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Press releases 2002 -

Neville and Bernard Michaelson - OFT apology

PN 31/02     24 May 2002

John Vickers, Director General of Fair Trading, today issued a public apology to Neville and Bernard Michaelson, the founders of Colorvision, for maladministration by the OFT in 1995. Measures, welcomed by the Parliamentary Ombudsman, have since been introduced to ensure that such maladministration could not happen again.

The OFT has also paid £3.48 million to Neville Michaelson and £1.25 million to Bernard Michaelson. The payments are in line with the principle applied by the Parliamentary Ombudsman that those who have suffered injustice from maladministration should, so far as practicable, be put back in the position they would have been in but for the maladministration.

The Michaelsons complained to the Parliamentary Ombudsman about the OFT’s handling of the Minded to Revoke notice relating to the consumer credit licences of Colorvision.

The Ombudsman found that there had been serious failings in procedure within the OFT and as a consequence the whole revocation process had been compromised. This had led to injustice for the Michaelsons.

John Vickers, Director General of Fair Trading, said:

‘I apologise unreservedly to the Michaelsons for the misfortunes which they suffered as a result of OFT's maladministration six and a half years ago. Since that time the OFT has reviewed its procedures and taken steps to ensure this could not happen again.’

The OFT now has:

  • reinforced its procedures to ensure that those taking licence revocation decisions do so only on the basis of sound evidence
  • changed its internal structures to strengthen the clear separation between those investigating complaints and those deciding whether evidence justifies revoking a licence.

The ex-gratia settlement figure is made in general recognition of the losses the Michaelsons have suffered relating to OFT's maladministration. There is no single way in which a precise valuation of this can be reached but the factors taken into account in calculating the sum are losses in salary and pension contributions, the disposal of shares at no value, legal expenses and effect on health and reputation.

NOTES

1. Under Section 25 (2) (d) of the Consumer Credit Act 1974 the Director General can, when determining whether or not a company is fit to hold a licence to carry on the business of providing consumer credit, consider evidence of the company’s business practices.

2. Decisions to revoke a consumer credit licence are made by an Adjudicating Officer for and on behalf of the Director General of Fair Trading. Before a licence is revoked the Adjudicating Officer issues a minded to revoke notice to the licensee. The licensee is then given the opportunity to make representations before a final determination is made. If the determination is adverse, the licensee has a right of appeal to the Secretary of State for Trade and Industry (the licence remains in force until the appeal has been decided).

3. Once a company has its credit licence revoked it is not able to offer credit facilities. Consumer credit agreements already made are not affected.

4. The Parliamentary Commissioner for Administration (the Parliamentary Ombudsman) is independent of Government and is an officer of Parliament. He is responsible for investigating complaints referred to him by MPs from members of the public who claim to have suffered injustices in consequence of maladministration by or on behalf of government departments and certain non-departmental public bodies.

5. The Ombudsman's case relates to the OFT's issue of a minded to revoke notice to Colorvision, a company in which Neville and Bernard Michaelson were majority shareholders and of which they were directors.




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