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The Actuary The magazine of the Institute & Faculty of Actuaries

A personal view

It is amazing how quickly the year since I was elected president of the Faculty has passed. I suppose that this should not really come as any great surprise, given what has happened in the meantime. The Faculty looks forward to celebrating its 150th birthday next year, but during its history it has probably never experienced such an important year as the past one. During that year Sir Derek Morris carried out a thorough and independent review of the actuarial profession. His final report on the profession earlier this year was not only fair and balanced but set out a structure for taking the profession forward into the 21st century. The next year is therefore likely to be just as busy and challenging. This time the profession will be working with the Treasury, the Financial Reporting Council, and the regulators to establish a new independent standards structure for the future. Work on this has started and is already well under way. The target implementation date is April 2006.

Given these changes, the profession has taken this opportunity to review its strategic direction going forward. We need to address basic questions such as ‘where do we want the profession to be in five to ten years from now?’ and ‘what do we need to do to get there?’. I hope that if you were not able to attend the meetings in either Edinburgh or London last month to discuss the future strategic direction of the profession, you will let Michael Pomery or me have your thoughts, either individually or collectively from a group from within your employer or your local actuarial society. We are particularly interested in the views of younger members. If you have not already made your thoughts known I urge you to do so as soon as possible.In my presidential address in October of last year I made one of my themes the loss of trust and confidence in professionals. In today’s society it has become very fashionable for the press to criticise professionals. This is bad enough when there is some justification for it but more often than not it is ill-informed and the journalist hasn’t understood the issues that are being written about. Michael Pomery and I have spent time on this and had a number of meetings with key journalists over the year to try to assist them in better understanding the issues involved and to offer them a discussion with us before they write their articles on actuarial-related matters. Although there is a danger that I shall be accused of being biased, I do feel that there has been some improvement in reporting standards recently. I am, however, not kidding myself that everything is now okay, and would be one of the first to accept that considerably more work is required to be done in this area.

The good reputation of the Actuarial Profession is fundamental to our continued success as actuaries. We therefore have a personal responsibility to make sure that in our day-to-day dealings with clients, colleagues, government, regulators, other third parties, and of course journalists we are constantly working to reinforce and enhance that reputation. I am thinking here not just about technical excellence but also ethical conduct. Our professional conduct standards (PCS) is an excellent document providing guidance in most areas of professional conduct. It is a document which I carry with me in my briefcase and which I still find gives me direction on re-reading the appropriate section when confronted with a difficult professional matter. It therefore came as no great surprise to me earlier this year when, in discussions with the presidents of some of the other actuarial associations at the International Actuarial Association’s Presidents’ Forum, I learned that they too carry a copy of their association’s PCS in their briefcase and often refer to it for guidance. May I suggest that if you have not looked at the PCS recently that you download a copy from our website and re-read it. Even better, why not print off a copy and keep it close to hand for reference.

An area that has been getting its fair share of publicity lately, and that is likely to continue to do so, is conflicts of interest. The Pensions Act 2004 has focused the minds of pension scheme actuaries who give advice to both the trustees of the pension scheme and to the sponsoring employer of the scheme on their position and whether any conflicts or potential conflicts can continue to be satisfactorily managed.

Conflicts of interest are not new to the actuary and come in many forms. They do seem to be more complicated today than they were when I qualified. However, the guiding principles in dealing with them today are not so greatly different from those that assisted actuaries 25 or more years ago. It is important that these guiding principles in the PCS are fully understood, vigorously applied, and not deviated from in the face of any strong commercial pressures to do otherwise. The letter of April 2004 to members from the Pensions Board and the Professional Affairs Board which can be found on the website, together with the advice to the profession on conflicts of interest from solicitors Herbert Smith, should also be carefully considered.

Returning to the 150th anniversary of the Faculty of Actuaries, the actual date of the adoption of the Constitution and Laws of the Faculty was 20 March 1856. It is therefore pleasing that to mark this actual date 150 years on – Monday 20 March 2006 – Baroness Onora O’Neill will deliver a lecture to the Faculty in the Royal Museum of Scotland at 5pm. Baroness O’Neill is well known for her stimulating and relevant lectures on ‘Trust’, ‘Openness’, and ‘Transparency’. In the current climate it is therefore most appropriate for her to deliver a lecture entitled ‘Intelligent trust, small print and good communication’. I hope many of you will be able to attend Baroness O’Neill’s lecture and will join the Faculty in celebrating this memorable milestone.