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Comments from ACCA
October 2008

ACCA is pleased to comment on the consultation document on the above. ACCA is a professional accountancy body which represents over 120,000 qualified members who are based in the UK and in many countries throughout the world. Our members work in public practice, in business and in the public sector.

The proposals put forward in the document are reasonable to the extent that they seek to streamline the law enforcement system by enabling the criminal courts to exercise powers and impose sanctions which are currently available but only to the magistrates' courts and regulatory bodies. We accept that it may in principle be justifiable for the criminal courts to make additional orders in fraud cases.

Where we take issue with the proposals concerns the intention to exercise these powers irrespective of whether there has been a conviction in the case before the criminal court. The document suggests that action to bar an individual from practising specified activities could be initiated during the course of criminal proceedings and a final order could be imposed whether or not the defendant was convicted or acquitted. Similarly, in the case of companies and partnerships, the power to wind up could be exercised whether or not the defendant body was convicted. We consider that such powers are in principle excessive and unfair and could lead to unjustifiable action being taken against individuals and firms.

We note in this respect that the Fraud Review called only for the criminal courts to have the power to disqualify, prohibit or restrict an offender (from engaging on professional or criminal activities. Further, the examples of comparable powers in relation to non-statutory activities which are quoted in the consultation paper as examples of procedures which could be extended to other fields (such as prohibited activity requirements and serious crime prevention orders) make clear that those powers are available only where proceedings have been concluded and there has been a conviction.

We would therefore oppose the proposals in their current form since they appear to go further than the Fraud Review recommended and further than the comparable powers available already in respect of non-regulated activities.

Our responses to specific consultation questions are set out below.

Q1 Do consultees believe that the proposed powers should be available pending determination of a criminal charge and in the event of an acquittal as well as on conviction?

No. This approach would far too presumptious and would have the potential to cause lasting damage to a person's livelihood and reputation. The document does not discuss the repercussions of an acquittal, for example. It should be the essential precondition of any use of the new powers that there has been a relevant conviction in the fraud case.

Q2 Do consultees agree that the proposal for a power to bar an individual from professional practice targets the right sectors?

The Fraud Review has clearly identified three areas as being of particular concern, given the likelihood of practitioners in those areas holding client monies. This should therefore be the key factor in devising a proportionate use of the proposed new powers. We suggest that it be taken into account that power to authorise individuals to undertake incidental investment advice under the FSMA is currently delegated to a number of professional accountancy bodies, including ACCA. A feature of such authorisation, however, is that the adviser in this position may not hold client monies. In view of this we believe that there needs to be a very clear distinction made between investment authority which is granted directly by the FSA, and which does entitle client money to be held, and the more restricted authority granted by designated professional bodies under FSMA. The latter category does not pose the same risk as the former and should not fall within the scope of the proposed powers. We would add that our own disciplinary powers enable to us to investigate any allegation of fraud on the part of any of our members and, in the case, of a conviction, it is very likely that we will bar the member concerned from practising or expel him or her from membership altogether.

Q3 Do consultees agree with the proposed scope of the power to bar individuals from professional practice?

The targeted areas seem to be reasonable.

Q4 Do consultees agree with the proposed process for exercising the power to bar individuals from professional practice?

As stated already, we consider that the proposal to take such action irrespective of a conviction is excessive and should be revised.

Q5 Do consultees agree with the proposed scope of the power to wind up companies and partnerships?

Given that the powers themselves are already available we do not object in principle to their adoption, with safeguards, by the criminal courts.

Q6 Do consultees agree with the proposed process for exercising the power to bar individuals from professional practice?

Again, the proposal to exercise the powers regardless of a conviction is in our view excessive and unreasonable.

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