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The Actuary The magazine of the Institute & Faculty of Actuaries

The Morris Report and the profession

Almost a year to the day since it was announced
in the aftermath of the Penrose Report, Sir
Derek Morris’s review was published by the
Treasury on budget day. It held few surprises for us, as we had been working closely with the review team during that time and its central recommendations had already been mapped out in the interim assessment, which came out shortly before Christmas. The very fact there had been a review into a profession of only 4,500 fellows in the UK underlines the important role we have in society.
The profession did not agree with all the analysis in the interim assessment. To blame actuaries, as journalists do, for underfunded pension schemes when the government had deliberately legislated for a weak funding standard is simplistic nonsense. However, the profession itself had identified weaknesses in how we did things and had already instigated a major programme of reforms. It was not surprising therefore that the review covered these nor that journalists dwelt on them. We are, however, very supportive of the review’s outcomes because as Sir Derek says: ‘[It” built on changes already contemplated or initiated by the profession.’ We wanted an independent standards board. Sir Derek has paved the way for something better than we could achieve ourselves: true independence, statutory backing, and support for the proposal from government, FSA, and the pensions regulator. Lots of practical details have still to be worked out, including the need to ensure that representation and funding are right, but we will be working for as swift an implementation as possible.
Independent oversight of professional regulation seemed an inevitable trend in today’s society and it came to accountants and lawyers before us. Our response has to be to build on the positives it will bring. It still leaves the profession in the driving seat but should give us a sounding board when there are difficult issues to face and independent endorsement of the ways things are done. A large number of the Morris recommendations will be up to the profession to consider and implement. We welcome his analysis and will ‘work with the grain’ of those recommendations.
Sir Derek talked about the profession being at a crossroads. But we believe we were already on a journey with a clear direction. In 2000 our vision was outlined: we do see ourselves (as Sir Derek does) ‘fulfilling a wider remit in the field of financial risk analysis, bringing expertise, robust technical standards and the benefits of professional conduct standards to traditional and new sectors’. As the current leaders of the profession, we have to ensure that the pace of change is accelerated. As outlined in the 2005/6 corporate plan (on the website), we will be defining the future role of the profession in the post-Morris era and the evolution of its structures to deliver that role most effectively. We will be judged by what we do, not by what we say.
Sir Derek has looked closely at the profession and, although critical of us in a number of respects, he considered us: ‘dedicated, skilled professionals providing important and useful advice, with commitment, integrity, and a strong sense of duty.’ Gratifyingly, this endorsement was featured in the Financial Times editorial about the review and the profession.
We belong to a profession we can be proud of and we have a great future. We look forward to the hard work ahead to turn the Morris recommendations and our own changes into a reality.