The cost of inaccurate information? – possibly £9million of UK taxpayer money in damages

by | Jan 28, 2015 | Information Management, Intranets

Although there is an agreement that effective information management is important in improving operational performance and reducing organisational risk it is rare to have any documented examples in the public domain. Now two have come along almost together. The first is an analysis of how information management failures were a contributory factor in the Fukushima nuclear disaster in a paper by Andrew Thatcher and Ana Vasconcelos (Information School, University of Sheffield) and David Ellis (Department of Information Studies, Aberystwyth University) and I will comment on this paper in due course. The second is an interesting court case in the High Court regarding a winding-up order being issued by Companies House as the result of the bankruptcy of Taylor and Son Ltd in 2009. However the winding up order was actually issued in the name of Taylor and Sons Ltd, just one letter different. Companies House corrected the error three days after the initial order but by then the credit rating of the Taylor and Sons Ltd was damaged beyond redress. The company, which had 250 employees and 3000 customers, went into liquidation three months later.

The published judgment makes interesting reading as the Judge decided that Registrar at Companies House owed a duty of care when entering a winding up order on the Register to take reasonable care to ensure that the Order is not registered against the wrong company. The claim for damages has yet to be agreed, four years after the demise of a successful family business, but lawyers for the former owner of the business estimate them to be of the order of £9million. In the end the people paying the damages will be UK taxpayers.

The judgement is well worth reading to learn about how Companies House manages its information quality and how the Judge interpreted the law. The problem seems to have arisen from a failure to follow agreed internal information management policies. This decision (especially from the High Court) might well be a precedent for other actions where public organisations have not taken due care to ensure that the information on their records is correct, but I am not a lawyer so that is only a personal opinion. It is only fair to point out that Companies House has a very good record for managing data errors but the Judge commented that the implications of this excellent record were that such errors were easy to avoid and so should not have occurred. My thanks to Charles Oppenheim and Rich Greenhill for bringing this case to my attention through their Tweets.

Martin White