Britain’s biggest accountancy body is expected to warn that the introduction of alternative business structures combining solicitors and chartered accountants could founder, because the codes of conduct of the two professions are incompatible.

The 132,000-member Institute of Chartered Accountants in England and Wales (ICAEW) will demand that the Legal Services Board grant it major influence over how chartered accountants who join ABSs are regulated – regardless of who is designated the approved regulator.

‘We would not be happy to see accountants coming under another regulator,’ a senior ICAEW source told the Gazette. ‘We wouldn’t want accountancy practices regulated as if they were law firms.’ It has been suggested that the ICAEW could itself apply to regulate ABSs, though cost could be a deterrent.

The institute is understood to be concerned that a ‘legal’ regulator could not properly regulate ABSs involving both lawyers and accountants because the codes of conduct of each profession are incompatible. The institute will convey its concerns to the LSB as part of the latter’s consultation on ABS regulation.

The senior ICAEW source said: ‘It’s not good for professions to be joined on the same principles. Lawyers and accountants both have to act in accordance with strict ethical principles, but these are different. Lawyers must serve the interests of their clients and accountants must be objective. Accountants always have a responsibility to take into account the public interest in all of their work.

‘Individual accountants already work in law firms. They have to abide by both sets of ethics, so both public interest and client-focused advice is given. But with whole-firm ABS regulation, the two sets of professional standards cannot be reconciled. This could make regulation difficult to deal with in a cost effective way.’

Another difficulty is that accountants worldwide generally abide by standards laid down by the International Federation of Accountants. ‘We are a global profession, which lawyers are not,’ the source added.

  • The Solicitors Regulation Authority has launched a consultation on the regulation of alternative business structures. The organisation argues that ABSs should be subject to the same ethical benchmark, standards of service and consumer protections as any other kind of law firm. The consultation closes on 31 August.