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The Actuary The magazine of the Institute & Faculty of Actuaries

Aspirations for the new year

Restructuring the profession
In his presidential address, delivered to a capacity audience at the National Gallery of Scotland last November, Stewart Ritchie announced a consultation exercise among Faculty members on the future of the Faculty, and on the possibility of a merger with the Institute. This was not an initiative guaranteed to enhance Stewart’s popularity in all quarters, and I am sure many members of both the Faculty and the Institute will share my view that it was a courageous move on his part. By the time you read this, preliminary information on the findings of the consultation exercise may well be available, but as I write it I have no idea what the outcome might be. Whatever the findings, however, the consultation process will enable a more meaningful and more comprehensive review of the structure of the UK actuarial profession to take place than would otherwise have been possible.
Restructuring the profession is probably the biggest challenge facing the Faculty and Institute Councils during 2007. Now that the Financial Reporting Council’s arrangements for oversight and technical standard-setting are in place, we need to create governance and operational structures that are appropriate for the profession’s revised role under the new strategy. We may never get a better chance to streamline the way we organise ourselves, and we must make the most of the opportunity. Among the questions that need to be considered are:
– How many members should there be on Council(s), and should the election arrangements be changed?
– What should the respective roles of Council(s) and the management committee (FIMC) be, and what should be the relationship between these bodies?
– Should the profession have a structure in which practice areas dominate (as at present), or a predominantly functional structure? (See my article in the October 2006 issue of The Actuary for more on this.)
– Should the arrangements for election of presidents and officers, or any other aspects of these positions (such as term of office) be changed?
Although there is no intention to make changes for change’s sake, the current structure cannot fairly be described as lean and efficient, and we must not miss this chance to improve it.
Institute members clearly also have a legitimate interest in any proposed merger with the Faculty. However, I have taken the view that there is little point in consulting them before the views of Faculty members on the principle of a merger are known (and, while we have not formally discussed it as a body, I believe other Institute Council members share this view). If there is support to proceed with discussions, a specific proposal will have to be put to members of both bodies in due course. We are a long way from that point now, and patience is needed in any exercise of this nature. In the meantime, Institute members who have concerns are welcome to contact me at the email address below.

Progress with implementing Sir Derek Morris’s recommendations
Just before Christmas, the Financial Reporting Council (FRC) released its report on the implementation by the profession of the relevant recommendations of the Morris Review. I was delighted by the positive comments in the report, and in particular by the statement that ‘It is clear that the Profession has responded positively to (the Morris Review) recommendations, notably in relation to education and training’. Congratulations are due to Caroline Instance, Trevor Watkins, Peter Dingwall, and many other members of staff and of the profession who have worked hard to achieve so much in a short time.
The FRC report also made it clear that we have more to do in a number of areas. A comprehensive review of the Professional Conduct Standards will be high on the agenda for 2007, and we also need to address the CPD requirements for practising certificate-holders, and to provide actuaries with the tools needed to make sensible assumptions about longevity improvements. In addition, the FRC will be carrying out a review of the effectiveness of monitoring and scrutiny of actuarial work, and this may help to point the way forward on peer review.

Strategy review
Aside from structural issues, other aspects of the strategy implementation are gaining momentum, and we are still on target to have completed detailed implementation plans by mid-year. Communications can be expected later in the year on proposed new services for members, on specific plans for developing the associateship qualification and on the profession’s offering to overseas members. Moreover, in parallel with the strategy review, work on developing our activities in the risk management space will move up a gear.

Let’s go to work!
There is clearly a lot to be done, and Councils look forward to your help and support in the months ahead. Let’s make 2007 a defining year for the Actuarial Profession!