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The Insolvency Service has issued a reprimand – the first time such powers have been used – against the ICAEW for regulatory failings on 30 June.
The reprimand relates to failures by the accounting association after restrictions were imposed on Adrian Duncan, an insolvency practitioner based in London.
It is alleged that Duncan subsequently absconded with nearly £4m in estate funds.
As a result, he was prohibited from taking on any new insolvency appointments, but the ICAEW was found to have failed to monitor whether Duncan was adhering to these restrictions.
It also did not take steps to ensure that any estate funds Duncan was managing were subject to the appropriate financial controls.
The reprimand was delivered in accordance with Sections 391J and 391K of the insolvency Act 1986, after the Insolvency Service identified the failings by ICAEW.
Claire Hardgrave, head of insolvency practitioner regulation at the Insolvency Service, said: “We take the integrity of the insolvency regime and regulation of Insolvency Practitioners extremely seriously. While the vast majority of licensed insolvency practitioners work to a high standard, where failings are identified and there is wrongdoing we will not hesitate to act.
“The public needs to have confidence in the regulatory regime, and it is important for lessons to be taken from this case.”
Michael Izza, CEO of ICAEW, added: “We take our role as a regulator extremely seriously and always seek to act in the public interest.
“The conduct of Adrian Duncan during the events in question is unprecedented in our 37 years as an insolvency regulator. He deceived ICAEW, his clients and his colleagues and we have enormous sympathy for those affected by his shocking behaviour.”
