Institute merger merry-go-round

Institute merger merry-go-round

As three institutes engage in clandestine discussions to form a unified body, Michelle Perry weighs up the pros and cons of the controversial plan.

Link: Should they merge? – vote in our online poll

Link: 1995 – 2004 merger timeline

Merger talks strike again. It’s nothing new to the profession. Few are surprised by the resurgence of talks in a post-Enron world. But what is frustrating members most is the secrecy and what has been promised in the inevitable backroom bargaining.

General consensus is that these merger talks will go the way of previous ones – onto the aborted pile. Internal wrangling and fiercely guarded brand values have so far ended up derailing past efforts.

There have been at least three serious attempts in the last 10 years to create a unified body out of differing combinations of the institutes. The government has indicated it would prefer fewer bodies – not that this is the driver behind the current talks. And some surveys have indicated that members aren’t averse to some form of consolidation.

But tradition and identity always appear to be the two issues that result in placing an insurmountable obstacle in the path toward union.

‘It’s like proposing that Manchester United and Manchester City merge,’ suggests one indignant ICAEW member, illustrating the strength of feeling.

What is driving the talks, however, is the globalisation of accountancy, and the apparent fear from some of the institutes that they do not have an international presence. Rising operational costs and converging agendas mean that for many, a merger looks the most sensible and natural step to take.

Statements from each of the institutes involved in this round of talks – ICAEW, CIMA and CIPFA – say consolidation would solve many of their long-term problems. Charles Tilley, CIMA’s chief executive, has said: ‘Consolidation would be an excellent thing as long as it enhances the strengths of the three bodies.’

But the greatest trial is yet to come, as the architects of this merger plan have to convince their members. This will be no easy feat. ICAEW member Jeff Wooller, part of the Ginger Group (which has been a thorn in the side of Moorgate Place), believes differing standards of education are the greatest hindrance. ‘We have all made huge sacrifices to become ICAEW members. We could all easily have taken CIMA or CIPFA without having to make any sacrifices,’ says Wooller.

Members at other institutes dismiss this attitude as pure snobbery and pretentiousness. ‘It’s part of their DNA to only merge a chartered body, if at all. They consider themselves above everyone else. It’s a pompous attitude,’ said one non-ICAEW accountant.

But the ICAEW is suffering the most from dwindling member numbers. CIMA on the other hand has the second fastest average annual growth rate, standing at 5.2%, according to the Financial Reporting Council’s key facts and trends annual survey. ACCA leads with its impressive rate of 7.8%. CIPFA and the ICAEW are experiencing some of the lowest growth rates at 0.5% and 2.0% respectively.

Undeniably, the ICAEW boasts the largest member figures in the UK, enjoying a membership of 108,157 in 2002. But the institute can no longer assume it will always be the most popular UK accountancy body.

The ICAEW’s traditional make up – male, white and middle class – no longer reflects the face of UK accountancy and could be putting off many women and ethnic groups from choosing the qualification. It has, after all, the lowest percentage (20%) of female members out of all six institutes.

The highest percentage (36%) goes to ACCA. But does size equate to success? Wooller doesn’t think so. ‘Most members I have talked to think the ICAEW is already too big. We do not get benefits of scale. It has never given the impression there are advantages in being the largest,’ he argues.

He points to the Association of Corporate Treasurers as an example of a small but well-formed body. ‘It’s a minnow in size compared with any of the three bodies. The reason is that it has a more exclusive examination system.’

But imagine for a moment, putting aside the traditional prejudices, if the merger succeeded. It would create an institute with more than 200,000 members and more than 85,000 students, making it one of the most powerful voices on an increasingly global stage. But would such a body work in the public interest, ensuring competition and fresh ideas?

Few people think so. ‘What’s really at issue is they’re trying to close down competition,’ said one accountant, who preferred to remain anonymous.

What is likely causing initial resistance, is the desire to retain exclusivity, particularly for ICAEW members. But does exclusivity assure higher standards and a voice that speaks for UK accountants on a world scale?

Right now, that is what UK accountants and the public most need, and institute leaders must persuade members to be objective to avoid judgments based on egos and traditional prejudice.


1995: ICAEW members reject a merger with CIMA

JUL 1998: ACCA targets CIMA and CIPFA members to gauge interest in merger. Talks founder

JUL 2000: ACCA president Dr Moyra Kedslie says proposals to merge with rival institutes remain alive, despite the failure of moves to merge with CIMA and CIPFA

FEB 2001: Plans for a merger between the Institute of Chartered Accountants in Ireland and the Institute of Certified Public Accountants are dropped after ‘soundings’ from members.

OCT 2003: Nearly half of those asked in an Accountancy Age/Reed Accountancy Big Question say UK accountants would be better served by a single institute representing their interests

JUL 2004: Merger talks begin between ICAEW, CIMA and CIPFA to create a unified body representing public, practice and business accountants ICAS finally ends 13 years of speculation of a merger with its English and Welsh counterpart, by firmly rejecting the idea – ‘for the moment’.

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