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The Actuary The magazine of the Institute & Faculty of Actuaries

Are you always professional?

T he natural reaction to the question in the title is ‘of course’. But why are you so sure it is true? Have you thought about it this year? When have you felt under pressure to bend (or break) your professional ethics?
Ten years ago all boards of listed companies were pretty comfortable with their governance structures; but think how much they have changed because of Cadbury, Higgs, Turnbull, and Sarbanes-Oxley.
Some scenarios that might be relevant to you are:
– Your company is considering a strategy which you feel may conflict with the public’s best interests. What should you do?
– Your best mate has had a tip for a share and tells you down the pub that he wants to invest a considerable sum of money. You do not work in the investment area; but at least know a good deal more than he does. Can you advise him?
– ‘We have a strict code of Chinese walls in our firm; therefore the conflict of interest thing doesn’t apply to us’. True or false?
– A new firm of consultants launches in the UK market with a promise of undercutting the lowest quote for actuarial services by 25%. How do you compete?
– It’s just you and your boss in a two-person actuarial consultancy. You are seriously uncomfortable with something she has just done. Are your first priorities to your boss, the profession, the client, or yourself?
Confidentiality and conflicts of interest form the basis of many of these questions. What alternative actions are possible? Which are acceptable? Is the answer obvious?

This applies to you. And you. And you
If you work for a large firm, whether insurer or consultant, you naturally comply with its ethical standards. But does that meet all the profession’s requirements? And some issues are purely personal or unconnected with your employment.
In some circumstances compliance with the PCS may require careful analysis and the determination to undertake a difficult or even a painful action. Even if you work outside the UK or are fully retired, you are always required to comply with the PCS (as well as the standards of any other relevant actuarial association).
The profession, through the Professional Guidance Committee (PGC), can assist you on a confidential basis to reach your decision, sometimes by providing contact with a suitably experienced actuary who helps to focus your analysis. Please contact the secretary to the Professional Affairs Board (PAB), Michael Scott (details right). Please note that such contact will not preclude disciplinary action if a complaint is received.
All professions are experiencing an increased level of complaints about non-adherence to professional standards; medics, accountants and lawyers are affected as well as actuaries. The Morris report remarked favourably on the changes the UK actuarial profession made to its disciplinary schemes from 1 January 2004. However, the level of awareness among the profession of the content and implications of the PCS, which is generally the basis of any potential misconduct that causes a disciplinary action, is less than is appropriate.

Further reading
Over the next few months we hope to publish occasional articles setting out actuarial dilemmas. When reading them, please think how the circumstances and issues can be translated to be relevant to your own circumstances. There will be further analysis of the scenarios in subsequent articles.
Case study
You work for a reinsurance company, always eager to win business. You have been qualified as an actuary for a few years and have certain authority within the office.
Your company has thrown a cocktail party for a number of clients to coincide with an EnglandGermany football match. Because of the successful outcome of the game, the alcohol continues to flow into the small hours. You are flitting from group to group being sociable, and catch the tail end of a conversation between your boss, an actuary, and the CEO of a small insurance company, EasyLife, for which you are the account executive. The tone is one of light-hearted banter but you hear your boss say ‘ and that consulting actuary, Percy Snodgrass, I would never have him on my team; he’s a waste of space worse than putting James back in goal for England’ The talk reverts to football (not your favourite sport) and you move on.
Within a week, there is a letter on your desk from Percy Snodgrass. He has been fired from his secondment to EasyLife. He holds you responsible for words said to the CEO. He is now about to contact the Professional Affairs Board.
What do you do?