In the first article in this series, we looked at the general effects of insolvency on the career of a professional.
In this article we will look at the profession of accountancy and the approach taken by some of the Recognised Professional Bodies (RPB) when a member of an RPB becomes insolvent and adopts one of the available financial remedies. Two of the most frequently adopted remedies are Bankruptcy and the IVA (Individual Voluntary Arrangement).
If you are a member of an RPB such as ACCA, CIMA, CIPFA, ICAEW or IFA, you may be surprised to learn that these five bodies take varying approaches to a member who becomes insolvent. Most members of these bodies work as accountants or are otherwise employed professionally in the financial sector.
If you are a member of CIMA or of ICAEW and you go bankrupt, expulsion from the body and loss of licence or accreditation is mandatory. In the case of CIMA the same sanction applies if you enter into an IVA. In the case of ICAEW the sanction is discretionary if you enter into an IVA.
The remaining three bodies ACCA, CIPFA & IFA all retain discretionary powers to expel insolvent members and to withdraw licence and accreditation if a member becomes bankrupt or enters into an IVA.
A member of ACCA who becomes bankrupt or enters into an IVA must notify ACCA within one month or face automatic expulsion.
A member of CIPFA will usually be suspended rather than expelled following Bankruptcy or IVA.
ICAEW will take all circumstances into account before exercising its discretion in regard to expulsion of a member who enters into an IVA.
A member of IFA who becomes bankrupt or enters into an IVA may face a prohibition order made by FSA on the grounds of not being fit and proper to practice under S56 of the Financial Services & Market Act 2000.
Re-admission to each of the five listed bodies is possible and in some cases is at the discretion of the relevant RPB or of its governing council.
Other than IFA, each of the other four listed RPBs has in place a benevolent fund which may assist members who face financial difficulty. Such assistance may be financial or it may be advice only. In any case, if you are a professional in financial trouble and you are faced with the choice of becoming bankrupt or entering into an IVA, you should consider all of the financial solutions open to you. Before opting for any particular solution, you should establish the possible effects of each option on your professional career. Your RPB will be able to spell out in detail its policy in regard to this matter and you should also consider taking legal advice.
In the next article, no 3 in this series, we will look at the effect of insolvency on some more professional careers.
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