WHO WILL HOLD ERRANT PROFESSIONALS TO ACCOUNT?
Who has the power to police professional conduct? The process isn’t always clear-cut as each body has its own procedures and perimeters of power
The notion of professional conduct is very much in the spotlight these days. We all have dealings with professionals: attorneys, auditors, tax practitioners, actuaries and financial planners. So who sets the professional standards governing these professions, and has the responsibility to ensure that the people we rely on are competent to do their work?
The answer, in theory, is simple: there are a range of professional bodies mandated to do just this. We have regulators as well as professional bodies tasked with oversight of the skills, ethical conduct and professional standards of each profession. They all seek to ensure that the public maintains its trust in the various professions, by holding their members accountable against a specific code of conduct. But quite how they do this varies considerably.
On the skills side, some of the professional organisations work with accrediting bodies such as the SA Qualifications Authority to link educational requirements to those of the jobs market, while others depend on international accreditation standards.
SA has both statutory professional bodies — such as the Independent Regulatory Board for Auditors
(Irba) and the Estate Agency Affairs Board — and nonstatutory bodies, such as the SA Institute of Chartered Accountants (Saica) the
CFA Society SA and the Actuarial Society of SA.
The difference is that a statutory professional body is formed by an act of parliament and you need a licence to practise, while a nonstatutory professional body is formed by the industry, and membership is voluntary.
This is where it gets complicated, since the main thing people want to know is: where does the power reside to discipline wayward professionals? How far can disciplinary processes go? And do nonstatutory professional bodies have the power to enforce their rules on members?
The answer, clearly, should be yes — because even though membership is voluntary, the member and professional society have a contractual relationship.
But surely in some cases (think of an errant auditor), “discipline” needs to go beyond simply removing someone from a practitioners roll.
It all depends on the perimeters of power of each professional body, their procedures for dealing with disciplinary matters, and whether they are integrated with other agencies that have the power to go further and actually prosecute cases.
Sadly, this isn’t always as clear-cut as it should be.
Take accountants. Under Saica’s disciplinary process, if a complaint is received against a member who is also a member of Irba, that complaint is also referred to Irba. In a case like this, the accounting bodies need to partner to effectively protect consumers and uphold the reputation of the profession.
In some cases, professional bodies also battle to discipline members since they don’t have prosecuting powers themselves, and depend on other agencies. These bodies also deal with the conduct of individuals, rather than companies, which sometimes makes it harder to see where the fault lies — with that person or in the company’s processes.
Take Saica’s disciplinary process against former Steinhoff CEO Markus Jooste. In May 2021, Saica hit Jooste with four charges, but the case has dragged on, as the accounting body can’t subpoena people or compel co-operation. Saica is also waiting to see what the regulator, the Financial Sector Conduct Authority (FSCA), finally decides about the Steinhoff fraud.
But thanks to the courts, we do at least have some clarity about the reach of these organisations’ powers.
In a case going back years, the Financial Planning Institute of Southern Africa (FPI) found one of its members, Elizabeth Coetzee, guilty of breaching its code of ethics and terminated her membership. Coetzee appealed the case to the Supreme Court of Appeal, and lost.
But this was a significant ruling, as it created case law confirming that a nonstatutory professional body has the power to govern the conduct of its members, as members agree to peer-to-peer reviews when they first join that body. After that case, the FSCA’s predecessor, the Financial Services Board, barred both Coetzee and her mother from practising.
Of course, litigation is expensive, but professional bodies often have to go this route to protect the reputation of the industries they serve.
The FPI case also underscored the fact that while professional bodies regulate their members and set the standards, their decisions can always be challenged in court.
So if you ask who has the power here, the answer is both SA’s courts and the individuals who have the power to appeal to the rule of law.
Professional bodies regulate their members, but their decisions can always be challenged in court