RegulationCorporate GovernanceFirms’ fury at tribunal costs plan

Firms' fury at tribunal costs plan

FRC plans to make claiming disciplinary cost almost impossible

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.

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