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ICAEW loses judicial review of refusal to grant complete regulatory powers

7 March 2019

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The Institute of Chartered Accountants in England and Wales (ICAEW) has lost its high court appeal to regulate all reserved legal services.

The Institute of Chartered Accountants In England And Wales, R (On the Application Of) v The Lord Chancellor and Secretary of State For Justice, was heard by Lord Justice Leggatt and Mrs Justice Andrews on 27 November 2018.

The justices found that former Lord Chancellor David Lidington’s (pictured) decision to refuse permission for the ICAEW to extend its regulatory powers beyond probate (granted in 2014) was justified.

In summary they said there was “no evidence that the Lord Chancellor made an error of law in his approach to the issue of governance and independence, as alleged by the ICAEW”.

However, in a minor concession to the accountants’ argument, they said it was “unclear whether the Lord Chancellor gave separate consideration to each of the additional reserved legal activities which the ICAEW was seeking approval to regulate”.

As such, they concluded: “We consider that the appropriate course for us to take is to quash the decision in so far (but only in so far) as it concerned the administration of oaths and remit it to the Lord Chancellor for reconsideration. To that very limited extent, this application for judicial review succeeds; the decision otherwise stands”.

The ICAEW launched its judicial review after Lidington’s decision to overrule the Legal Services Board’s (LSB) recommendation that it be permitted to regulate rights of audience, the conduct of litigation, reserved instrument activities, notarial activities and the administration of oaths.

ICAEW executive director of professional standards Duncan Wiggetts said the ruling “undermines the important role of the LSB in determining applications by confirming that, irrespective of its recommendation, the lord chancellor can impose his own unspecified and undisclosed test to determine a regulator’s suitability”. He added the precedent set by the most recent decision “makes a lottery of all future applications.”

Explaining his decision in September 2017, Lidington said he was unconvinced that the ICAEW’s proposed Legal Service Committee would be sufficiently independent from the wider organisation. He also drew a distinction between accountants’ usual role of determining tax liability, and the handling of criminal or civil litigation by lawyers.

“It is one thing for accountancy practices to be expert in taxation, but quite another to be proficient in the conduct of civil or criminal litigation in the courts,” he said.

Echoing the concerns of the Legal Services Consumer Panel and the Lord Chief Justice he argued, that the move would be neither in the public nor consumer interest and would “add complexity to the regulatory landscape”.

Picture credit: Chris McAndrew

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