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A disciplinary framework fit for the future

Author: Professional Standards Department

Published: 06 Jul 2022

ICAEW’s disciplinary framework is being simplified and updated to make it more efficient and accessible. Ahead of the changes, Duncan Wiggetts, ICAEW’s Chief Officer for Professional Standards, explains the rationale behind the reforms and discusses how the revamped framework better meets the needs of a modern regulator.

The new disciplinary framework is the culmination of a two-year project to update and simplify ICAEW’s existing disciplinary scheme and make it more accessible for its users.

“We believe we've now got something that's fit for purpose in the modern era,” says Wiggetts. “People can understand key parts of our system better than they did before as the processes are clearer and more transparent, and greater efficiency will improve the speed of investigations and disciplinary proceedings which is in the public interest.”

When the ICAEW Regulatory Board (IRB) embarked on the project in 2020, the goal was not to make substantive changes to the main cornerstones of the disciplinary scheme but, rather, to streamline it and make it more responsive to the evolving regulatory environment. 

However, there have been some re-writes of existing provisions, for example to remove overly complicated or legalistic language and improve clarity. There have also been amendments to some processes to address inefficiencies and ensure they are in line with equivalent professional regulatory bodies. 

“The fundamentals of our disciplinary scheme, however, are still the same, and broadly the types of sanctions have stayed the same,” stresses Wiggetts. “The key planks haven’t changed; it’s more about explaining the process more clearly.”

The split

“The IRB had already supported a number of recommendations I had made for substantive changes to the Disciplinary Bye-laws (DBLs) after I joined ICAEW and carried out an initial review of the disciplinary scheme,” explains Wiggetts. “But the incorporation of these new provisions within the somewhat archaic structure of the original bye-laws meant that the whole scheme had started to resemble something of a patchwork quilt.”

So, after approving the last set of changes in 2019, the IRB wanted to start a project to look at how the framework as a whole could be improved. Given the length of time it can take to amend a disciplinary bye-law, the first stage of the project was to consider how many of the disciplinary scheme’s provisions needed to be set out in bye-laws rather than regulations. The project team looked at how similar regulatory bodies had refreshed their frameworks and found that most had divorced the duties and obligations of members from the processes that need to be followed.

“Rather than reinvent the wheel or continue with what we had, we decided to re-model the disciplinary scheme to follow that two-layer framework. This would then allow all the pure process provisions to be moved into a set of regulations which would allow for changes to be made far more quickly by the IRB with ICAEW Council still being required to agree to any future change to the DBLs,” explains Wiggetts.

A single document

The first stage of the project, focusing on what was necessary to keep in bye-laws, and taking leading counsel’s advice, led to a reduction in the number of DBLs to 16. “Some of this was obvious,” says Wiggetts. “For example, the duty to report misconduct should clearly be in the bye-laws as it imposes an obligation on a member or firm, whereas the need for parties to serve a document 14 days in advance of a hearing is clearly process.”

The second stage involved creating the new Investigation and Disciplinary Regulations (IDRs), which bring together the process provisions pulled out from the existing DBLs and the individual regulations of each of ICAEW’s disciplinary committees.

“We took soundings from committees and users as to how these processes and committee regulations were working,” says Wiggetts. “And, when it became clear there were areas for improvement, some were rewritten to be more efficient or effective, or even deleted.”

The final part of the project focused on what needed to be done to cover other processes affected by stages one and two. This involved several changes, including enhancement of the existing Fitness Regulations (now re-named as the Fitness to Practise Regulations), the creation of a new standalone appeal process for regulatory appeals (Regulatory Review and Appeal Regulations) and changes to the existing regulations relating to the appeals of decisions made on readmission, re-registration and provisional membership applications. 

“As a result, we’ve created a disciplinary and regulatory handbook,” explains Wiggetts. “It's just one document which separates out all the processes currently intermixed in the DBLs and walks through the processes from start to finish. It's a lot more streamlined.”

Groundswell of support

Throughout the project, the project team consulted with a wide range of stakeholders, from external legal counsel and oversight regulators, to the chairs of ICAEW’s regulatory and disciplinary committees and with staff in the Professional Conduct Department who use the processes every day. “This has enabled us to identify where there are procedural issues, consider alternatives and test out revised processes to ensure that they will work well in practice and remain fair to complainants and members” says Wiggetts.

The final stage in this engagement process was a formal public consultation on the proposed changes where comments were invited from ICAEW members, regulated individuals and firms, consumers of accountancy services and other stakeholders. “All the major accountancy firms responded,” says Wiggetts. “And they wrote to us in some depth about things that they did and didn't like and what they thought the IRB should re-consider.”

“So, in addition to all of the inputs pre-consultation, we have now had the benefit of all the best minds in the legal and risk departments of the major firms analysing what we've done.  And the great thing is that nearly all responses expressed strong support for the revising of the disciplinary framework and the new structure,” he adds. “While, as a result of their feedback, we have made a number of changes,” he adds. “

All responses were carefully collated and considered. “We certainly listened to the responses,” emphasises Wiggetts. “We analysed the main objections that came out from the consultation particularly where supported by more than one respondent and debated all of these objections or proposed revisions with the IRB sub-group before deciding whether to change anything.” Wiggetts noted as an example that changes had been made to core DBL 5.4 regarding rebuttable evidence of prior findings of fact in civil proceedings to limit its application to where members had either been a party to civil proceedings or who had given evidence in court but to exclude findings made by Judges about members who had been neither a party nor a witness.

Final approvals

Following the consultation, the two-year project is now nearing completion. The ICAEW Council gave the final approval to the 16 core DBLs, and the IRB approved the new regulations, in June. The next step is to get Privy Council approval for the core DBLs, which is a requirement under ICAEW’s Charter. While the FRC has been involved in reviewing progress at all stages has indicated that it will advise the Privy Council to approve, further approval will yet need to be obtained from the Legal Services Board which has a statutory duty to approve changes to the regulatory arrangements of all legal services regulators.

Subject to these approvals being granted, the IRB intends to launch the new core DBLs and the disciplinary and regulatory handbook in late 2022 or right at the start of 2023.

“While I have regretted starting this project on a number of occasions having read and re-read too many drafts, I think we’re all pleased with what we’ve achieved,” says Wiggetts. “We’ve created a new framework with the right split of governance, and which will allow the IRB to act in an agile way to ensure that the processes remain fair and effective in the future and which will be easier to understand and use.”

Resources

Update and simplify

The IRB's project objectives were to:

  • update and simplify the current disciplinary scheme to make it more accessible ad understandable to all users:
  • separate the obligations and duties of all ICAEW members, affiliates, students and firms from the provisions which set out the processes to be followed to allow a more agile approach to the changing of processes in the future; and
  • make improvements to aspects of the current process to ensure the disciplinary process works more efficiently and effectively, and continues to operate in the public interest.