The ICAEW intends to update its disciplinary framework: how might this affect your obligations as a member?

1 February 2022

The ICAEW Regulatory Board is currently consulting on proposed changes to the ICAEW disciplinary framework, and is seeking views by 15 March 2022, with the intention to launch a new set of “Core Disciplinary Bye-Laws” and a new “Regulations Handbook” this summer.

Much of what is being proposed is structural in nature in an attempt to update and simplify the current disciplinary scheme, which could be described as “unwieldy” at best. The current version of the ICAEW’s Disciplinary Bye-Laws (“DBLs”), which became effective in October 2019, consists of 73 pages worth of: (1) obligations and duties imposed on ICAEW members, affiliates, students, and firms; (2) the powers which the various disciplinary committees have over them; and (3) details of all the processes which must be followed from receipt of a complaint through to final determination by a disciplinary tribunal or an appeal panel.

The proposals seek to extract the process parts of the DBLs and place them in a new and separate 5-part Regulations Handbook, which we outline below. The plan is also to reduce the current 49 DBLs to 16 “core” DBLs which will comprise the duties and obligations of members, firms, affiliates and students, and the powers that can be taken against them.

Proposed structural and terminology changes

The end product of this structural renovation of the disciplinary framework will therefore be a much shorter and more concise Core DBLs document, which will sit alongside a new Regulations Handbook made up of:

  1. Part 1: Investigation & Disciplinary Regulations – although a new document, these regulations will essentially comprise a merger of all of the process provisions within the current DBLs and the individual regulations of each of ICAEW’s disciplinary committees that relate to the disciplinary process from receipt of a complaint until its final disposal.
  2. Part 2: Fitness to Practise Regulations – these will comprise the current Fitness Regulations merged with the current process provisions in the current DBLs that relate to fitness to practise.
  3. Part 3: Regulatory Review & Appeal Regulations – these will merge the current Review Committee Regulations and those elements of the current DBLs and the Appeal Committee Regulations which relate to regulatory appeals, thereby bringing together all of the processes for appeals against the ICAEW regulatory committees in one place.
  4. Part 4: Readmission and Re-registration Application and Appeal Regulations – again a merger of existing provisions relating to initial review and appeal into one document , bringing together the provisions relating to readmission and re-registration in the current Fitness Committee Regulations (Admission to Provisional Membership, Readmission and Re-registration), with relevant provisions from the current DBLs and Appeal Committee Regulations, which relate to appeals of such matters.
  5. Part 5: Regulations for the Fitness to Practise Committee’s review of provisional membership applications and appeals – a rather long title for a document which will contain the provisions relating to the Fitness to Practise Committee’s (currently called the Fitness Committee) initial review of applications for provisional membership referred to it by the ICAEW Education & Training Board, and also a new appeal process against any decisions made by it.

While this overhaul of the disciplinary framework appears substantial, the proposals largely describe an exercise that will merge existing provisions into a more coherent and hopefully more accessible and user-friendly format. There will also be some changes in terminology some of which we have already touched on, such as the Fitness Committee becoming the Fitness to Practise Committee, but also a proposed renaming of the Investigation Committee to the Conduct Committee and the Professional Conduct Department to the Conduct Department.  There will also be the introduction of terms such as ‘conduct matter’ which describes a matter being investigated, ‘allegations’ which are those matters reported by the Conduct Department to the Conduct Committee and ‘formal allegations’ describing those allegations which are referred by the Conduct Committee to the Disciplinary Committee.

The changes we have discussed so far are unlikely to significantly impact individuals and firms falling under the ICAEW’s regulatory net. However, there are a few important substantive changes which are being proposed, which carry more weighty implications. We focus on three of these below.

 

A new duty to report misconduct

Under the current DBLs, ICAEW members must report potential disciplinary matters to the Professional Conduct Department (which as we mentioned earlier, will be renamed the Conduct Department) where it is “in the public interest to do so” (DBL 9.1).  This has always been a difficult test to decipher and will have undoubtedly led to inconsistencies in approach.

The proposals seek to remove this subjective test and make it an obligation to “self-report, or report another ICAEW member, affiliate, student or firm, where events have taken place which indicate a possible liability to disciplinary action”.

Two significant changes are therefore proposed. First, the duty is being expanded to encompass not only ICAEW members but also ICAEW affiliates, students and firms; in other words, any person or firm to which the DBLs apply. Secondly, when deciding whether to self-report or report a potential disciplinary matter to the ICAEW, the test will no longer be whether you think it would be in the public interest to do so; rather, the test will be whether the matter indicates a possible liability to disciplinary action. This is a much broader and objective test and will arguably make it easier to establish whether a report is necessary, and also more difficult to rely upon the subjective test as a reason for deciding not to make a report.

 

A new test for initial determination

Currently, the Investigation Committee determines whether or not to refer a matter to the Disciplinary Committee by deciding whether there is a “prima facie” case of liability of disciplinary action (DBL 15.2).

The proposals seek to change this test to whether there is a “realistic prospect, if the allegations were referred to a tribunal for hearing, the allegation or allegations would be found proved”. This in fact reflects the test adopted by many other professional regulators, but regardless, will mean an arguably higher threshold for initial determination.

 

An expansion of interim and final orders

Starting with interim orders, currently the ICAEW Disciplinary Committee can only make an interim order against a member, student or other individual subject to the DBLs in three discrete situations: where the relevant person has been charged with an indictable offence, where they have been excluded from another professional body, or where there is evidence they have abandoned their practice (DBL 30.2).

The proposals seek to expand these situations such that an interim order may be imposed where there is “risk of significant harm” to the public if interim measures are not put in place. In addition, the types of interim orders that may be imposed are proposed to increase, to now include “any ancillary orders” or “such other terms and conditions” as the Tribunal thinks fit. This is a significant expansion of the variety of interim orders that may be currently imposed, which are limited to suspension or the imposition of conditions (DBL 30.15). It is unclear what other interim measures will be appropriate but the fact that this has been intentionally widened creates the potential of more onerous implications on respondents subject to on-going disciplinary proceedings.

As for final orders, the variety of these orders are also proposed to widen, to include giving the Tribunal the power to impose an order for members and affiliates to undertake specific training or for firms to put in place specific training for their principals and employees.

 

Conclusion


The bulk of the proposed changes to the ICAEW’s disciplinary framework appear to be structural in nature, and in that regard they are not particularly contentious and are in fact helpful in respect of making the scheme more accessible and understandable to members, affiliates, students and firms. However, there are also some substantive changes proposed which have the potential to have a significant impact on individuals and firms if they become subject to an ICAEW investigation. We will be responding to the consultation , and would encourage our clients and others who may be impacted to do so as well. The consultation is open until 15 March 2022.

FURTHER INFORMATION

If you have any questions or concerns about the content covered in this blog, please contact Julie Matheson.

 

ABOUT THE AUTHORS

Julie Matheson is a partner in the Regulatory Team. Her expertise lies in advising professionals and professional services firms, particularly in the accountancy and built environment sector, on regulatory compliance, investigations and enforcement proceedings.

Lucinda Soon is a professional support lawyer in the Regulatory team, and is responsible for knowledge management and practice development. Her work focuses on leveraging the team’s collective knowledge and expertise, ensuring that know-how and current and emerging regulatory developments are identified, evaluated, synthesised, and shared.

 

 

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