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The Actuary The magazine of the Institute & Faculty of Actuaries
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Revalidation of professional competence

Are you a working actuary? What have you to show the outside world that you are a trusted professional? Are these impertinent questions? We who have worked hard to pass examinations and have experience in our specialist fields may find it difficult to accept the changes we now face.

We have watched as other professions had to change. Events in the medical profession in Bristol and recent international accounting scandals are examples of recent criticisms of professionals. Our profession has been exposed as never before to public discussion, not least after the Equitable’s affairs came to public attention. Inter alia, this has led to the fundamental Morris review.

I lead a task force charged with making recommendations in a number of interlinking areas – principally to ensure professional qualifications continue to command public confidence by revalidation of our competence. Other areas include the need to organise our membership categories and educational requirements, including work-based skills, in line with developments in the rapidly changing international actuarial scene and changes from 2005 in our own education programme, and to ensure the level at which the term ‘actuary’ is used is on a par with titles in other professions and for actuaries internationally.

The resulting proposals, amended following discussions at Councils, boards, and committees and approved by Councils, have at their heart revalidation of professional competence.

Two are already being implemented. Demonstration of work-based skills as a requirement for awarding associateship and fellowship applies to all new students from July 2004. Tests called UK practice modules covering UK guidance notes, legislation, and FSA regulatory requirements are being introduced with the first exams in April 2005, with grandfathering arrangements for those who took earlier versions of examinations.

The other proposals have been agreed in principle and will be implemented, but as they are wide-ranging in their effect, aspects of their implementation are subject to consultation. The task force report is available at www.actuaries.org.uk/files/pdf/professional_affairs/PCTF_ConsRep.pdf.

While this article summarises the main points, I would urge you to take a look at the full report, including its appendices which give the essential background. There are 16 questions, referred to here as Q1–Q16, to which we would like your responses. Your comments need not be restricted to just those areas. The proposals have been referred to and strongly supported by both the new presidents in their addresses. Your help, first in finding the best way to implement them and then, no less importantly, going ahead to implement them, is urgently needed.

New initiatives in our profession are now developed only after the relevant design principles have been drawn up. This project is no exception, and the relevant principles are set out below. An appendix to the report matches the proposals against these principles.

The proposals for revalidation of professional competence are in two parts:

  • where appropriate, self-certification that the requirements for a ‘working actuary’ have been met; and, separately,
  • provision of two kinds of practising certificate – the existing statutory certificate, and a new proposed certificate.

Related to these are proposals for continuous professional development.

Working actuary

At annual subscription renewal, members will be asked whether they are working as an actuary in the UK or overseas, or not working as an actuary. Draft renewal forms can be found in an appendix to the consultation report. All fellows and associates who indicate they are ‘working’ will be required to have a pass in a UK practice module, or its equivalent under ‘grandfathering’, to certify that they have attended a professionalism course in the past ten years and that they have completed the relevant CPD requirements. Suggestions for a more descriptive name than ‘working actuary’ would be welcome as part of the consultative process (Q1).

The requirement to declare oneself as a working actuary or not is an issue about the perception of others. Is the fact that I am an actuary relevant to how what I do and say is perceived by anyone? For members working in financial areas, the answer will almost invariably be yes.

There are some potential problems with ‘marginal cases’, including activities of retired actuaries and views are sought in the consultation. An example is given in Q2. There is no attempt at providing a full watertight prescription of what duties would be carried out by a working actuary, but examples are given in two separate appendices to the report. I would urge you to look these up to see how your position compares.

Practising certificates

Quite separately, there will be two types of practising certificate available to working actuaries – the existing (and any future) statutory practising certificates and also a new type provisionally named the actuarial profession’s practising certificate. The profession is open to suggestion as to a suitable name for this certificate (Q3).

This new certificate would be issued automatically on qualification as a fellow and related to the UK practice module (or its equivalent) passed or could be applied for voluntarily by other fellows. Some practice boards may choose to make it compulsory for carrying out specific tasks.

Employers would be encouraged to support this new certificate and we would expect, in time through board decisions, for it to become a requirement for all actuaries actively working in significant practice areas to hold one.

For certificates issued automatically on qualification, the first renewal would be one year after issue. Subsequently the certificate would be renewable three-yearly with the same requirements as for a working actuary but also with CPD demonstrated of at least two-thirds of the minimum formal CPD in the required specialism, and evidence of work experience to be determined by the relevant board. Q4–Q6 cover this issue.

The statutory practising certificates for statutory functions will be similar to the current requirements. Fees for the actuarial profession’s certificates might be set at the same level as the statutory certificates but payable three-yearly, not annually.

Implications for types of actuary and student

There are five categories of people in the profession: students, associates, fellows, affiliates, and honorary fellows. The affiliate category subdivides into transient, regulated, qualified, technical, and others. Details of these and what they are expected to be able to do are set out in appendices to the report.

It has been agreed that in future from 1 July 2005 full membership of the profession should be at the new associate level. The report details the 2005 education strategy and new requirements for associateship. Full membership includes voting rights and the opportunity to call oneself an ‘actuary’. Associates from 1999 onwards will be included. Such an associate will be a working actuary if the requirements are satisfied.

All UK actuaries who exercise a statutory actuarial function are required to have achieved the level of fellow. It is envisaged that normally most actuaries will continue to fellowship, as is the situation now. Q15–Q16 show the areas where we would particularly like input from you. There are flowcharts in the report indicating the implications of the new arrangements for fellows and associates.

CPD changes

It has been proposed that the scheme is tailored to the three practising regimes:

  • statutory role;
  • practising with an actuarial profession’s practising certificate; and
  • other working actuary role.

Each would have CPD requirements relating to knowledge in specialist technical areas, as well as professionalism including professional management issues.

They will aim to encourage lifelong learning and embrace a wide range of learning activities. Formal CPD will be redefined to reflect this and will include activities such as accessing sessional meetings via the Internet.

There will be mandatory attendance at professionalism courses run by the profession on joining as a student, on qualification as an associate and as a fellow, and then at ten-yearly intervals for all working actuaries. This requirement will be phased in.

The courses for experienced actuaries are likely to take different formats to cater for different needs. Professional management skills may be considered to embrace the skills required of a modern actuary. These might include a reasonable balance among a number of topics such as quality assurance and actuarial governance issues, risk management and principles of corporate law, taxation, and finance. Project management, IT, and communication skills are also relevant.

Q7–Q14 cover the discussion issues on CPD and professionalism courses.

Consultation

Comments will be welcome at the consultation meetings, to Michael Scott by email (michaels@actuaries .org.uk), or by post at Maclaurin House, 18 Dublin Street, Edinburgh EH1 3PP.

Consultation meetings are being held in the Spy Room at the Honourable Society of Gray’s Inn, 8 South Square, London WC1R 5EU (location plan can be found at www.graysinn.org.uk) on Thursday 18 November at 5pm and at the Merchant Company Hall, 122 Hanover Street, Edinburgh on Wednesday 24 November at 5pm.

Comments will be received up to 30 November 2004. Detailed implementation proposals will then be drawn up by the task force and put before FIMC and Councils.

The new arrangements set out here will affect almost all of us. I would urge you to read further by downloading the report on the website and responding in one of the above ways. We hope to see you at the consultations, and in any case look forward to receiving your comments.

To see a full version of this article, see the local professional PDF.

The task force report is available at www.actuaries.org.uk/files/pdf/professional_affairs/PCTF_ConsRep.pdf