ICAEW’s new Guidance on Disciplinary Sanctions: what accountants and accountancy firms need to know

The regulatory landscape for accountants is progressively evolving, driven by heightened public expectations, increased scrutiny of professional conduct, and a greater push for transparency across regulated professions.
 

Against this backdrop, the Institute for Chartered Accountants in England and Wales (ICAEW) has introduced an updated Guidance on Disciplinary Sanctions which aims to facilitate proportionality and transparency and promote the public interest.

The Guidance serves as a framework for committees to determine the type and level of sanction to be applied in disciplinary cases against members. The updated Guidance will replace the 2018 scheme and apply to all disciplinary matters considered by the Conduct Committee for the first time on or after 1 January 2026.

What’s new? Key changes to the Guidance
 

The new Guidance is not dramatically different from the previous version. However, there are a number of key changes that ICAEW members should be aware of:

Dishonesty

Dishonesty is now a standalone category, having previously formed part of the sanctions for a breach of the fundamental principle of integrity. The Guidance is clear that the starting point for a finding of dishonesty is exclusion, albeit with discretion to reduce this to severe reprimand in exceptional circumstances. While this is consistent with how dishonesty was treated under the previous version of the Guidance, having this as a separate category of offence ensures that members facing a dishonesty allegation can be clear as to the sanction that will be imposed.

Unlike other categories, breaches are not subdivided into the tiers of “very serious”, “serious” and “less serious” matters; rather, dishonesty is framed as a significant breach irrespective of the surrounding context, with only aggravating and mitigating factors to prompt any derogation from the default position of exclusion.

Sexual misconduct

Another new addition is the category of sexual misconduct, which has a starting point of exclusion in very serious cases, as well as prescribed categories of fine. Recognising the unique sensitivities involved, the ICAEW carried out a public consultation in relation to this, which ‘showed strong and consistent support for including a financial penalty within the overall sanction for sexual misconduct’.

Discrimination, bullying, victimisation and harassment

The Guidance also provides directions in relation to the fundamental principle of professional behaviour. These changes reflect the recent amendments to the ICAEW Code of Ethics which introduced the requirement to not bully, harass, victimise or unfairly discriminate against others. The updated Code of Ethics also introduced a “reasonable and informed third party” test against which to measure members’ conduct. The platforming of ethical behaviour breaches are interpreted to extend to personal conduct if serious enough to impact on the public perception of the profession.

To reflect this increased scrutiny, a breach of the fundamental principle of professional behaviour results in a starting point of exclusion in serious and very serious cases whilst, separately to this, conduct involving discrimination, harassment and bullying also carries a starting point of exclusion in very serious cases.

For more details about the last year’s changes to the Code of Ethics, see our three-part series here.

Non-cooperation with the investigation

Emphasis has been placed on the treatment of non-cooperation with ICAEW Investigations by treating failure to cooperate as a more serious aggravating factor. The ICAEW states the position was reviewed against the actions of comparable regulators, which demonstrated that the ICAEW were not taking seriously enough the non-cooperation of its members. A recent tribunal finding imposed a severe reprimand, a £5,000 fine and £6,473 in costs on a member who failed to cooperate with them during an ICAEW investigation, indicative of a general trend amongst regulators to take such issues seriously.

To find out more about this finding and regulated professionals’ duties to cooperate with regulators, see our recent blog here.

Higher financial penalties

Financial penalties have been updated throughout the Guidance with a view to “aligning the most serious type of misconduct with the highest levels of penalty” and uplifting more general levels of fine to reflect inflation and deter breaches.

A category A fine, for example, is now valued at up to £25,000 (previously £20,000). A lesser category C fine sits at up to £15,000 (previously £10,000), and the least punitive category F fine is £2,000 (previously £1,000).

Failure to comply with the fundamental principle of integrity now carries a starting point of a category B financial penalty in very serious cases, and categories C and D for serious and less serious cases respectively. Each tier has shifted one category higher, emphasising the importance of compliance in this increasingly scrutinised area. This shift is also reflected in penalties for breach of confidentiality and the fundamental principle of objectivity. Unsurprisingly, very serious cases of failure to comply with the fundamental principle of professional behaviour also carry a starting point of a category B penalty.

Strengthening existing provisions

The overarching guidelines on the principles of sanction have been enhanced to facilitate a more detailed understanding of the decision-making process, and committees’ approach to proportionality and insight. This includes, for example, an expanded list of common aggravating and mitigating factors, and updated definitions for the “very serious”, “serious” and “less serious” levels of misconduct. Where defective work is involved, sanctions will reflect the quality of the work and impact of the breach as a distinct consideration from the mindset of the relevant individual.

Separate Disciplinary and Regulatory Guidance

While previous versions of the Guidance addressed both regulatory and disciplinary findings, the ICAEW has decided to separate the Guidance into two separate documents to avoid confusion and ensure each set of sanctions is targeted to the nature of the proceedings. Revised guidance for ICAEW’s Regulatory Committees will be consulted on in early 2026, with publication expected in late 2026. In the meantime, those facing potential regulatory penalties should continue to apply the June 2023 version of the ICAEW Guidance on Sanctions.

What does this mean for members?
 

The messaging of the ICAEW is clear: members must not only maintain high standards of performance, competence and technical work, but also ensure their behaviour aligns with increasingly stringent ethical standards. This is so, not only in the context of day-to-day work, but in a broader sense in how members conduct themselves when socialising with work colleagues and beyond. The spotlight remains on reducing tolerance for any behaviours which might undermine public trust and confidence in the profession.

It is hoped that this greater scrutiny of conduct will be coupled with more consistent outcomes across cases and more clarity and predictability in relation to the ICAEW’s conduct of investigations. Although it introduces the possibility of more severe sanctions, a clearer and more robust regime for determining sanctions will be a welcome development for those navigating investigatory processes.

On a practical level, the changes are a good stimulus for proactive compliance reviews by firms and individuals. It is advisable to assess internal ethics policies and training on conduct, safeguarding and reporting procedures and a framework for engaging with the ICAEW. By doing so, members reduce the risk of exposure to investigation and more severe sanctions imposed under the new provisions.

Conclusion

The ICAEW’s new Disciplinary Sanctions Guidance represents a significant shift towards a strengthened regulatory framework. Its aims for greater transparency, public protection and high professional standards are palpable, and the impact of more stringent measures should not be underestimated.

For members, the new Guidance serves both as an important reminder and an opportunity; a reminder that public and regulatory scrutiny is on the rise, and an opportunity to reinforce compliance and foster a culture of ethical behaviour to adapt to the evolving regulatory landscape.

If you would like to know more about how we can advise you on regulatory compliance or support you in an investigation, please visit our defending accountants and accountancy firms page or email a member of our team in confidence.