Firms' fury at tribunal costs plan

The FRC’s plans to ensure it will never pay costs on disciplinary cases offend ‘natural justice’, senior sources in the profession have said, as disillusionment with its new disciplinary body grows.

Last week, the Accountancy and Actuarial Discipline Board unveiled plans that would mean that defendants who clear their names will only receive costs if the AADB is guilty of ‘misfeasance’, thought to be an impossibly high barrier.

A senior member of the profession slated the idea this week, saying that ‘natural justice requires that whoever loses pays costs’.

‘Misfeasance’ constitutes an offence greater than simply negligence or the AADB finding its charges do not stick, but requires costs claimants to prove there has been some deliberate and dishonest use of office.

The proposals follow a £1m cost award to PricewaterhouseCoopers and others when the AADB’s case against the firm over Mayflower failed. At the time, claims for costs had not been budgeted for by the FRC.

The board has also proposed the formation of a Decisions Disciplinary Committee, which will also be subject to the rules regarding circumstances of ‘misfeasance’.

‘If they take us to a tribunal and win, then we pay the costs. Why shouldn’t it work the other way around? It seems a matter of principle that you don’t bear the costs if you haven’t done anything wrong. It is enshrined in law in the courts.’

The costs issue could lead to broader disillusionment with the tribunals process. The firms were not keen on the Joint Disciplinary Scheme, which also denied defendants costs.