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Revamped disciplinary framework to take effect in June

Author: Professional Standards Department

Published: 09 Mar 2023

Following Privy Council approval of changes to ICAEW's existing Disciplinary Bye-laws, ICAEW's new disciplinary framework will come into effect from 1 June 2023. We talk to Duncan Wiggetts, Chief Officer for Professional Standards, about next steps and what the changes mean for investigations and disciplinary proceedings.

The new disciplinary framework, which is the result of a three-year project led by ICAEW's Regulatory Board (IRB), updates the existing disciplinary scheme to make it more transparent, simpler to understand, and more efficient for everyone involved.

"We're delighted to confirm that the Privy Council has approved the changes we were proposing to make to the Disciplinary Bye-laws (DBLs) and Principal Bye-laws," says Duncan.

Making the split

The IRB started the project after it had approved the last set of changes to the existing framework in 2019. The IRB had become concerned at the lack of cohesion between the new and existing DBLs and also at the time it took to change even small aspects of processes due to the lengthy governance procedure and requirement for Privy Council approval. This prevented the IRB from being more responsive to the fast-changing regulatory environment.

After looking initially at how similar regulatory bodies had refreshed their frameworks, the IRB noted that most had opted to retain a small number of DBLs and to transfer all process provisions into regulations which could be amended much more quickly.

"Currently everything is set out in the DBLs," explains Duncan. "So, even a decision to make a small change from 14 days' notice to 28 days' notice for an application could take a year due to the need to clear many layers of governance and obtain Privy Council consent."

"After consulting with specialist Counsel, we determined that only certain matters needed retaining in the DBLs," he says. "These were the duties and obligations imposed on members and member firms by the disciplinary scheme and the powers bestowed on Professional Standards staff and disciplinary committees to investigate and take disciplinary action in relation to members or member firms."

The first stage in the project was therefore to identify what needed to stay in the DBLs and what could be hived out into a new set of regulations. This concluded that the number of DBLs could be reduced from 49 to 16. All the provisions dealing with processes were transferred out of the DBLs and merged with the individual processes established by the Investigation, Disciplinary and Appeal Committees. This brought all the processes together to form the Investigation and Disciplinary Regulations (IDRs).

"The new IDRs will mark the first time we've had all the processes that we follow in our disciplinary work in one document," Duncan explains. "There will just be one document detailing what happens from receipt of an allegation to the assessment proceed and, right the way through to the end of the final stage of appeal. That will make it a lot more user-friendly."

Cornerstones stay the same

"While everything will certainly look a lot different after 1 June, and we have also taken the opportunity to improve aspects of existing processes and introduce a few additional provisions, the key cornerstones of the disciplinary scheme will remain as they are," says Duncan. "For example, complaints will still be considered in the first instance by the Investigation Committee (renamed the Conduct Committee) and, where the Committee considers it appropriate, will be referred to be heard by a Disciplinary Tribunal."

If a matter is part-way through the disciplinary process when the new framework comes into effect on 1 June, the matter will continue in accordance with the old framework until it reaches a significant step in that process. Those significant steps will be set out on ICAEW's website when the new IDRs are published.

Changing the language

During the transfer of provisions into the IDRs, the project team took the opportunity to re-write those that lacked clarity or were written in archaic language, removing all Latin phraseology along the way. One of the Latin references being replaced is the 'prima facie' test which the Investigation Committee has applied for decades when considering complaints.

"While staff and Investigation Committee members know what this means, we're forever being asked what this means by complainants and members," explains Duncan. "So, we've inserted a new clearer test whereby the Investigation Committee, or the Conduct Committee as it will be known, will need to determine in the future whether there is 'a realistic prospect, if the allegation were to be referred to a Tribunal for hearing, such allegation would be found proved'. Not only is this easier to understand, it is similar to the tests used by other bodies."

In addition to the new name for the Investigation Committee (necessary to reflect the fact that the Investigation Committee does not do any investigating), the current Disciplinary Committee will be known as the Tribunals Committee, and the Fitness Committee will become the Fitness to Practise Committee.

The Professional Conduct Department will be known in future as the Conduct Department. It will also be the prosecuting body not only before the Conduct Committee but also when allegations are referred to the Disciplinary Tribunal or are the subject of an appeal. Previously this would have been the Investigation or Conduct Committee.

Greater protection for the public

The new framework also includes important additions aimed at providing better protection for the public and improving the efficiency of the disciplinary process.

For example, the IRB was concerned about the restrictions on the ability to obtain an interim order against a member even in the light of damning evidence. "At the moment, under the existing DBLs, interim orders can only be imposed in very limited circumstances such as when a member has been charged with an indictable offence or has abandoned their practice," explains Duncan.

"It was clear from our review of other regulators' processes that we were too far away from the usual threshold for an interim order - where there is a risk of significant harm being caused to the public by a member being allowed to continue to offer services to the public or to continue to hold themselves as a member of ICAEW pending the determination of the disciplinary allegation."

While the threshold is changing, it is not expected to herald a big surge in the number of interim orders being imposed on members.

"Given the draconian nature of such orders, they should only be sought where there is a clear and obvious concern," says Duncan. "But where we have strong evidence that a member has acted fraudulently in relation to a client, we need to protect other members of the public from potentially suffering the same fate."

Multiple allegations against the same member

Another new element is a 'lie on file' procedure. "This is brand new but will apply to only a relatively small number of matters," says Duncan. "But under current bye-laws, if someone is expelled as a member and there are 20 other allegations still in the system, we then have to prosecute all of those through to conclusion even though we can't expel anybody more than once."

As of 1 June, it will be possible for Conduct Department staff to apply to the Conduct Committee or disciplinary tribunal (as appropriate) to ask them to agree to such matters lying on file. If they agree, the Conduct Department would not do any more work on these cases. Instead, the cases would lie on file. If the expelled member later reapplied for membership, these additional allegations would then be taken into account.

Remediation and improvement

The project team also looked at expanding the range of sanctions available to the Conduct Committee and Disciplinary Tribunals and ensuring consistency in what was available.

"As a result, we've extended the type of sanctions which can be offered or imposed," says Duncan. "For instance, the orders that can be made will cover not just the imposition of a non-financial sanction like a reprimand and/or a financial sanction but will allow the Conduct Committee or Tribunal to impose instead or in addition a requirement for a member to undertake specific training linked to the heart of the issue."

Likewise, a firm could be required to introduce training for some, or all, of its staff related to any issues discovered. "In this way, we're addressing the failure when we are faced with allegations about a lack of competence, rather than just imposing a fine and hoping that they will do the work better in the future," explains Duncan.

This change links well with ICAEW's revised CPD framework. If a member would normally be required to do 20 hours of CPD, for example, they could be offered a consent order or have imposed on them the need to carry out more than the minimum requirement during the current and subsequent CPD years, with specific areas being covered. The CPD monitoring team would then carry out checks to ensure the member complies with the additional requirement.

Next steps

The key committees and Conduct Department staff have been kept informed of the proposed changes, and committee members and staff will now receive extensive training in the lead up to the framework's launch on 1 June.

Further information to help members and firms understand the changes will be published in the coming weeks.