9 juin 2025 Rebecca McGregor  - Annabel Rodgers Endersby -  Sinead Casey  - Bethany Parker - Rianna Moth Dispute Resolution - Sanctions - Financial Regulation

ICAEW publishes proposed updates to its Disciplinary Sanctions Guidance

The Institute of Chartered Accountants in England and Wales (“ICAEW”) has announced substantial proposed updates to its Disciplinary Sanctions Guidance (for use by the ICAEW's disciplinary committees). These changes aim to improve clarity, fairness, and proportionality in its enforcement process, with a focus on addressing the seriousness of misconduct and aligning penalties with public expectations. 

The ICAEW is consulting on the proposed guidance from 23 April 2025 to 9 June 2025. The changes to the Disciplinary Sanctions Guidance, are the first in the ICAEW Regulatory Board’s approved plan to split the existing Guidance on Sanctions. A reform of the Regulatory Sanctions Guidance (for use by the ICAEW's regulatory committees), will follow in late 2025 or early 2026.

Overhauling the Disciplinary Process Structure

One of the core changes is a significant restructuring of the disciplinary process, introducing a six-step decision-making pathway. This first identifies the allegation category from the ‘Indicative Sanctions Table’ contained in the guidance and progresses through assessing its seriousness, considering relevant aggravating and mitigating factors, and ultimately ensuring the final decision is fair and proportionate for both the public and the ICAEW member or member firm.

As part of this overhaul, definitions for misconduct seriousness are now categorised based on one of two factors: either the 'mindset' involved, or the 'quality of work' performed. The relevant factor depends on the specific nature of the conduct being considered. Unless the assessment of seriousness is specifically based on the poor quality of the work undertaken, the guidance directs the Disciplinary Committee to determine if alleged misconduct is ‘very serious,’ ‘serious,’ or ‘less serious.’

Enhanced Focus on Key Misconduct Categories

The ICAEW is placing a stronger emphasis on how specific types of serious misconduct are identified and sanctioned. The proposed guidance introduces distinct sections and, in some cases, more stringent starting points for penalties.

  • Dishonesty: A proposed new section for dishonesty, reinforcing its seriousness by setting exclusion and the highest financial penalty band as the default sanction. This dual approach aims to prevent individuals from practising while also holding them financially accountable for the harm caused. 
  • Ethical Breaches: Sexual Misconduct and Discrimination, Bullying, and Harassment: These forms of misconduct now also have dedicated categories within the guidance. Sanctions are twofold: a financial penalty alongside exclusion or suspension, to deter such misconduct and uphold professional integrity. 
  • Audit Failures: A new three-tier assessment framework is proposed for audit-related misconduct, with penalties directly linked to the severity of the failure and, in some cases, the audit fee.
  • Other specific categories include Tax-Related misconduct and Anti-Money Laundering compliance.

Failure to cooperate with ICAEW investigations will attract more severe penalties under the new framework. For serious instances of non-cooperation, such as a failure to comply with a notice to produce information or a disregard of a formal order, exclusion is the proposed starting point. Lesser sanctions may apply where there is delayed but eventual cooperation.

Financial Penalties

The guidance outlines specific starting points for financial penalties applicable to each type of allegation. These penalties are now structured to involve either a multiplier or fall within one of six defined categories, which range from £2,000 to £25,000. Importantly, these financial categories will be adjusted at regular intervals in line with inflation.

There are also provisions for discounts on financial penalties. A discount of up to 30% may be applied for early and full admission of misconduct, depending on the timing. However, these discounts do not apply to non-financial sanctions or financial penalties for insolvency practitioners.

Looking Forward

The proposed changes signify a major step by the ICAEW to strengthen its disciplinary framework, reinforcing professional integrity and public confidence, and indicating a move towards more robust, transparent, and targeted enforcement. In particular, the establishment of new categories relating to ethical breaches is consistent with a wider trend of regulatory bodies taking an increased interest in cultural issues. For example, the FCA has increasingly focused on non-financial misconduct and reaffirmed in March that it is continuing to prioritise its work in this area (notwithstanding that new rules and guidance on this topic have been delayed). The FRC has also recently reviewed its own enforcement procedures, which you can read more about in our article: FRC launches End-to-End review of its AEP Enforcement Process | Linklaters. 

Once finalised, members should consider the updated guidance alongside their internal disciplinary policies and procedures from the perspective of identifying any material disparities. It is important to keep in mind that internal disciplinary procedures and the ICAEW’s external disciplinary framework are separate and independent processes (and, for example, serious misconduct in the eyes of the ICAEW may not always align with the threshold for gross misconduct in the eyes of the employer and/or the Employment Tribunal). Accordingly, whilst broad alignment on the seriousness of any misconduct is helpful, the updated guidance should not unduly influence the outcome of any internal disciplinary procedures.

As the consultation progresses, focus remains on ensuring these proposals are fit for purpose and reflect stakeholder input. However, what changes will be formally implemented into the guidance, due later this year, remains to be seen.