Robert Mudge on ICAS' vision for excellence in regulation
Robert Mudge, Executive Director, Regulation, explains how ICAS upholds standards – and why it’s vital we continue to do so.
There is a tendency to view regulation as, at best, a necessary evil. Understandably, members and firms are unlikely to be overjoyed at the prospect of a regulatory monitoring visit – or worse, finding themselves subject to a disciplinary investigation. We want to change this narrative and highlight the important and positive work the regulation team does. Regulation is one of the key objects of ICAS, as set out in our Royal Charter, and we know from repeated member surveys that protecting the reputation of the CA qualification is one of ICAS’ most highly valued functions.
Given the importance of this work, we will be talking more in the coming months about our regulatory work, starting with the launch of our new regulation strategy, which outlines in detail our approach for all stakeholders. As a starting point, it is worth reminding ourselves of ICAS’ four main regulatory functions:
- Giving licences to firms
We issue more than 1,700 practising certificates to our members and supervise more than 800 firms. When we receive an application, we are extremely careful to check the applicant has the necessary knowledge, skills and experience to do the job. As we see it, they will be representing ICAS in their work, so we have to make sure they can do so effectively.
- Monitoring activity
We review the work and compliance processes of members and firms on a regular basis to make sure they are meeting the required standards. If we identify areas where they need to improve, we will work with them to get them back to the right level. But, if necessary, we will take regulatory action.
- Investigations function
This deals with complaints against members and firms. If necessary, we will apply fair and proportionate disciplinary sanctions to those we find have fallen short of the standards.
We ensure that members are undertaking the CPD required to maintain their professional knowledge at an appropriate level.
ICAS’ approach to regulation has changed considerably over the years. Our regulatory work is increasingly independent from our representative functions, with our stakeholders rightly expecting more in terms of fairness and transparency. Allegations of protectionism or favouritism are incredibly damaging.
In part, this stems from the increasing expectations of a range of oversight regulators, including the FRC (audit), the Insolvency Service (insolvency), and the Office for Professional Body AML Supervision (AML). Just as ICAS regulates members and firms, we are subject to even greater scrutiny.
Whereas regulation was previously more of a support function, professional bodies are now expected to take a more robust approach, with less tolerance for non-compliance. This does not mean we will rush to sanction or fine. Members and firms approaching their obligations responsibly are unlikely to face difficulties. For example, the revised Money Laundering Regulations in 2017 were a big change for firms, with a raft of new processes to implement. A bedding-in period was therefore to be expected – but six years on, a stronger response is required where appropriate.
Recent years have seen a series of proposals for consolidation of regulatory functions at a national level. The FRC has taken over public interest entity audit regulation, with proposals for single regulators on the table for insolvency and AML. Enhanced regulation of tax practitioners is often discussed. If ICAS is to argue against these proposals by supporting professional body regulation, our functions must be providing strong outcomes for all stakeholders.
To support our changing approach, it is important that we do more in terms of education. We learn a lot about non-compliance and where firms are struggling. We should communicate better to members and firms the areas where others have been falling short, explaining what they can do to avoid this, and showing what “good” looks like. We have started a Regulatory News quarterly email, which will feature positive compliance messages. We are also looking at the helpsheets and guidance we publish, as well as the regulatory content on icas.com.
We are living in a time when trust in accountancy, as with many other prominent professions and institutions, is being questioned. Members of the public, obviously, want to know the accountant they engage meets the right standards. When our members and firms know they are all properly regulated, that upholds the reputation of the CA qualification for all. The fact is, we regulate firms and members day in and day out, and routinely achieve strong outcomes. That isn’t something likely to appear in headlines or on the “breaking news” ticker – but that only makes it all the more important for us to tell that story ourselves.
Read the ICAS Regulation Strategy 2023