In this Q&A article, Nigel Howell, Head of Investigations at the Institute of Chartered Accountants in England and Wales (ICAEW), discusses the impact escalating debt problems can have on your ICAEW membership.
which ICAEW by-laws apply to members in relation to personal debt issues?
There are two institute by-laws that apply to personal debt. They are Principal By-law 7 and Disciplinary By-law 4. Certain types of personal debt automatically trigger disciplinary issues, which we have no control over.
what is the implication of bankruptcy on members?
The Principal By-law I’ve just mentioned specifically relates to bankruptcy. It states that if you are made bankrupt, you automatically lose your institute membership. That means there’s no investigation and there are no disciplinary hearings. It’s automatic and non-negotiable.
what about IVAs?
IVAs are a discipline liability, but unlike bankruptcy, members are unlikely to lose their membership. Once you enter into a formal IVA arrangement, your debt is classed as being a separate liability, which you should tell us about.
We will then contact the arrangement supervisor and monitor it. Generally speaking, as long as you successfully come out the other end of the arrangement, you can continue as a ICAEW member. The matter will go to our investigations committee because the by-laws dictate we are liable to take disciplinary action. However, we do try to be pragmatic and, unless there are any aggravating features, you should only have to pay minimal costs. You can then continue as a member.
what if a member has a County Court Judgement (CCJ) against them?
CCJs are also specifically mentioned in the Disciplinary By-law 4, and they also automatically mean we are liable to take disciplinary action against a member. Again, we try to take a pragmatic approach, we understand times are hard and it’s easy for people to get into difficulties.
We are not here to make people’s problems worse however, we do have a job to do in line with the by-laws. In these circumstances, we open a file and look into numerous areas, including why you haven’t satisfied your CCJ, if you are going to satisfy it or if you are you appealing against it.
If you aren’t appealing against it or are paying the debt, you will receive a disciplinary sanction. Because the sanction applies to a financial issue, the recommended actions are likely to be relatively low level, and if there aren’t any aggravating features, you won’t be at risk of losing your membership.
what is an aggravating feature?
If you’ve been dishonest at some point and you’ve misled somebody, the process isn’t always straightforward. This is what we refer to as being an ‘aggravating feature’ that may escalate your case, and potentially lead to you losing your membership.
does the ICAEW need to be notified about informal debt strategies?
Informal debt strategies are a slightly more grey area because when our disciplinary by-laws were written, they weren’t commonplace. This means that while we can be more clear about how we would deal with formal arrangements, such as bankruptcy, IVAs and CCJs, informal strategies aren’t covered by the by-laws. Therefore, if you do have an informal arrangement in place and are settling your debts, you don’t need to tell us and no disciplinary action will be taken.
can a discharged bankrupt reapply for ICAEW membership?
If you’ve been discharged, there’s no reason why you can’t apply to us to have your membership reinstated, providing there are no aggravating features in relation to your bankruptcy.
at what point should members tell the institute about their debt issues?
If you are experiencing personal debt, we don’t need to be informed about it unless formal measures are taken, e.g. a CCJ or IVA.
if you could give one piece of advice to ICAEW members about debt, what would it be?
You don’t have to notify us if your debt issues are at an informal stage. However, if your situation does become formal, it’s best you tell us because you will get credit for doing so.
In the meantime, it’s important to remember you aren’t alone, caba are on hand to provide you with confidential support and advice. There’s also our Ethics Advisory Service, who can also discuss your financial issues with you on a confidential basis too.
how caba can help you
If you live in the UK and are struggling with bills or loan repayments or are concerned about your personal debt, we can help you get back in control. Our specialist debt advisors are here to provide you with impartial and confidential advice. We also have plenty of handy financial tools, including budget planners and savings calculators to help you get a hold of your money.
All of our services are free, impartial and strictly confidential. We are independent of the ICAEW and will not report or disclose any information you share with us. Our specialist debt advisors can help you to minimise the impact of your debts through advice, information, budgeting and prioritising. We can negotiate with creditors on your behalf too.
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