The accounting watchdog stung by its £1m costs bill after defeat in the
Mayflower case wants to change the rules so that defendants can reclaim costs
only where the FRC’s lawyer has been guilty of ‘misfeasance’.
partner Peter Wyman said the firm did not believe a case for changing the
current scheme had been made and suggested the proposals be withdrawn.
‘The broad scheme was carefully put together and drew on the predecessor
schemes of the CCAB bodies with a long track record, and which were fit for
purpose. We are not persuaded there are fatal flaws in the existing scheme that
require any of the changes being proposed and there is almost no track record
at all of the new scheme which has had only one case that’s gone from start to
‘We worry that the changes proposed, taken together, will seriously damage
both the effectiveness of the scheme and in the longer term, public support and
professional support for it,’ said Wyman.
Other firms echoed those views.
& Young partner Jan Babiak said she did not expect any case to be
brought for misfeasance.
‘Even in the extremely unlikely event that there may have been misfeasance,
accountants and firms are likely to find it very unattractive to make an
application for costs on this basis. Such accusations will not contribute to
good future relations between the regulator and the regulatee given the board’s
regulatory role will continue,’ she said in her response on behalf of the firm.
On top of the costs changes, the FRC wants the
Accountancy and Actuarial
Discpline Board to look at misconduct where there have been breaches of
‘guidance’ as well as of accounting standards.
Currently only standards breaches are punishable: ‘We think misconduct is und
erstood and set at a right level. This is not a scheme designed to deal with
trivial matters,’ Wyman said.
argued that the ‘concern over lack of FRC reserves should not cloud the issue of
avoiding any unfairness that could occur by placing grater costs burden on a
member or member firm.’
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