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The Actuary The magazine of the Institute & Faculty of Actuaries

The Actuaries’ Code

The opening years of the new millennium have been aperiod of intense scrutiny for our profession and itsprofessional bodies. The fallout from the Equitable andthe Penrose and Morris reports have contributed tohow we are viewed externally and how we view ourselvesinternally. As part of our strategy to address thiswe have conducted a full review of our ProfessionalConduct Standards, or the PCS as it is popularlyknown by those who remember it exists!The PCS is a comprehensive and well-thought throughcode of conduct, covering all the importantethical issues. Our review highlighted that it is a longdocument, that it is at times convoluted, and that it isnot easily memorable.Our review, therefore, had a number of objectives:? to make the code itself shorter and more memorable;? to make it accessible to all, including the outsideworld;? to produce a document designed to effect thedesired outcome in behaviour.We quickly concluded that a change to a principles basedcode would allow us to meet these objectives.Although the code’s prime principles will requireamplification and some more detailed supportingrules, these will be kept to a minimum, with a renewedemphasis on each member being expected to exercisehis or her judgement to keep within the principles ofthe code, rather than being content not to infringe aseries of rules.We called it the Actuaries’ Code (although it will alsoapply to students) because this name makes the aimand content of the code more easily understandableto the wider community. We chose to label the eightprinciples all with names beginning with C only latein the process, when we found that six of the eightnaturally have those labels, and that only a little twistingwas needed to get the others to conform – but theprinciples came first, the labels only followed. We dothink, however, that the 8Cs will make it easier for usall to remember the contents of the code.We now want your comments on how successful wehave been in meeting our objectives. The first draft ofthe Actuaries’ Code was shared with members inAugust. (See p10 of September’s issue of The Actuary.)The consultation version, which will be released thisautumn, is not, at the time of writing, expected todiverge significantly from the draft version.The proposed code will mean we will all need tothink harder about ethical issues which we might face– following the rules alone was never enough, as thePCS itself states, and the principles-based approachdoes require actuaries to think about their actions. I’msure we would all prefer a code which requires us tothink before we act – rather than have a long, detailedcode where no thinking is required, but disciplinarycases can follow on infringements of technicalities. Inthis way there is a danger of the process becoming more important than the goal, which is the protectionof the public and the reputation of the profession.The structure of a short code with attendant AP standards(Actuarial Profession Standards, the new termfor guidance notes on ethical matters issued by theActuarial Profession) should be easy to use. Whateveractuaries are doing, the 8Cs of the code should directtheir thoughts, and where one may apply they shouldturn to the AP standard for further help. Althoughthese may contain some detailed mandatory requirements,they will also contain amplification of the principle.These AP standards will typically be muchshorter than the guidance notes formerly produced bythe profession, and the rules within them will, as faras possible, be principle-based.To comply with international obligations arisingfrom UK membership of the IAA and Groupe Consutatif,we are not completely free to abandon somedetailed rules, and in some areas these detailed rulesare helpful in reinforcing the principles. The principleswill then be reinforced in the AP standard – particularlywhere otherwise the scope for interpretationmight be too wide. But this does not detract at all fromthe general intention to help all of us keep to the principleswhich, I hope, we will all share.I do hope as many as possible of the readers of TheActuary (or those who have been dedicated enough toread this far!) will feed back comments, positive andnegative, as part of this consultation, so that the codewhich comes into force on 1 April next year won’t turnout to be anybody’s April Fool!