Court sees FSA ‘refund’ deal

Processors are claiming a victory over the Food Standards Agency (FSA) in the High Court, which they claim could see the agency refund or reduce charges to industry to the tune of £1m.

The FSA was challenged in the courts by 12 members of the Association of Independent Meat Suppliers (AIMS) over issues surrounding the recovery of EU minima charges.

AIMS decided to take action over the FSA’s charging regulations, which they claimed were “defective”, and took issue with the fact that the exchange rate the agency used to calculate the minima charges for 2010/11 was based on the average exchange rate for 2009.

Peter Hewson, from AIMS, said: “That could not have been worse for the industry and, to compound matters, the FSA then recalculated operators’ discount rates to consolidate the increase into this year’s charges. If the agency had put in place procedures that allowed minima charges to go up and down as the exchange rate varied, we probably would not have started legal action.”

However, rather than fight the FSA over the entire issue of EU minima payments, AIMS accepted the agency’s proposal to recalculate the EU minima using the exchange rates applicable during 2010/11 and 
refund overpayments by 15 March.

Hewson added: “We know that 141 operators were invoiced for ‘underpayments’ and paid a total of £1,050,490. Industry-wide, the two refunds and future reductions may well be in the region of this sum.”

Norman Bagley, director of AIMS, said: “This is just the latest in a series of reverses that the FSA has had in the courts. All have been due to its unwillingness to engage con-structively with the industry.”

However, an FSA spokesman countered: “It is not the case that any party ‘won’ in the High Court on Friday. The FSA is pleased the claimants have agreed to a situation which the FSA offered them last summer. The FSA recognised the exchange rate it had used to calculate the EU minima was based on an aggregate rate for 09/10, when we should have based this on the 10/11 exchange rate. We acknowledged this in August last year, so the subsequent litigation  has been unnecessary.”

She added the FSA was still unsure of the full amount to be credited back to industry: “The only part of the refunds we know right now is the recalculation of the exchange rate 
on the 2010/11 EU minimum com-pliance, which will lead to a credit in GB of £447,860.91, covering around 130 FBOs out of the 141 invoiced.”

However, Tim Russ, of Clarke Wilmott, the law firm representing AIMS’ members, said: “We wrote to the FSA to see if the error, as we saw it, on the minima charges could be sorted out. But the FSA only offered to look at a recalculation of the invoices when the court proceedings were issued. Much cost could have been saved if they had dealt with this matter in the way finally agreed when we 
first wrote to them.