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A rapid regulatory resolution

In order to speed up dealing with less serious complaints, the IFA’s Tim Pinkney sets out a new regulatory process. Consent orders will be central to this new process, he explains.

A rapid regulatory resolution
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  • Contributed by Tim Pinkney
  • September 13, 2019
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Having effective regulatory and enforcement mechanisms are essential to protect the reputation or public trust of the IFA and its members – and the wider accountancy sector.

This new process avoids the need for less serious complaints to be considered by the Investigations Committee as part of the formal disciplinary process. Therefore, regulatory breaches are dealt with in a timelier manner and more efficiently.

The process only applies to complaints where the complainant (the IFA) and proposed sanctions are agreed by the respondent member, student, affiliate and member firm by way of a consent order.

Purpose

The Regulatory Committee plays a vital role in helping to ensure compliance with the IFA’s bye-laws, regulations and the Money Laundering Regulations 2017. In so doing, this committee supports the protection of the public, high standards of professional conduct, and contributes to the prevention of money laundering and wider economic threats in the UK and overseas.

When reviewing cases referred to it, the Regulatory Committee considers whether a member, affiliate, student or member firm has failed to meet relevant requirements and takes effective proportionate and dissuasive enforcement measures under the IFA’s rules.

Scope of work

The committee will consider complaints by the IFA against the member, affiliate, student or member firm where there is no third-party involvement, such as a client, employer or other key stakeholder. If a case involves a complaint by a third party, the matter will be considered by the Disciplinary Committee.

The issue will be considered and determined whether there is a prima facie case that facts or matters have occurred or arisen, which render a member, affiliate, student or member firm liable to regulatory action in relation to non-compliance with:

  • IFA Bye-laws
  • IFA Public Practice Regulations
  • IFA CPD Regulations
  • Money Laundering Regulations 2017
  • Any other regulations concerned with the general performance of the professional work undertaken by members, affiliates, students and member firms.

Where the Regulatory Committee finds that the member, affiliate, student or member firm is liable to regulatory action, the Regulatory Committee will determine the sanction to be offered by a consent order.

The Regulatory Committee will review case reports based on findings referred from the compliance team, including review findings from AML (antimoney laundering] and CPD (continuing professional development) monitoring, plus professional indemnity insurance or client money issues.

Submissions made by the member, affiliate, student or member firm to the IFA in relation to the complaint will also be considered. If the concerns are serious or persistent, the Regulatory Committee has the power to refer the member, affiliate, student or member firm to the IFA’s disciplinary case manager for disciplinary action to be taken. 

Decisions

The chair of the Regulatory Committee will be responsible for the committee’s written decisions, which will include an explanation of the outcome and the reasons to support it. Details of consent orders that have been accepted will be published in Financial Accountant and on the website.

In cases where a consent order is not accepted by a member, affiliate, student or member firm then it will be referred to the Disciplinary Committee to consider appropriate action, which could include the addition of costs to any subsequent disciplinary order issued by the Disciplinary Committee.

Powers

The Regulatory Committee will take effective, proportionate and dissuasive regulatory action to incentivise compliant behaviour. It may impose by way of a consent order one or more of the following sanctions if the member, affiliate, student or member firm so consents: 

  • caution
  • reprimand
  • regulatory penalty, including fines and costs
  • remedial action and conditions eg. co-operation with the IFA, undertaking CPD, further AML monitoring, increased PII (professional indemnity insurance.All such costs to be borne by the member, affiliate, student or member firm as appropriate.

Where a member, affiliate, student or member firm does not accept the consent order, the IFA complaint will be referred to the Disciplinary Committee.

Further details on the powers of the Regulatory Committee and potential sanctions are available on the IFA’s disciplinary regulations and sanctions guidance section of our website (see link below).

The standard of proof for making such a decision is the balance of probabilities, that is, that the facts are more likely than not to have happened.

Tim Pinkney is the IFA’s head of practice standards Visit the regulatory section of the IFA’s website: tinyurl.com/ifa-8091

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