ICAEW’s Guidance on Sanctions has long played a critical role in supporting decision-making across regulatory and disciplinary cases. But since the last update in 2018, both the regulatory landscape and public expectations of professional conduct have evolved. An update to this guidance also naturally follows a significant overhaul of ICAEW’s disciplinary framework which took place in 2023. In response to these developments, the existing guidance has been reviewed and revised to ensure it remains clear, consistent, fair and aligned with the public interest.
“The changes we’ve made mean the document better reflects the guidance we need to be providing to our committees, based on the types of cases they're now seeing,” explains Emily Healy-Howell, Director, Regulatory & Conduct, Professional Standards at ICAEW.
“We have retained all the things that were working well with the previous guidance,” adds Kim Nyawira, Head of Committees and Tribunals, Professional Standards. “And we built on that to make some changes designed to ensure sanctions remain proportionate, promote transparency and fairness, and improve clarity, consistency and usability.”
“We also wanted to provide greater clarity to members and member firms about what the committee takes into account when they're considering a matter,” says Kiren Kalirai, Senior Lawyer, Professional Standards. “This includes clearer information about the specific aggravating and mitigating factors for a breach, and the level of penalties they can expect to see.”
Distinct, appropriate guidance
The previous guidance was used by both ICAEW’s disciplinary and regulatory committees. “But it was very much directed towards disciplinary issues, whereas the regulatory committees have a slightly different function and follow different processes,” explains Emily. “To address this, while keeping consistency across decision making, an early decision in the project was to produce two separate guidance documents; one focused on the regulatory side and the other on the disciplinary side.”
The first document, the Disciplinary Sanctions Guidance, took effect from 1 January and sets out the framework to be used by ICAEW’s disciplinary committees to determine the type and level of sanction in disciplinary cases. The new regulatory guidance will follow later this year.
ICAEW’s Professional Standards Department carried out a comprehensive review and has now implemented the updated guidance with oversight from the ICAEW Regulatory Board. The review involved specialist staff from each regulated area, independent committee members and a full public consultation.
What’s changed?
The overarching aims of the new Disciplinary Sanctions Guidance are to:
- improve the clarity, consistency and usability of the guidance for decision-makers and those going through disciplinary proceedings;
- ensure sanctions are proportionate to the seriousness of the misconduct;
- promote transparency and fairness in outcomes; and
- reinforce ICAEW’s commitment to acting in the public interest.
Alongside modernising the structure and language of the guidance, the changes include an update to financial penalty levels to maintain deterrence; clearer and expanded definitions of seriousness; clarification on aggravating and mitigating factors; and improved alignment with ICAEW’s Code of Ethics. There are also, for example, new sections relating to dishonesty, sexual misconduct, and discrimination, bullying and harassment. The treatment of non-cooperation with ICAEW investigations has also been strengthened so that serious or deliberate non-cooperation now carries a starting point of exclusion.
Principles of sanction
The document opens with a new overarching guidelines section, which provides a clearer explanation of the principles of sanction, the stages of decision-making, and the approach to proportionality and insight. This should give committees and respondents greater clarity on how sanctions are applied and justified.
The list of common aggravating and mitigating factors has been updated and expanded. “One of the broader changes we've made is to review the aggravating and mitigating factors,” explains Emily. “We've updated them as, for example, some were out-of-date and no longer relevant. We have also updated and provided more information on factors relevant to specific breaches.”
Another of the more general revisions is updated definitions for the three tiers of seriousness – very serious, serious and less serious. These definitions provide a calibrated structure that distinguishes for the first time between mindset (intent) and the quality or standard of work, ensuring sanctions better reflect the nature and impact of the breach.
“What we've introduced,” explains Emily, “is a different way of looking at seriousness where it relates to quality of work. A good example is ‘defective audit work’. Instead of the committee's decision-makers looking at the person's mindset – whether they did defective work deliberately or knowingly – we've introduced a much more relevant approach. This involves setting out what would make something more serious in terms of the quality of the work rather than the mindset of the individual, which is far more appropriate for offences of this nature.”
The new guidance also includes updated financial penalties to ensure they’re appropriate to the breach. “In the ethics section and throughout the guidance, we’re making sure we're aligning the most serious type of misconduct with the highest levels of penalty in terms of starting points,” says Kim. “Alongside this, the more general financial penalty bands have been uplifted across the board to reflect inflation and ensure they retain their deterrent effect and stay proportionate.”
Dishonesty and sexual misconduct
One of the main aims of the changes is to better reflect the types of cases coming before ICAEW’s committees. Dishonesty is now a standalone category with exclusion as the starting point, which is intended to reflect the seriousness of dishonesty and its impact on public confidence in the profession.
“Previously, our guidance didn't have a section on dishonesty,” explains Kim. “Instead, it was addressed through the fundamental principle of integrity and was always placed at the most serious end of that category. Further to our review, we decided to have a single starting point, but importantly allow committees to have discretion to lower that starting point in exceptional circumstances.”
Elsewhere, in the section on ethical breaches, ‘sexual misconduct’ and ‘discrimination, bullying and harassment’ have been introduced as distinct breach categories, as they attract distinct aggravating and mitigating factors. This allows more relevant consideration when it comes to sanction.
The public consultation showed strong and consistent support for including a financial penalty within the overall sanction for sexual misconduct.
“We recognise that a financial penalty could be perceived as putting a price on this sort of behaviour. However, as a professional body there are important differences to note when compared to a statutory regulator. At ICAEW we can exclude someone from membership, but they can continue to work as an accountant,” says Emily. “So, it was felt that if we did not include the financial aspect of our sanctioning regime we would be left with a non-financial order, which might mean that serious sexual misconduct could be perceived as being treated more leniently than misconduct in other areas. In addition, it would go against our normal sanctioning pattern, which involves an order and a financial penalty.”
Non-cooperation with ICAEW
Another key change is in the treatment of members and firms that fail to cooperate with ICAEW investigations. Serious or deliberate non-cooperation now carries a starting point of exclusion and will be handled via a fast-track process where appropriate.
“We’ve made the starting point exclusion to emphasise the importance of cooperating with your regulator, recognising the difficulties caused by non-engagement and cooperation,” says Kiren. “During the review, we looked at what comparable regulators were doing, and it was apparent that we weren’t taking those who don't cooperate with us, or frustrate our processes, as seriously as we should.”
Non-cooperation has a two-fold effect. “First, if you don't cooperate with ICAEW, it frustrates our ability to carry out our function effectively, and that directly affects public confidence in ICAEW as a regulator” adds Emily. “And second, it has a practical effect on our day-to-day operational effectiveness. It can delay investigations and means that staff and committees alike spend a lot of time dealing with those matters that are being frustrated by certain individuals. We hope these changes will help us make the best use of resources, reduce the impact of non-cooperation and improve the flow of work in our investigation department.”
Approach to audit
In dealing with audit sanctions specifically, the new guidance has kept essentially the same mechanism, but we have more clearly aligned it to the FRC’s approach to sanctioning. “We have a delegation agreement with the FRC,” explains Emily, “which gives us quite specific direction on how sanctions should be approached in audit matters, so we've now made that much clearer in the document.”
Other audit-related changes include making the difference between the responsibilities of firms and individuals clearer, and the introduction of a revised three-tier audit fee multiplier system for determining financial penalties (less serious – 0.5×, serious – 1.5×, and very serious – 2× the audit fee). “We’ve also specifically invited committees to consider a firm's overall income and its financial strength, as part of their consideration of proportionality, and to either take the penalty up or down accordingly,” says Emily.
Consistent, robust decision-making
The guidance is effective from 1 January 2026, which means that any case the Conduct Committee considers for the first time after that date will come under the new provisions. Cases that have already been looked at by the Conduct Committee and have come back for any reason after 1 January will remain under the old guidance.
“Ultimately, our new guidance is designed to help ensure good decision making,” says Emily. “It’s going to reassure members, the public and oversight regulators that decisions are consistent, fair and robust. And it’s going to do that partly because it’s both easier to use and better reflects the disciplinary cases that come to us.”
“Our aim was to provide a sanctioning framework that is consistent, proportionate and aligned with the public interest,” emphasises Kim. “When looking at the sanctions levied, individuals, consumers and the public should feel they’re being protected. And for members, it’s about being confident that expected standards are being upheld and maintained.”
Resources
Note: The previous Guidance on Sanctions remains effective for regulatory committee decisions. Revised regulatory guidance will be consulted on early in 2026, with publication expected later in 2026.