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The Actuary The magazine of the Institute & Faculty of Actuaries
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Disciplinary tribunal panel - Mr Peter Kerr

This determination is, until 12 March 2008, subject to appeal.
Mr Peter Kerr, FIA 1988, resident in Belfast (‘The respondent’)

The charge was that the respondent had committed misconduct as defined in rule 1.6 of the Disciplinary Scheme 2004 of the Institute of Actuaries:

“Misconduct means:
(a) Any breach of the bye-laws of the Institute; and/or
(b) Any conduct,
by a member, whether committed in the UK or elsewhere, in the course of carrying out professional duties or otherwise constituting failure by that member to comply with the standards of behaviour, integrity, competence or professional judgment which other members or the public might reasonably expect of a member having regard to any advice, guidance, memorandum or statement on professional conduct, practice or duties which may be given and published by the Institute and/or, for so long as there is a relevant Memorandum of Understanding in force, by the Board for Actuarial Standards and to all other relevant circumstances.”

The respondent was present and was represented at the hearing by Mr Stephen Hallam of Brown Rudnick LLP. The Institute’s investigating actuary was present and was represented by Ms Julie Matheson, solicitor, of Shepherd and Wedderburn. Mr Dominic Spenser Underhill was the legal adviser to the hearing.

The particulars of the charge
In reaching its determination on fact and misconduct, the panel noted that the burden of proof rests with the Institute’s investigating actuary, and applied the standard of proof set out in rule 1.4 of the Institute’s Disciplinary Scheme.

The panel found that during the period from 3 March 2000 to 5 July 2007, the respondent had retained a number of Pension Scheme Actuary appointments and accepted additional new Pension Scheme Actuary appointments without holding a current Scheme Actuary certificate, such conduct:
1. Constituting a breach of Bye-law 76 of the Bye-laws of the Institute of Actuaries and therefore misconduct in terms of rule 1.6 (a) of the Disciplinary Scheme of the Institute of Actuaries
2. Constituting a material breach of a requirement of a practice standard Guidance Note, namely paragraph 2.1 of Guidance Note 29 (versions 3.1, 4.0, 5.0 and 6.0, being the versions in force from 3 March 2000) and paragraph 2.2 of Guidance Note 29 (version 7.0)
3. Additionally and in any event constituting ‘misconduct’ in terms of rule 1.6 (b) of the Disciplinary Scheme of the Institute of Actuaries.

The respondent had admitted that he had breached Bye-law 76 and paragraph 2.1 of Guidance Note 29; and furthermore that the breach of Bye-law 76 constituted misconduct under rule 1.6 (a) of the Disciplinary Scheme.

The respondent had denied that his breaches of Bye-law 76 and paragraph 2.1 of Guidance Note 29 constituted misconduct under rule 1.6 (b) of the Disciplinary Scheme. The tribunal accepted that it is possible to envisage situations where a breach that constitutes misconduct under rule 1.6 (a) may not constitute misconduct under rule 1.6 (b). Thus, it was necessary to consider whether, in addition to misconduct under rule 1.6 (a), the respondent was also guilty of misconduct under rule 1.6 (b).

In this case, the respondent had repeatedly over a period of seven years failed to obtain and retain a current Scheme Actuary Certificate. During that time, he held appointments under 15 pension schemes.

The question to be determined, therefore, was whether the respondent had complied with the standards of behaviour, integrity, competence or professional judgment that the Profession and the public might reasonably expect of him, having regard to the various criteria that are set out in rule 1.6 (b) (which refers to ‘guidance’, which includes Guidance Note 29).

The tribunal did not consider that the respondent’s failings impinged on his integrity or professional judgment. However, the tribunal found that the chronic failure, without any reasonable excuse or justification, of the respondent to obtain the requisite certificates for over seven years, to enable him properly to practise, did call into question his behaviour and competence. This view was supported by the respondent’s breach of paragraph 2.1 of Guidance Note 29. Thus, it found that the respondent was guilty of misconduct within the definition of rule 1.6 (b).

Sanction
The panel determined, under rule 6.23 of the Disciplinary Scheme, to impose the following sanction on the respondent:
>> Suspension from membership for a period of two years, and
>> A fine of £4000.

The panel’s reasons were as follows:
1. The respondent had practised as a Pension Scheme Actuary without the appropriate practising certificates in place. He did that for a continuous period of seven years for a large number of clients. The Institute has put in place guidance for its members who wish to practise in this field. This is currently embodied in Guidance Note 29. It has done so to ensure that its members adhere to the letter as well as the spirit of section 47 of the Pensions Act 1995, which prescribes various duties on a Pension Scheme Actuary.
2. The obtaining of a practising certificate is thus not merely an administrative requirement for the benefit of the Institute; it is there to protect the public in general and pension schemes, and their members, in particular. It does this by ensuring that the Institute’s members who work in this highly responsible field are objectively recognised as being professionally competent to do so.
3. It followed that the failure by the respondent to obtain a certificate was serious, in that he had failed to maintain a standard of professional duty to the public and the pension schemes that the Institute demands of its members. The seriousness of the misconduct was compounded to a significant degree by the fact that the respondent had failed to obtain proper certification for a period of seven years, in which time he was advising regulated pension schemes. This seriousness could not be excused by any explanation that the failure to obtain certification was an administrative oversight, since the obtaining of a certificate is not for merely administrative reasons.
4. The tribunal took into account detailed submissions in mitigation and noted in particular that the respondent was not motivated by dishonesty or mischief. He demonstrated clear and unconditional remorse, was ashamed, and had at all times co-operated with the investigation of this charge; he had not endeavoured to waste the Institute’s time and resources. The tribunal also noted confidential information about the respondent’s personal circumstances of late. While these were not in existence for the entire time that the respondent was without his certificates, they were taken into account when considering the sanction. Also, the tribunal noted that it was the respondent’s current intention not to return to the work of the Profession.
5. Part of the reasoning behind the sanction mentioned above was to enable the Institute to recover fees payable upon the granting of a practising certificate that the respondent ought to have paid, but did not.

Costs award
An application for costs was made on behalf of the investigating actuary. Liability for costs was not resisted in principle, although the level of costs was challenged as being excessive.

The tribunal considered a schedule of costs supplied on behalf of the investigating actuary. It found that the hourly rates were reasonable but that the amount of time spent on the matter was excessive and disproportionate to what had been presented as an uncontested and relatively straightforward matter.

In the circumstances, the tribunal ordered that the respondent pay costs of £5000 towards the expenses incurred.

William Abbott, FIA, chairman; Oliver Rowlands, FIA, and Philip Hodson, LLB
11 February 2008