A cross-party group of MPs has expressed fresh doubts over the involvement of a leading international firm in the Post Office compensation scheme.

Today’s report from the Business, Energy and Industrial Strategy committee said members were ‘concerned’ that Herbert Smith Freehills had been involved with the discredited HBOS scandal and was now involved with the historical shortfall scheme (HSS) for hundreds of Post Office workers.

Between 2000 and 2014, the Post Office prosecuted 736 sub-postmasters and sub-postmistresses at an average of one a week based on information from the Horizon computer system. That system has since been discredited, and the compensation scheme was created to pay those who were falsely accused and in some cases jailed for thefts they had not committed.

The involvement of Herbert Smith Freehills has already been questioned in light of its role advising the Lloyds Banking Group to compensate victims of fraud on a scheme which was found to have serious shortcomings. The All-Party Parliamentary Group on Fair Business Banking said last year that the firm’s involvement with the Post Office scheme was ‘perverse’.

The business committee was concerned that during last month’s evidence session, the Post Office chief executive Nick Read said he was unaware of issues associated with the HBOS scheme.

‘Both the POL CEO and [business minister Paul Scully] told us that Herbert Smith Freehills’ appointment may be justified on the basis that they might have learnt from lessons from the HBOS scandal alongside their other experience in designing such schemes,’ said the committee report.

‘Our predecessor committee’s work on corporate governance and corporate scandals has indicated that quite the opposite can be true and that lessons are often not learnt.’

The committee added that despite the firm’s experience in establishing compensation schemes it was ‘not reassured’ by Read’s argument that the HBOS and Post Office schemes were unrelated.

‘We expect the government to explain how the historic shortfall scheme differs from the HBOS Reading scheme and what safeguards have been built in to avoid the problems that the latter scheme experienced.’

Elements of the Post Office scheme were heavily criticised by MPs, who said they were ‘deeply disappointed’ that the 555 group action litigants who took the Post Office to court and first exposed the Horizon scandal are in a worse position than other victims.

They were also concerned that so few sub-postmasters had approached the Post Office to begin the process of overturning unsafe convictions, and also that some sub-postmasters had been denied interim compensation despite having had their convictions overturned.

A spokesperson for HSF has said there is no conflict with the firm acting for the Post Office on this matter. The firms points out it did not design and run the HBOS compensation scheme, which was only implemented after independent advice and following consultation with various third parties including the FCA.

The business committee’s report focused only on the compensation scheme and not any other issues associated with the Horizon convictions. Those matters, including the role of Post Office lawyers, are subject to an ongoing inquiry led by retired High Court judge Sir Wyn Williams.

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