Is Peter Hargreaves fit for purpose?
Posted by Christie Malry on March 9, 2010 at 9:36 pm
Accountancy Age publishes an extraordinary rant by Peter Hargreaves, the Chief Executive of Hargreaves Lansdown. Like all good rants, it's strong on rhetoric, but weak on factual content.
Something has perplexed me over the years. I hear accountants moaning about the profligacy of the Institute and fees but don’t complain to the president. Accountants are supposed to be frugal and look after both their and their clients’ money. It is a disgrace when the ICAEW doesn’t set an example and show similar prudence.
The accounts of the ICAEW reveal several interesting facts. 600 people are employed on an average salary of £45,000 per annum. Most commercial organisations are moving to defined contribution pensions but they still have a defined benefit scheme.
According to its accounts, the ICAEW closed its defined benefit scheme to new entrants in 2000. And the scheme will be closing to future accruals too.
I am surprised how much the chief executive pays himself for presiding over this overstaffed bureaucracy (in 2008 £425,000 plus the final salary scheme).
Michael Izza joined the ICAEW in 2002. I would imagine it's very unlikely indeed that he's in the ICAEW's final salary scheme, given that it closed two years before he joined them. And I don't suppose Izza will want to heed advice on taking a pay cut from a man whose own salary, according to Hargreaves Lansdown's accounts, was £1,016,953.
The ICAEW it appears has acquiesced to a few cranks who feel the Institute should provide the unnecessary. Information on the economy, which most members never read, is probably done better elsewhere, not least by the four major firms of chartered accountants in this country. The Institute should have a limited role and chartered accountants wherever they may be should attempt to restrain the excesses. They should be confined to:
- maintenance of the register of members;
- examination of potential new chartered accountants;
- maintenance of professional standards and discipline of the occasional member that errs;
- communication to chartered accountants on accounting standards and other relevant factors which chartered accountants require in their job in industry or in their profession;
- advice on how to charge for their services.
I see no advantage to the members in England and Wales in having a Singapore office and various other offices throughout the world. I would have thought a hundred staff maximum could do the job that is required.
And what does HL do, exactly? It charges people for looking after their money for them. It's a business that shouldn't need more than 100 people to run. How many employees do they have? Why... 600, according to their accounts. If Hargreaves wants to be part of a smaller institute, he's welcome to apply for membership of ICAS. If they'll have him. Oh, and ICAS costs more than ICAEW or ACCA. Their average salary is approximately £37,000 per year which, considering they're in Scotland, is basically equivalent to the ICAEW's average salary.
It's easy to bash the professional institutes, but they provide a vital service to the UK's 300,000 accountants. They give us the right to call ourselves chartered (or certified) accountants. That's the deal. Anything on top is icing. We need them to keep the exams up to date, we need them to check up on accountants and their practices, we need them to provide some basic services, and we need them to lobby on our behalf to regulators. That stuff costs, but we're better off with it than without it.
No-one likes paying subscriptions, but it's a necessary cost of doing what we do. I am very proud to be a chartered accountant. If you don't like the deal, resign your membership. If you really get nothing from it, why torture yourself by paying "too much" for something that you don't value?
Oh, and, surprise, surprise - Ken Frost, "the living brand" and proud owner of the title of the accountancy profession's third biggest idiot thinks it's an "excellent piece".
Leave a Reply