Louise Silverton joined the Practice Assurance Committee (PAC) with 40 years of experience in midwifery practice, education and regulation. At first glance, this might seem an unusual background for someone moving into financial regulation. But she immediately saw the common threads tying her experience in midwifery regulation with the approach taken at ICAEW.
“The ultimate purpose of professional regulation is to protect the public and ensure high standards,” she explains. “And you essentially do that by having high standards for people when they enter a profession, and then standards to make sure they practise well and stay up-to-date. You also have a process to take action if they fall short.”
As well as being a midwife herself, Silverton was involved in midwifery education and worked for the Royal College of Midwives, where she was Deputy General Secretary and then Executive Director for Midwifery. “I’ve always had an interest in regulation,” she explains. For example, as a member of the International Confederation of Midwives’ Regulation Standing Committee, she was co-chair in developing Global Standards for Midwifery Regulation.
When she saw an advertisement for an ICAEW committee role, she researched what ICAEW does and found clear commonalities in the ultimate purposes of regulation. “This meant I wasn’t wary of becoming involved in a very different organisation,” she says. “Although the sorts of things we deal with on the PAC were new to me, the principles were not.”
The PAC is responsible for all operational matters associated with ICAEW’s Practice Assurance scheme. It mainly considers reports from PA visits where quality assurance reviewers have identified serious concerns in the provision of accountancy services or where firms are failing to comply with the Practice Assurance Regulations.
Firms coming before the committee may be required to take remedial action to address concerns in areas such as handling client money or compliance with anti-money laundering (AML) legislation. Since July 2019, the committee has also had the power to levy penalties for less serious compliance or conduct issues. But where concerns are particularly serious or persistent, it refers the firm to ICAEW’s Professional Conduct Department (PCD) for further investigation.
The committee, which normally meets six times a year, is made up of twelve members, at least half of whom must be lay. During the pandemic restrictions, the committee was only meeting online but the plan from now on is to meet in-person at least twice each year.
Silverton urges people from all backgrounds to consider serving on the committee. “You really just need to have an inquiring mind,” she emphasises. “I brought that to the PAC, and I think you need that much more than you need to know the specific details of how things work, because you’ll pick those up as you go along.”
She also believes prospective PAC members need to be interested in process. “If you don’t have an interest in process, you probably won’t enjoy the work,” she explains. Another quality she thinks committee members need is not to be afraid to ask questions. “At the beginning, I asked some really basic questions because I didn’t understand how ICAEW or accountants work,” she acknowledges.
Time and again
The scope of the Practice Assurance scheme means the committee tends to see similar cases coming before it. “The areas where firms fall short are very often the same,” explains Silverton. “And these are customer due diligence, AML compliance and Clients’ Money Regulations.”
“Obviously each organisation is different and the personalities in firms are different,” she adds. “But the main areas where we’re imposing penalties or referring firms to PCD are reasonably common.”
These similarities mean committee members quickly get an in-depth understanding of the main issues, for example, what is good practice in a firm-wide risk assessment for AML or how to comply with client money requirements. “The fact that our work is so focused is actually helpful,” she says. “It doesn’t make it boring.”
She also stresses that cases that come before the PAC are the tip of a very wide pyramid. “The vast majority of individuals and firms do everything right,” she says, “or just need to make minor tweaks that QAD recommends, they do these and we never see them.”
AML compliance is something the committee is increasingly looking at. “We think a lot of the firms that come before the PAC still don’t really understand what it means,” says Silverton. “In particular, we see single-handed practices saying things like: ‘I know all of my clients, so I don’t need to think about that.’ But even if you’ve got a very longstanding client, there may have been changes or someone might be taking advantage of them, for example, so you’ve always got to ask the right questions.”
A new educational drama, produced by ICAEW in collaboration with HMRC, is one of the innovative ways ICAEW is trying to tackle this lack of understanding. The film, All Too Familiar, looks at what can go wrong if firms fail to ask the right questions and exercise the necessary professional scepticism.
“I would love it if no firms were referred to us for not doing their firm-wide AML risk assessments,” says Silverton. “But they too often misunderstand what these assessments are. They don’t seem to realise it’s about identifying the money laundering risks their firm faces from its clients and the services it provides.”
The committee also sees too many cases where firms have not done what they said they would do. “They might have given an assurance to ICAEW’s Quality Assurance Department (QAD) after a previous monitoring visit that they will rectify an issue, but by the next visit, a few years later, they still haven’t done it,” says Silverton.
“Many of these issues are obvious, and happen time and again,” she adds. “A firm said five years ago that it would ensure all its clients have received its complaints policy. But it still hasn’t written to them. Or firms persistently get their engagement letters wrong, yet there are draft templates freely available on the ICAEW website.”
Aim to improve
Before July 2019, the committee did not have the power to levy financial penalties. But, since then, this ability has allowed it to deal with some of the less serious cases more quickly, where appropriate. The committee still refers more serious cases to PCD.
“Our aim is not to punish,” stresses Silverton. “What we want is to get firms to do things properly. We want to see people improve and do so sustainably.”
For many firms, it is often not the level of fine that’s the issue. “It’s having it published that they’ve done something wrong,” she says. “This shows the importance attached to the reputation of the individual or organisation. Even if a fine is quite small, the impact can be quite large.”
Something else she has noticed is that the accountant members of the PAC can be harder on their colleagues than the lay people are. “If you’re a member of a profession and a fellow professional isn’t meeting the expected standards, you don’t like it,” she explains. In other cases, it will be lay members who take a firmer view, which is why a balance of lay and accountant members works so effectively.
Silverton expects the coming year will be a busy one for the committee. “What we will continue doing is what we always do, and that’s trying to get firms and individuals to work in the best way possible,” she emphasises. “It’s rarely a case of them not working hard enough or putting in sufficient effort, because often doing these things properly is less effort. It’s more about having proper systems then applying and reviewing them regularly.”
“I really enjoy my role as committee chair,” she concludes. “It’s interesting, and I feel we do make a difference. It’s nice not to have people coming back as repeat customers.”
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