What is misconduct?
"Misconduct" means conduct that breaches a legal or contractual obligation imposed on the director. It could mean acting in breach of an employment contract, breaching relevant regulatory requirements (such as mandatory health and safety rules), breaching the criminal law or engaging in activities that are morally reprehensible or likely to undermine public trust and confidence.
What is mismanagement?
“Mismanagement” means being involved in the management of an organisation or part of an organisation in such a way that the quality of decision making and actions of the managers falls below any reasonable standard of competent management.
The following are examples of behaviour that may amount to mismanagement:
- Transmitting to a public authority, or any other person, inaccurate information without taking reasonably competent steps to ensure it was correct.
- Failing to interpret data in an appropriate way.
- Suppressing reports where the findings may be compromising for the organisation.
- Failing to have an effective system in place to protect staff who have raised concerns.
- Failing to learn from incidents, complaints and when things go wrong.
- Failing to model and promote standards of behaviour expected of those in public life, including protecting personal reputation, or the interests of another individual, over the interests of people who use a service, staff or the public.
- Failing to implement quality, safety and/or process improvements in a timely way, where there are recommendations or where the need is obvious.
When proven misconduct or mismanagement should be assessed as "serious"
Providers will have to reach their own decision as to whether any facts that are alleged reach the threshold of being "serious misconduct or mismanagement".
Serious: Important, grave, having (potentially) important especially undesired consequences, giving cause for concern of significant, degree, amount, worthy of consideration.
Source: The Shorter Oxford English Dictionary
Misconduct differs from mismanagement, in that a single incident of misconduct may be so serious that it amounts to serious misconduct, whether the provider also concludes that this was incompatible with continued employment or not. However, any serious misconduct renders a director unfit within the terms of the fit and proper person requirement.
However, an isolated incident is unlikely to constitute serious mismanagement unless it is so serious that it calls into question the confidence of the organisation and the public in the individual concerned.
Serious mismanagement is likely to consist of a course of conduct over time. Any assessment of its seriousness needs to consider the impact of the mismanagement on the quality and safety of care for people who use the service, the safety and well-being of staff, and the effect on the viability of the provider.
Not all misconduct or mismanagement in which a director has had some involvement will reach the threshold of “serious”. Where there is evidence of misconduct or mismanagement that is not judged to be “serious”, the provisions of Regulation 5(3)(d) do not apply. However, it will be for the provider (as the employer) to determine the most appropriate response, in order to ensure that performance is managed and the quality and safety of services is assured.
A provider could consider isolated incidences of the following types of behaviour to amount to misconduct or mismanagement that does not reach the required threshold of seriousness:
- intermittent poor attendance
- minor breaches of security
- minor misuse of an employer’s assets
- failure to follow agreed policies or processes when undertaking management functions where the failures had limited repercussions or limited effects, or were for a benevolent or justifiable purpose.
The following are examples of misconduct and mismanagement that providers would be expected to conclude amounted to serious misconduct or mismanagement, unless there are exceptional circumstances that make it unreasonable to determine that there is serious misconduct or mismanagement:
- fraud or theft
- any criminal offence other than minor motoring offences
- assault
- sexual harassment of staff
- bullying
- victimisation of staff who raise legitimate concerns
- any conduct that can be characterised as dishonesty, including:
- deliberately transmitting information to a public authority or to any other person, which is known to be false
- submitting or providing false references or inaccurate or misleading information on a CV
- disregard for appropriate standards of governance, including resistance to accountability and the undermining of due process
- failure to make full and timely reports to the board of significant issues or incidents, including clinical or financial issues
- repeated or ongoing tolerance of poor practice, or failure to promote good practice, leading to departure from recognised standards, policies, or accepted practices
- continued failure to develop and manage business, financial, or clinical plans.
As part of reaching an assessment as to whether any actions of omissions of the director amount to “serious misconduct or mismanagement”, providers should consider whether an individual director played a central or peripheral role in any wider misconduct or mismanagement. The more central the role of the director, the more likely it is that the conduct of the director should be assessed to be serious misconduct or mismanagement. The provider should also consider whether there are any mitigating factors that could be relied on to downgrade conduct that should otherwise be assessed to be serious misconduct or mismanagement so that the conduct did not meet that threshold of seriousness.
Factors to consider around concerns regarding serious misconduct or mismanagement
Please note the following points:
- The relevant matters can arise either in the director’s current role, in a former role within the provider’s organisation, when the director carried out any role where he or she was concerned with a service that is regulated by CQC or which, if provided outside the UK, would be a regulated activity if the activity was carried out within the UK.
- Allegations about a director’s conduct while engaged in any other type of business or non-business activity is not relevant for Regulation 5(3)(d), but it is likely to be relevant to the director’s good character (Regulation 5(3)(a)) and/or his or her competence, skills and experience (Regulation 5(3)(b)).
- A director’s conduct comes within Regulation 5(3)(d) if he or she has been “responsible for” serious misconduct or mismanagement – namely that he or she was one of the decision-makers that led to the serious misconduct or mismanagement.
- A director’s conduct comes within Regulation 5(3)(d) if he or she has “contributed to” serious misconduct or mismanagement – namely where the director was not one of the lead decision-makers that led to the serious misconduct or mismanagement but where, by action or omission, the director took some significant step or steps to assist the lead decision-makers who were responsible for that misconduct or mismanagement.
- A director’s conduct comes within Regulation 5(3)(d) if he or she has “facilitated” any serious misconduct or mismanagement – namely that he or she took steps or failed to take steps that he or she ought to have taken that enabled those primarily responsible for the misconduct or mismanagement to carry out the acts or omissions that constituted the serious misconduct or mismanagement.
- A director’s conduct also comes within Regulation 5(3)(d) if he or she has been “privy to” serious misconduct or mismanagement, in that the director was aware that misconduct or mismanagement was happening in an organisation and failed to respond to that knowledge by acting in an appropriate manner. An appropriate response to serious misconduct or mismanagement will depend on the circumstances and the internal governance arrangements of the organisation in which the director worked, but it could include:
- drawing the serious misconduct or mismanagement to the attention of an appropriate senior member of staff
- making a formal complaint
- drawing the serious misconduct or mismanagement to the attention of a suitable person outside the provider’s organisation.
- Providers would be entitled to conclude a director had been “privy to” serious misconduct or mismanagement if the director knew sufficient details of that misconduct or mismanagement (or the circumstances were such that it was reasonable to conclude that the director ought to have known of that mismanagement or misconduct) to require appropriate action by the individual and failed to take any appropriate action in a timely manner.
Good character
There is no statutory guidance as to how ‘good character’ in Regulation 5(3)(a) of the 2014 Regulations should be interpreted.
However, the following are some of the features that are normally associated with ‘good character’:
- honesty
- trustworthiness
- integrity
- openness (also referred to as transparency)
- ability to comply with the law.
To consider that a director is of ‘good character’, the registered provider should be able to regard the director as a person in whom the provider, CQC, people using services and the wider public can have confidence, and who will comply with the law.
Factors for providers to take into account when assessing ‘good character’
Providers must have regard to the following matters specified in part 2 of schedule 4 to the 2014 Regulations when assessing whether a director is of good character:
- convictions of any offence in the UK
- convictions of any offence abroad that constitutes an offence in the UK; and
- whether any regulator or professional body has made the decision to erase, remove or strike off the director from their register.
Other things to look for in assessing good character
When making decisions about character, providers would also be expected to consider:
- the prior employment history of the director, including the reasons for leaving
- whether the director has ever been the subject of any investigations or proceedings by a professional or regulatory body
- whether the director has ever breached any of the Nolan Principles of Public Life
- whether the director has ever breached any of the duties imposed on directors under the Companies Act
- the extent to which the director has been open and honest with the provider
- any other information that may be relevant, such as disciplinary action taken by an employer.