Accountants hit back after Law Society protests over ABS regulator bid
Soare: application consistent with the regulatory objectives
The Institute of Chartered Accountants in England and Wales (ICAEW) has hit back against Law Society objections to its application to become an alternative business structure (ABS) regulator, claiming the public interest was “built into accountants’ DNA”.
Last month the society submitted a detailed letter protesting that the ICAEW application was flawed, in particular that it sought to become an approved regulator and licensing authority for probate activities without having separation between regulation and representation as other regulators had.
The application, which is currently under consideration at the Legal Services Board (LSB), does not therefore meet the board’s internal governance specifications, the society charged. It went on to make a raft of other objections, including that the ICAEW under-estimated the extent of work involved in non-contentious probate.
The LSB has published the Law Society’s letter and the accountants’ response – an icy exchange which reveals demarcation tensions between the two that add an extra layer of complexity to the LSB’s decision.
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The ICAEW’s approach to allowing accountancy firms to handle probate work – which it submitted in December – is twin-track. They could either become authorised firms in which all principals and owners are individually authorised, or ABSs in which not all principals and owners are so authorised.
Rejecting the society’s points, Vernon Soare, the ICAEW’s executive director for professional standards, also queried why the society had been permitted to object outside of the formal consultation period which preceded the application. He asserted the application was consistent with the regulatory objectives of the Legal Services Act and the government’s attitude to proportionality in terms of the risk presented to consumers and the public of allowing accountants to handle probate.
Specifically on the point of separation of functions, the ICAEW said that its probate committee, which would oversee authorisation, did not in fact answer to the institute, as the Law Society had claimed, but “if anywhere… to the LSB itself”.
Further, the primacy of the public interest was “built into the DNA of the accounting profession” since, “in contrast to the legal profession”, it was written into its 1880 founding charter.
On the division between contentious and non-contentious work, the accountants argued that the Law Society in turn under-estimated “the amount of work that is already carried out by accountants in the area of estate administration which is closely linked to the issues here”. In its deliberations on whether to make estate administration a reserved activity, the LSB had observed how the ICAEW had protected consumers, including by use of its code of practice, the letter said.
The accountants also rejected a Law Society objection on the grounds that the ICAEW did not appear to meet the LSB’s list of regulation essentials, including an outcomes-focused handbook, a ‘risk identification framework’ and ‘supervision targeted at risk’. The LSB had accepted that these standards could be met by other means as long as the same outcomes were achieved, said the ICAEW.
For instance, accountancy firms were given a ‘practice assurance’ review every eight years, with other risk visits where necessary. “We understand that this is a more rigorous and complete process than that operated by other regulatory bodies”, it insisted.
Tags: ABS, Alternative business structures, ICAEW, Institute of Chartered Accountants, Law Society, Legal Services Act, Legal Services Board, probate
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