

Following a judicial review challenging the fairness of the procedure, HSE conceded to introducing a revised process for the independent and impartial determination of such disputes and to consult stakeholders upon the proposed revised process.

The HSE produced a consultation document which allowed only six weeks for stakeholders to respond.

The HSE consultation document presents a dispute resolution process that is only marginally different to the previous one (which was considered unfair). The questions it raises to stakeholders appear to be aimed only at minor aspects of the operation of the process, rather than the process itself.

The FFI scheme

The Fee For Intervention (FFI) cost recovery scheme was first introduced on 1 October 2012 and provides a means by which the HSE can recover its costs of performance of its statutory functions where an HSE Inspector is of the opinion that a person is contravening or has contravened one or more relevant statutory provisions for which the Executive is the enforcing authority.

By Regulation 24(5) of the Health and Safety and Nuclear (Fees) Regulation 2016, and in earlier 2012 regulations, the Secretary of State granted the HSE the duty and power to create a procedure to resolve disputes in relation to the fees it may claim under these regulations.

The dispute process introduced by the HSE provided duty holders with the means to challenge the alleged contravention as well as the amount of fees charged firstly by way of a “query”. Upon receipt of a query, the HSE FFI team liaises with the relevant HSE Inspector to consider the challenge and as a consequence the claim for fees is confirmed, withdrawn or amended.

A decision not accepted by the duty holder may be referred to an HSE FFI panel by way of a “dispute”.

In the event of an unsuccessful referral to the disputes panel, the HSE may charge fees at the same rates for consideration of the dispute. There is no provision for payment of fees to the duty holder in the event of a successful dispute.

The disputes panel comprises two HSE managers and an “independent person” appointed by the HSE.

The dispute process has been severely criticised by lawyers because of its lack of fairness independence and impartiality and its failure to comply with the fundamental requirements of natural justice and Article 6 ECHR.

Judicial review

In August 2014 OCS Group UK Ltd (OCS) was issued with a notice of contravention, followed by an FFI invoice. OCS denied that a material breach had occurred and escalated the matter to a formal Dispute.

The disputes panel, comprising two HSE managers and an independent person, found in favour of the HSE.

OCS took issue with the dispute process, stating that the HSE was acting as “judge in its own cause”.

The judicial review was presented on the basis that the dispute process lacked independence, fairness and transparency.

When granting permission for judicial review, Mr Justice Kerr observed: “It is arguable that the HSE is, unlawfully, judge in its own cause when operating the FFI scheme; and that the scheme is either unlawful or being operated in an unlawful manner.”

OCS was granted permission to proceed with a judicial review and a hearing was scheduled. Prior to the hearing, the parties agreed a consent order by which the underlying notice of contravention was withdrawn. The HSE agreed to pay OCS’s costs, and the HSE agreed to review the FFI disputes process and to consult with stakeholders.

Consultation process

The consultation process closed on 2 June 2017, having been open for just six weeks, and changes are due to be implemented by 1 September 2017.

The consultation document appears little more than presenting a disputes process that remains unfair and similar to that which is already in existence, lacking independence and impartiality.

The only change of significance is that it is proposed that the disputes panel will comprise a lawyer as chair, together with two other members with practical experience of health and safety management. HSE has confirmed that all panel members will be HSE appointments selected by the HSE.

The attempts at demonstrating independence appear inadequate in the absence of demonstrable impartiality. It remains proposed that costs be paid by an unsuccessful challenger to FFI yet not by the HSE for an unsuccessful FFI claim.

It remains to be seen how the HSE will react to the consultation process. The dispute process currently proposed by the HSE appears to do little to satisfy complaints that the process is unfair, and lacks independence and impartiality. If introduced as proposed, it is likely to be subject to further legal challenges.