Thursday, October 20, 2016

ACCA teams up with the IPA – singing in harmony, or trouble in paradise?

The following extract comes from an email that ACCA issued to its insolvency licence holders today:

The work of IPs is highly specialised and, in the last few years, the Insolvency Service (IS) has sought to bring about a high degree of standardisation across the Recognised Professional Bodies (RPBs) through the Memorandum of Understanding, Principles for Monitoring, Complaints Gateway and the Common Disciplinary Sanctions Guidance. In addition, recent inspections by IS indicate that it is seeking further standardisation in the licensing, monitoring and complaints-handling processes across the RPBs.             

ACCA’s regulatory arrangements go beyond insolvency and further standardisation of regulatory processes by IS is likely to require ACCA to develop bespoke arrangements for the regulation and discipline of IPs. A change which may be suitable for the regulation of IPs may not necessarily be suitable for the wider regulated ACCA member population. This would mean running two separate regulatory and disciplinary systems, which adds complexity to ACCA’s regulatory arrangements.             

The IPA is the specialist insolvency regulator amongst the Recognised Professional Bodies (RPBs), and currently licenses 600 IPs across the UK. It also provides insolvency support services to its IPs, such as a handbook, helpline, and CPD events with a regulatory slant (including two annual conferences, practical insolvency and refresher courses, and a series of regional roadshows) – aimed at ensuring that IPs keep abreast of and are well-equipped to meet required regulatory standards.             

The collaboration will therefore enable ACCA to consolidate its regulatory arrangements for IPs with those of IPA, which in turn will ensure ACCA is able to meet its obligations as a RPB and regulate its IPs in an efficient and effective way in line with IS’s requirements.             

Through the collaboration, the regulation of ACCA IPs will be undertaken by IPA, and will cover:             

• licensing, save that initial eligibility for insolvency authorisation will be undertaken by ACCA;
• monitoring, including regulatory action following IPA’s procedures; and
• complaints and discipline, including referral of ACCA IPs to IPA’s disciplinary committees.             

ACCA will exercise appropriate oversight of the activities undertaken on its behalf and will continue to keep under review IPA’s regulatory arrangements for licensing, monitoring and complaints and discipline to ensure they are consistent with the Memorandum of Understanding, Principles for Monitoring and Memorandum of Understanding for the Complaints Gateway.

The collaboration will also see four ACCA employees involved in insolvency monitoring and complaints-handling transferring to IPA, which will allow for a degree of continuity.             

The new arrangements will come into effect on 1 January 2017

It is up to ACCA to decide how to react to the Insolvency Service’s demands for harmonised regulation, but at the same time we do wonder if a unilateral switch to what is effectively IPA regulation will necessarily be what their IP members want. Ignoring the technicality of the ACCA making the initial licensing eligibility criteria at the start of the year, we think, without doing the maths in detail, that this will effectively give the IPA as many IPs to regulate as ICAEW, or as near as makes no difference and, with apologies to ICAS and CARB, effectively leaves the profession with two regulators.

We look forward to seeing how the ACCA monitors, who come from a very different regulatory culture, fit into the IPA and what impact this has, not only on the ACCA IPs, but also on the IPA monitoring of its own membership. 

One point that does need to be clarified for ACCA IPs sooner rather than later, is how this impacts on their regulation under the anti money laundering (AML) supervision regime. Firms that provide insolvency services have to be supervised for compliance by HMRC or by one of the specified professional bodies. Presumably for those ACCA IPs who are also ACCA members they will continue to be monitored and supervised by the ACCA for AML purposes and it will be done as part of the Practice Assurance regime, on the assumption that they will continue to be caught under that regime. This could mean that ACCA IPs have two regulators, one for their insolvency work and one in respect of their AML obligations. In addition, ACCA licensed IPs who are not ACCA members need to know whether they fall within ACCA’s residual regulatory regime, will be regulated by the IPA, or need to apply to HMRC for AML supervision.

To us, this looks like the first step towards ACCA dropping out of insolvency regulation. Many will see this as a positive move towards fewer regulators. We wonder how the affected IPs, who don’t appear to have been consulted on this, will react.