The upcoming changes include an expansion of the list of financial services regulators included in the Statement to reference the Crown Dependency financial services regulators: the Jersey Financial Services Commission, the Guernsey Financial Services Commission, and the Isle of Man Financial Services Authority. This ensures that there is consistency of treatment of members working in financial services regulated firms whether on the UK mainland or in the Crown Dependencies.

A revised paragraph 19 of the Statement will say the following:

19. You do not require a PC if you are a principal in an entity that is authorised by the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA), or other competent financial services regulator (as defined) and the entity does not provide accountancy services other than incidentally, as defined in paragraph 20 below. A competent financial services regulator includes the Jersey Financial Services Commission, Guernsey Financial Services Commission, and the Isle of Man Financial Services Authority.

There will also be a consequential amendment made to the list of services in annex 1 to the Statement which are not considered accountancy services. This amendment expands the financial services regulators to include other competent financial services regulators, including the relevant Crown Dependency bodies.

The revised text will be as follows:

1. Investment business and other activities conducted under authorisation from the FCA or the PRA, or other competent financial services regulator (as defined).

Paragraph 20 of the statement is being expanded to add further detail on the criteria to evaluate whether accountancy services are provided in an incidental manner. The revised text will be as follows:

20. You do not require a PC if you are a principal in a firm that provides accountancy services that are incidental to core business services, which are not accountancy or related services.

• The accountancy services are incidental, complementary to, integral to, and arising out of the core services being provided which are not, themselves, accountancy services; and
• The accountancy services should not result in a separate income stream nor be charged to clients separately from the non-accountancy core services being provided; and
• The firm does not market itself or hold itself out as an accountancy practice, and accountancy services are not marketed as a separate service; and
• The volume and incidence of accountancy services is not substantial.

This can be a complex area and, if in doubt, members should consult the ICAEW Technical Advisory Services team for support in reaching a conclusion by calling +44 (0)1908 248 250.

Impact for members

The current version of paragraph 19 of the Statement says:

19. You do not require a PC if you are a principal in an entity that is authorised by the Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA).

There may be members who work in financial services regulated firms where the firm also provides accountancy services, who have been relying on an interpretation of paragraph 19 in isolation as an absolute exemption from holding a PC, who will now need a PC.

There are also members in the Crown Dependencies who work in financial services regulated firms who have been awaiting clarification of the Statement as it applies to them.

The changes that will now be made to paragraph 19 explain that members who are principals in a financial services regulated firm, where the firm also provides accountancy services (other than incidentally) are required to hold a PC. This is the case regardless of whether the firm is in the Crown Dependencies or mainland UK.

It is expected that the change will affect trust and company service providers/trust company businesses, and some other financial services regulated firms where the firm is in public practice by virtue of providing professional accountancy services to clients. It is unlikely that financial services regulated organisations such as private equity funds, real estate investment trusts or pension schemes would meet the definition of being in public practice under the Statement. However, if there is any uncertainty the ICAEW Technical Advisory Services team can be contacted for guidance to assist in deciding if a practicing certificate is required for ICAEW members who are principals in these firms.

Where an ICAEW member holds a practising certificate, the firm in which the member is a principal is required to hold qualifying Professional Indemnity Insurance (PII) under the ICAEW PII Regulations. Where a qualifying PII policy cannot be obtained, there is a process available where the firm can apply to ICAEW for a dispensation from the PII requirements.

For members in the Crown Dependencies, guidance on the approach that will be taken by ICAEW’s Quality Assurance Department for Practice Assurance monitoring reviews will be issued in due course. This will include details of the approach to Professional Indemnity Insurance requirements for financial services regulated firms in the Crown Dependencies.

Amnesty terms

An amnesty has been agreed by ICAEW Council such that members who don’t currently hold a PC have until 31 March 2025 to obtain one without the failure to hold a PC being treated as a disciplinary matter.

The amnesty applies to any member who is impacted by the forthcoming revisions to paragraph 19 which would be any member who is a principal in a financial services regulated firm.

A previous amnesty was in place from 1 January 2024 to 30 April 2024 for all members who did not hold a PC to obtain one if this was required under the version of the Statement effective from 1 January 2024. As the forthcoming revisions to the Statement are narrower in scope and should only impact members in financial services regulated firms, this new amnesty is not applicable to all members. The new amnesty covers the period from 1 May 2024 to 31 March 2025.

Details on how to apply for a practising certificate can be found here.