Charles Flint QC report presented to Treasury on 30 June 2017

Summary

A request was made for the full Charles Flint QC report regarding the failure of Powerhouse Insurance Limited, but the Treasury refused to disclose it citing legal restrictions on restricted information.

Key Facts

• The Treasury confirmed holding the report but withheld it entirely under an absolute exemption.
• The report was commissioned by the Financial Services Authority to review the role of the Insurance and Pensions Authority.
• The report is classified as 'restricted information' under the Insurance Act 2008.
• Only Chapter 10 of the report, containing conclusions, was previously published as it excluded restricted information.
• The Treasury noted the original Hansard quote incorrectly referred to 'Tower House Insurance Ltd' instead of 'Powerhouse Insurance Limited'.

Data Disclosed

• 30 June 2017
• 18.07.17
• 13th July 2017
• 7th July
• 2 April 2018
• 27 April 2018
• Section 27
• Freedom of Information Act 2015
• Insurance Act 2008
• Schedule 6
• Chapter 10

Exemptions Cited

• Section 27 of the Freedom of Information Act 2015 (Information the disclosure of which is restricted by law)
• Paragraph 1(1) of Schedule 6 of the Insurance Act 2008

Original Request

In Tynwald on 18.07.17 the Treasury Minister is recorded in Hansard as stating: "Mr President, the Isle of Man Financial Services Authority provided me with two reports on 30th June 2017. The first report was written by Mr Charles Flint QC, an independent expert commissioned by the FSA to undertake a review on the role of the Insurance and Pensions Authority in relation to the failure of Tower House Insurance Ltd. The second report was written by the Financial Services Authority and is addressed to me which sets out the key findings of Mr Flint QC, along with the response of the Authority to the conclusions of Mr Flint's report, including highlighting the regulatory and supervisory developments which address the matters observed. This second report was published by the FSA on 13th July 2017 and is available, as I am sure the Hon. Member is aware, through its website. The report includes an unabridged copy of chapter 10 of Mr Flint QC's report in which Mr Flint QC summarises his conclusions arising from his independent review. Shortly after receiving both reports, I met with the FSA on 7th July to discuss this matter." My request is for a copy of the report as quoted below. "The first report was written by Mr Charles Flint QC, an independent expert commissioned by the FSA to undertake a review on the role of the Insurance and Pensions Authority in relation to the failure of Tower House Insurance Ltd."

Data Tables (1)

Full Response Text

Freedom of Information Seyrsnys Fysseree

The Treasury Government Office, Douglas Isle of Man, IM1 3PU

Telephone: (01624) 685605 Email: FOI.Treasury@gov.im

Government Website: www.gov.im

Our ref: 416233 27 April 2018

Dear ###,

We write further to your request which was received on 2 April 2018 and which states:

"In Tynwald on 18.07.17 the Treasury Minister is recorded in Hansard as stating: "Mr President, the Isle of Man Financial Services Authority provided me with two reports on 30th June 2017. The first report was written by Mr Charles Flint QC, an independent expert commissioned by the FSA to undertake a review on the role of the Insurance and Pensions Authority in relation to the failure of Tower House Insurance Ltd. The second report was written by the Financial Services Authority and is addressed to me which sets out the key findings of Mr Flint QC, along with the response of the Authority to the conclusions of Mr Flint's report, including highlighting the regulatory and supervisory developments which address the matters observed. This second report was published by the FSA on 13th July 2017 and is available, as I am sure the Hon. Member is aware, through its website. The report includes an unabridged copy of chapter 10 of Mr Flint QC's report in which Mr Flint QC summarises his conclusions arising from his independent review. Shortly after receiving both reports, I met with the FSA on 7th July to discuss this matter."

My request is for a copy of the report as quoted below. "The first report was written by Mr Charles Flint QC, an independent expert commissioned by the FSA to undertake a review on the role of the Insurance and Pensions Authority in relation to the failure of Tower House Insurance Ltd."" For ease of reference we refer to the report you have requested as “the Flint Report” and make the facile point that the Hansard extract plainly ought to be referring to Powerhouse Insurance Limited.

Response to your request While our aim is to provide information whenever possible, in this instance we are unable to supply you with a copy of the Flint Report due to the application in these particular circumstances of section 27 of the Freedom of Information Act 2015 (the “Act”), being the absolute exemption relating to “Information the disclosure of which is restricted by law”.
Section 27 provides an absolute exemption where disclosure is prohibited by the public body holding it. I trust what follows provides a sufficient explanation as to why in this case we are unable to provide you with the requested report.
By way of background, you may be aware that the Flint Report, which was commissioned by the Financial Services Authority (the “Authority”), provides an independent review of the manner in which the Authority (as at the time would be the Insurance and Pensions Authority) discharged its functions in respect of Powerhouse Insurance Limited.
The Flint Report in its entirety is classified by the Authority as “restricted information” pursuant to the Insurance Act 2008 because it is significantly based on materials provided to the Authority as restricted information i.e. as material provided to the Authority for the purposes of ongoing discharge of its regulatory functions that have not been put into the public domain by any other lawful means1.
1 Chapter 10 of the Flint Report, which draws together the conclusions of Mr Flint QC, does not in itself contain restricted information and it was specifically drafted so as to exclude restricted information in order to enable publication of this chapter to a wider audience. The remainder of the report however contains throughout references to restricted information.

In relation to the Flint Report, the disclosure of this restricted information is prohibited by paragraph 1(1) of Schedule 6 of the Insurance Act 2008 as follows:- (1) Subject to paragraph 2, information which is restricted information for the purposes of this paragraph and relates to the business or other affairs of any person shall not be disclosed by a person mentioned in subparagraph (3) ("the primary recipient") or any person obtaining the information directly or indirectly from the primary recipient without the consent of the person from whom the primary recipient obtained the information and if different, the person to whom it relates. (2) Subject to subparagraph (4), information is restricted information for the purposes of this paragraph if it is obtained by the primary recipient for the purposes of, or in the discharge of such person’s functions under, this Act or the Retirement Benefits Schemes Act 2000 or any public document made under this Act or the Retirement Benefits Schemes Act 2000 (whether or not by virtue of any requirement to supply it made under those provisions). As Treasury has its own functions under the Insurance Act 2008, it is a primary recipient in its own right of the restricted information and as such is subject to the same prohibition under the statute as the Authority. Accordingly, the restricted information can only be disclosed by Treasury if a “gateway” to disclosure exists under paragraph 2 of Schedule 6 of the Insurance Act 2008, or if the necessary consent has been obtained.
In this instance, paragraph 2 of Schedule 6 does not provide a “gateway” to enable Treasury to release the report in response to this request. Furthermore, Treasury obtaining consent from the persons/companies who provided the (original) information to the Authority and by the persons to whom the report relates, would be a significant undertaking and likely to be non-viable, given the qualitative complexity as well as the volume of reports, documents and files to which the information relates.

The statutory prohibition on disclosure of restricted information is backed by a criminal offence under section 53(2)(e)(ix) of the Insurance Act 2008. Consequently, an absolute exemption under section 27 of the Act is engaged as disclosure of the report by Treasury is prohibited under the Insurance Act 2008. By way of further context for the prohibition on disclosure of restricted information, regard must be had to the careful manner in which the Authority itself handles the information it receives and specifically in this case, as to the sources of the information which made up the basis and evidence for the report. Effective regulation is very much dependent upon the adherence to the principle of protecting restricted information. Without the confidentiality of such information and disclosures being protected, the ability for effective supervision and regulation would be compromised. Even if there was no statutory prohibition on disclosure of restricted information under the Insurance Act 2008 and thus no engagement of section 27, there would of course be arguments that release of the Flint Report by Treasury could present arguments in terms of breach of confidence and thus engage section 26 of the Freedom of Information Act 2015. Treasury is aware that the basis for Mr Flint’s engagement was an expectation that the Flint Report to the Authority would not be published. That expectation was itself premised around the fact that his review did not envisage any Maxwellisation of the Flint Report. However, arguments relating to section 26 are somewhat academic given the engagement of section 27. To summarise: section 27 is engaged because Treasury has the Flint Report (and the information contained therein) pursuant to and subject to the restricted information provisions of the Insurance Act 2008. Your right to request a review If you are unhappy with this response to your freedom of information request, you may ask us to carry out an internal review of the response, by completing a complaint form and submitting it electronically or by delivery/post to us at the address provided above.

An electronic version of our complaint form can be found by going to our website at https://services.gov.im/freedom-of-information/Review . If you would like a paper version of our complaint form to be sent to you by post, please contact me and I will be happy to arrange for this. Your review request should explain why you are dissatisfied with this response, and should be made as soon as practicable. We will respond as soon as the review has been concluded.

If you are not satisfied with the result of the review, you then have the right to appeal to the Information Commissioner for a decision on; 1. Whether we have responded to your request for information in accordance with Part 2 of the Freedom of Information Act 2015; or 2. Whether we are justified in refusing to give you the information requested.
In response to an application for review, the Information Commissioner may, at any time, attempt to resolve a matter by negotiation, conciliation, mediation or another form of alternative dispute resolution and will have regard to any outcome of this in making any subsequent decision. More detailed information on your right to a review can be found on the Information Commissioner’s website at www.inforights.im. Should you have any queries concerning this letter, please do not hesitate to contact me. Further information about freedom of information requests can be found at www.gov.im/foi.

I will now close your request as of this date.

Yours sincerely ###