ICAEW consults on amending its Code to introduce specific requirements to treat others fairly and with respect

Last week the ICAEW launched a consultation on introducing into its Code of Ethics (the Code) a requirement that accountants treat others fairly and with respect, and not harass, bully or unfairly discriminate against them. 

The (rather un-festive) proposals would bring the ICAEW in line with other regulators which have already introduced similar requirements.  It also reflects the proposals in the FCA’s September 2023 Consultation Paper (closing later this month) that its Conduct Rules be amended to explicitly cover bullying, harassment and other similar behaviour towards colleagues.  (See our blog here on that Consultation.)

But what would the proposed changes mean, in practical terms, for professional accountants and accountancy firms?

This blog briefly looks at the proposals, but for in-depth insights into the regulatory implications of unprofessional behaviour in accountancy firms, and how to investigate such behaviour in accordance with a firm’s regulatory obligations, sign up to our timely webinar on this very topic next week.

The status quo

The current wording in relation to professional behaviour in the ICAEW’s Code is rather ‘vanilla’. It states that professional accountants should “comply with relevant laws and regulations and avoid any conduct that the professional accountant knows or should know might discredit the profession”. 

“Conduct that might discredit the profession” is defined in a rather circular fashion as including “conduct that a reasonable and informed third party would be likely to conclude adversely affects the good reputation of the profession”. 

The Code goes on to state that:

 “The concept of professional behaviour implies that it is appropriate for professional accountants to conduct themselves with courtesy and consideration towards all with whom they come into contact when performing their work” (115.1.A2).

The Code does not currently identify what behaviours the ICAEW considers to be discreditable.  Although the ICAEW’s Guidance on the Duty to Report Misconduct provides some examples of behaviour which might fall foul of the principle of professional behaviour, these are not currently codified and thus not immediately identifiable. On a reading of the Code, a member may not instantly understand or appreciate that insidious behaviours such as bullying or harassment could fall foul of their professional standards, and thus be reportable to the ICAEW as potential misconduct.

The proposed changes

The ICAEW proposes to amend paragraph 115.1.A2 of its Code (see above) to read as follows:

“The concept of professional behaviour implies that professional accountants should act in accordance with the standards that society expects in all professional and business relationships. For example, professional accountants should treat others fairly, and with respect, and not harass, bully, or unfairly discriminate against them.”

This would introduce specific examples of unprofessional or discreditable behaviour in relation to the way in which accountants treat ‘others’, reflecting a greater recognition in society of the importance of health and wellbeing.  Indeed, the ICAEW explain the rationale for the proposed changes as follows:

• “unfair or inappropriate treatment can affect the health and wellbeing of colleagues and impact on their ability to practise. This in turn can also have an impact on the quality of services received by consumers;
• unfair or inappropriate treatment can also mean that those who may not be competent are put in positions of responsibility, rather than being appointed on merit;
• incidences of bullying behaviour in the workplace or related environments can influence ethical behaviour. For instance, it could lead to covering up mistakes or acts of dishonesty, rather than being open and transparent; and
• unwelcome and inappropriate conduct by colleagues in professional or work-related environments or on social media is highly damaging to victims, the profession, and its reputation.”

The impact

Bullying, harassment and unfair discrimination could in fact be caught by the current wording in the Code as examples of behaviour which might discredit the profession.  In that sense the proposals do not therefore introduce new requirements, but simply clarify what has always been required.  However, the wording of the current Code could leave accountants and firms unclear as to whether behaviour which is less obviously unprofessional than, for example, dishonesty or sexual misconduct, would fall within the ICAEW’s regulatory remit.  The proposed changes would remove this uncertainty.  

Should these proposed changes be introduced (which seems likely, given that similar changes have been introduced by numerous other regulators), firms would need to carefully consider whether alleged bullying, harassment or discriminatory behaviour by one of their accountants should be referred to the ICAEW, even where this has been resolved locally.  

On 12 December, in the second part of our series on unprofessional behaviour in accountancy firms, we will delve into the duties of firms in terms of investigations and reporting to the ICAEW, both generally and in connection with these proposed amendments. Sign up here to ensure you are fully aware of your professional requirements. 

FURTHER INFORMATION

If you have any questions regarding this blog, please contact Julie Matheson and Lucy Williams in our Regulatory team.

ABOUT THE AUTHORS

Julie is a Partner in the Regulatory team. Her expertise lies in advising professional services firms, particularly in the accountancy, audit and built environment sectors, on regulatory compliance, investigations and enforcement proceedings. 

Lucy is a Legal Director in the Regulatory Department with a particular specialism in legal, healthcare and financial regulation. In her defence practice Lucy represents regulated professionals and organisations facing professional disciplinary proceedings, including law firms, solicitors, barristers, doctors, nurses, psychotherapists and teachers.