Over the past 18 months, we have seen an increasing number of investigations by regulators. There is no clear reason for the increase. The majority originate from former clients who are dissatisfied with the service that they have received. Often the complaints appear to be testing the water, to see whether it is worthwhile pursuing civil proceedings. This has clear advantages for the complainant as they are able to test the strength of their claim and obtain information without the risk of an adverse costs award. If the regulator does decide that the professional has acted in breach of their relevant code of conduct, this is likely to assist them in any subsequent claim, and make it difficult for the professional to defend a claim. On other occasions, the complainant appears to have suffered minimal financial loss and the complaints are made simply to “punish” the professional.
On receipt of a complaint, the Regulator will carry out an investigation into the factual background to determine whether it has any merit or reveals any potential breaches of professional obligations. It can then choose whether to take any further action. It may close its file, issue advice to the professional regarding their conduct or refer the matter to a disciplinary panel hearing.
With complaints to the RICS Disciplinary Panel, the Royal Institute of British Architects or the Architects Registration Board, the disciplinary hearing stage is a process akin to a trial. It is formal and adversarial. Should the panel conclude following a hearing that a sanction is appropriate, they have wide-ranging powers, from issuing a formal written reprimand through to deregistration from the relevant professional body. In effect, they have the power to end a professional’s career.
We would recommend that any professional who is subject to an investigation (or disciplinary hearing) by their regulator to forward the letter to their broker at the earliest opportunity - preferably on receipt of the first letter informing them a complaint has been made. A decision can then be made whether it should be notified under any insurance policy and consideration given to what cover may be available to assist with the cost of preparing a response.
There is also clear benefit to be gained from obtaining legal advice at an early stage, whether or not this is covered by an insurance policy. This ensures that an appropriate response is put forward, bearing in mind the potential risk to the professional’s career outlined above. It can represent a significant cost-saving in terms of both management time and legal costs if the matter can be resolved at an early stage. It should also ensure that important deadlines are not missed, which may result in lost opportunities to submit information.
Whilst regulatory investigations do not offer financial compensation for a complainant, and therefore there is no risk of insurers paying out a large sum for damages, a poor outcome can have dire consequences for a professional’s career and it is therefore important that all possible steps are taken from the outset to ensure the professional receives a fair hearing.