Acting to stop harm: the FCA and Appointed Representatives
The ICAEW has recently imposed a severe reprimand, £5000 fine and £3337 costs award on a member who failed to provide information requested by the ICAEW in accordance with a disciplinary investigation. This recent case serves as a reminder for members of accountancy bodies of the potential consequences of not cooperating with a disciplinary investigation by their regulator.
When signing up to membership of a professional accountancy body, many accountants are unaware that they are also signing up to the disciplinary processes of that regulator. Such disciplinary processes often require the accountant or accountancy firm to cooperate with an investigation in to their conduct.
In particular, under paragraph 13.1 of the ICAEW’s Disciplinary Byelaws, the ICAEW Investigation Committee may serve a notice on a member or firm subject to investigation to require them to provide “such explanations and such books, records and documents as the Committee considers necessary to enable it or the head of staff to perform its or his functions under these bye-laws.” Paragraph 13.2 of ICAEW’s Disciplinary Byelaws require the member or firm to comply with the notice within 14 days or within the time specified by the Investigation Committee. If the accountant or accountancy firm fails to comply with the notice, additional disciplinary action may be taken.
Failure to cooperate allegations are often viewed particularly harshly by disciplinary panels, and can result in fines and costs orders being imposed in addition to other sanctions, such as severe reprimands, withdrawal of a practising certificate or exclusion from membership.
In addition, the Disciplinary Committee will often impose an order requiring the member or member firm to provide the information requested by the Investigation Committee. The investigation in relation to the original conduct complained of will therefore continue, with the potential for further sanctions to be imposed if there is an adverse finding.
In the recent ICAEW decision, the allegations related to:
The member did engage to some extent with the preliminary stages of the investigation and provided some information, but ceased to engage once a formal investigation was opened, resulting in a Formal DBL 13 notice being issued and the matter being considered by the ICAEW Disciplinary Committee. The Disciplinary Committee found that the member’s failure to respond to the DBL 13 Notice showed “a lack of insight into the seriousness of the allegations and the importance of the ICAEW’s role in maintaining standards and the protection of the public”.
If you are the subject of an investigation by your regulatory body, it is important that you understand the regulator’s powers and your obligations to cooperate. In particular, if you are unsure as to whether information should be provided, or if you are unable to engage with the investigation, we would recommend seeking legal advice in order to avoid failure to cooperate proceedings.
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