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The Actuary The magazine of the Institute & Faculty of Actuaries

Getting to know the Profession’s disciplinary procedures

So you did something wrong, something incompetent, something unprofessional. Or perhaps you didn’t. Whatever the merits may or may not be, someone — a client, another actuary, a regulator — has complained to your regulatory body.

Effective enforcement and discipline is a critical component of any framework that relies on standards. Following the Morris Review — a Treasury-commissioned report launched in May 2003, which followed Lord Penrose’s investigation into Equitable Life and which highlighted serious shortcomings in the actuarial profession — the Profession established new disciplinary arrangements from 1 January 2004 that removed the administration and management of the schemes from the control of the Councils (although by law the disciplinary process remains a function of the professional body).

The disciplinary arrangements removed from the Councils to the control of a Disciplinary Board were extensive and they explicitly excluded all members of the Faculty and the Institute’s Councils from any role in the formal disciplinary machinery, provided management by an independently chaired Disciplinary Board and introduced lay participation at all stages of the process. This last provision had been specifically included in an attempt to ensure that the public interest is better served.

Where a complaint is received or even, proactively, where no complaint is received by the Profession but it considers it appropriate to do so in the interest of the public and/or the profession, trained staff start an investigation under the direction of an investigation actuary. The member under investigation is informed immediately.

In due course, a report is passed for determination by a separate adjudication panel who meet in private. That panel might either find no case to answer or it may sanction the member with that member’s consent. Only the most serious cases are referred to the disciplinary tribunal panel, which is advised by a highly experienced lawyer on aspects of law, but who has no input in the decision of the panel.

Disciplinary panels now comprise not only members of your own profession (providing that they have no conflicts of interest) but also a lay member. A balance is struck between those who do exactly the same type of work as you and the wider public whose interests are served by the lay member. The lay member is a person from a wholly different field, perhaps with no formal knowledge of your own profession, although probably familiar with regulation of other professions or similar adjudications. Lay people bring a different perspective.

Confidence in the Profession
The rationale behind the new rules is that the general public must have confidence in the profession and that processes that deal with allegations of wrongdoing are dealt with robustly and in a timely manner.

Any member of the Profession can be assured that the thread that runs through a disciplinary panel hearing is that of care. Everyone appointed to any particular disciplinary panel hearing is fully aware of the ‘there but for the grace of God’ syndrome. Anyone in a professional capacity can be accused of wrongdoing, whether justly or unjustly.

If not thrown out by the adjudication panel as being a complaint made with no merit, or if the adjudication panel determines a sanction which is considered unacceptable to the Respondent, it is for the disciplinary panel to make a determination and that determination is considered in great depth.

It goes without saying that the papers are read with the greatest of care. Mine are usually covered in notes on points to raise with my professional colleagues. There are, however, a few layperson’s tips which may be of assistance.

Averting complaints
Clients complain not only if they feel that they are getting poor service, but also if they feel that they may be getting a satisfactory service, but are not being kept in the loop. If telephone calls are not taken or not returned, if letters are not acknowledged and acted upon within a reasonable period of time, don’t be surprised if a complaint to your professional body follows, a complaint which could have been avoided if proper communication skills had been employed. No-one likes being ignored.

Co-operate with the investigation team. Not only is this a requirement under Rule 1.18 of the Disciplinary Scheme, but not to do so may attract a further allegation of misconduct in itself under Rule 1.22 of the Disciplinary Scheme. Although it may be understandable that you would not wish to help those who you may feel are attacking you, but consider how that would appear to a disciplinary panel. Letters from investigators that are ignored by the person accused are not helpful. Courtesy (even with jaws tightly clenched) doesn’t hurt.

3. Stand back. Can you really say that you are blameless or, deep down, is there a kernel of truth? If so, put your hands up. Give full and frank reasons for what, why and how you arrived in this sorry position.

4. Be careful what you write — both to clients and to your profession. Write every letter as if it is going to be produced at a tribunal — one day it might be.

5. Don’t forget that the adjudication panel is held in private. If that panel decides that a sanction is appropriate, think whether you really want to refuse to accept it. If you do refuse (and, of course, it is your prerogative), the next step is the disciplinary panel, which is held in public.

Although a spokesman for The Investors’ Association was quoted as saying, “actuaries have a deeply ingrained culture, which is cynical, self-serving and indifferent to public interest”, from my own experience, nothing could be further from the truth. The members of your profession with whom I sit are thoughtful, incisive and, most particularly, willing to listen to, and accept if substantiated, unpalatable views from a lay member for or against members of the actuarial profession. I feel that this takes a certain sort of courage.

There is no formal precedent system employed and therefore the profession does not follow the courts in that respect, but its decisions must be consistent. The standard, which is objective, is considered on a case by case basis. Transparency and consistency are very important, particularly because the standard expected is broad, covering as it does any conduct carried out in the UK or elsewhere.

I have heard an actuary refer to those members of the profession who have been brought before their regulatory body as “victims”. That is both unfair and unjust. If any profession is brought before their regulatory body, there is a reason, a concern.

The 1994 Court of Appeal case of Bolton v Law Society was an important judgement for regulatory bodies. In that judgement it was said that the most fundamental purpose was “to maintain the reputation of the (Defendant’s) profession as one in which every member, of whatever standing, may be trusted to the ends of the earth... the reputation of the profession is more important than the fortunes of any individual member. Membership of a profession brings many benefits, but that is part of the price”. Accepting effective regulation is part of that price.