View from the House - Jim Cousins

Pinochet will make his mark on our professional regulation yet.

Recently, the Law Lords had to consider Lord Hoffman’s involvement in the original House of Lords judgement on Pinochet.

Lord Hoffman was the director of a charity closely affiliated with Amnesty International. The Law Lords held this involvement had the potential to appear to bias Lord Hoffman’s judgement. The judgement given on 25 November 1998 was set aside.

This has profound implications for every profession. And for the Financial Services and Markets Bill now before parliament, the expected Bill on limited liability and the current consultation on company law reform.

In accountancy, fellow professionals are frequently involved in assessing complaints. The ‘Hoffman test’ does not debar all involvement in professional matters, but it does indicate a very wide-ranging standard for potential personal bias to be tested in each specific case and on each specific issue. Disbarment, on the basis of bias, from considering complaints, disciplinary action or for any quasi-judicial role, must from now on be widely examined.

The accountancy bodies now need to show that no-one sits in judgement or adjudicates a complaint in which they have a ‘Hoffman interest’.

But what actually happens? An ACCA member alleged that the association’s 1997 accounts were misleading. It was claimed they made no mention of the allegations of plagiarism in Malaysia and the lawsuits or contingent liabilities that might result; and that the accounts failed to disclose amounts which office-holders might have charged to the association for taking their spouses with them on their travels.

ACCA does not have an independent ombudsman to adjudicate disputes between members and officials, so the complaint was sent to the chief executive, who is involved with the preparation of accounts. Whatever the merits of the complaint, the Hoffman test suggests that it should have been examined by a fully independent party with no involvement in the accounts. But it was not.

So parliament must be satisfied that all regulators, and all regulatory regimes, pass the Hoffman test.

Jim Cousins is Labour MP for Newcastle Central