Insolvency Service investigations into trading companies
The ICAEW has, in recent disciplinary cases, emphasised its strong stance on members who fail to comply with its disciplinary investigations.
In three recent distinct cases brought against ICAEW members Mr Andrew Richard Nicholson FCA; Mr Alan George Kent FCA; and Mr David John Gillespie FCA, the decisions handed down reflect the ICAEW’s viewpoint that a failure to provide information when requested by the regulator will not be tolerated.
The ICAEW’s Disciplinary Bye-law 13 provides, in summary, that the Investigating Committee of the ICAEW has the power to give notice to a member to provide information which it considers necessary to perform its functions. It also imposes a duty on members to comply with such notices by such time as the Investigating Committee specifies.
The three respondents named above, in separate disciplinary cases, all fell foul of Bye-Law 13. Mr Nicholson, as part of an investigation into a complaint made against two of his former clients, was asked to provide a number of pieces of documentation including HMRC correspondence and tax computations. Mr Nicholson entered into correspondence with the Case Manager of the ICAEW and asked for extra time to provide this information. However, he ultimately did not do so. Mr Nicholson advanced mitigation, which led to the fine imposed on him for the failure being reduced to £500. However, he still also received a severe reprimand and an order to pay the ICAEW’s costs, which amounted to £2,286.
Mr Kent faced a similar allegation, after a complaint was made about two separate allegations arising out of his professional work. Information in relation to the complaints was sought by the ICAEW. Mr Kent failed to respond at all to the ICAEW’s correspondence. He therefore received a reprimand, a fine of £4,000 and a costs order against him of £1,399, along with an order that he produce the information requested.
Mr Gillespie fell foul of the same Bye-Law, failing to engage with the ICAEW, despite several letters being sent to him. He faced a similar penalty of a severe reprimand, a fine of £4,000 and a costs order against him of £1,511.50. He was also ordered to produce the information the ICAEW was seeking.
The decisions in these cases demonstrate the principle that transparency with one’s regulator is key. Many disciplinary schemes have provisions within them stating that a member has a positive duty to provide information when sought by the regulator. The ICAEW has, in these decisions, demonstrated that it views a breach of that responsibility as a very serious matter. The message to be taken is that professionals should comply with their regulator and provide information when sought. If that information is simply not available, or cannot be disclosed for other reasons, this should be explained.
If a question is raised by your regulator, do not bury your head in the sand; this could lead to a further disciplinary allegation being advanced against you.
For further information, please contact Julie Matheson
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