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The Actuary The magazine of the Institute & Faculty of Actuaries

The new CPD scheme

Many people experience a great thrill, or at least profound relief, when they realise that they will never again have to sit an exam. For many actuaries the journey to qualification is a gruelling one, and at the celebrations that followed qualification we rejoiced not only in the newly gained letters after our names, but equally in the thought that we no longer had to commit large proportions of what would otherwise have been free time to study.

Responding to change
It has long been recognised that qualifications need to be kept up to date. The world changes, and actuaries need to know about the latest techniques and the latest legislation in their areas of work, not those that were current when they qualified. The professional conduct standards (PCS) of the actuarial profession state that members may not give advice unless they are satisfied of their personal competence in matters such as methodology, legislation, and local conditions. The new continuing professional development (CPD) scheme is the profession’s way of ensuring that actuaries remain competent throughout their careers.
Actuaries are not alone in requiring continued learning. Solicitors and accountants are both required to fulfil CPD programmes. Indeed, it should probably be seen as the norm among professions today. The Morris Review considered the improvements that needed to be made to the profession’s CPD scheme, but did not consider whether a CPD scheme was needed at all this apparently was so well accepted that it could be taken for granted.
There is, of course, already a CPD scheme for the actuarial profession, but fulfilling its requirements has been compulsory only for those actuaries who needed practising certificates. The new scheme is now in the final stages of preparation, and all actuaries will be required to comply with its requirements. Because of this it needs to be more flexible than the old scheme, so that actuaries can design their own CPD programmes to meet their own needs.

CPD requirements
To this end, actuaries will place themselves into one of four categories. The first is those who need practising certificates. Their requirements will change little. At present they are required to undertake 15 hours of ‘formal CPD’ a year; this concept is being replaced by ‘verifiable CPD’, with a slightly more flexible definition, but the requirement for 15 hours will remain unchanged. A new requirement is that the 15 hours must include at least two hours of developing professionalism skills, including attending a professionalism event at least once every ten years. As now, ten hours of the verifiable CPD will have to be relevant to the subject area of the practising certificate.
The second category will comprise all actuaries doing actuarial work in the areas covered by the profession’s exam syllabuses who do not need a practising certificate. The requirements will be essentially the same as for the first category, but there will be more flexibility in what is included: ‘personally assessed activities’ can be used instead of verifiable ones.
The third category covers all actuaries who are working, but who are not in the first two categories. This will comprise mainly those who use their actuarial skills in wider fields or who have moved away from actuarial work. It will include some actuaries who have moved to purely non-actuarial roles within life and general insurers. In finalising the requirements for actuaries in this category, the position of the hypothetical actuary who has become a plumber was much discussed. All actuaries are required by the PCS to remain competent for the work that they do, so actuaries in this category will still be required to complete a programme of CPD. However, because the needs of actuaries in this group will vary widely, they will be expected to define their own CPD programmes and determine whether they need to complete the requirements for professionalism skills that apply to the first two categories.
The fourth category is actuaries who are not working: this will include those who are retired and are on career breaks. They will not have to complete any CPD.

CPD objectives
The new scheme states that there are two objectives of the requirements. The first is that actuaries develop and maintain the professional skills they need. The second is that others can confidently trust that they have done so. In drawing up the new scheme we have been sympathetic to the views of those who regard private study as an appropriate form of CPD. These days a lot of actuaries need to keep abreast of new requirements from legislation and the FSA and spend hours poring over documents to do so. Similarly, the recent stress the profession has placed on financial economics has led many actuaries to study this privately. However, the private nature of much of this activity makes it invisible to others, so as CPD it does not fulfil the second objective. This is the reason that we have introduced the concept of ‘verifiable CPD’. This is CPD that can be observed by others. Attendance at appropriate events, ‘formal CPD’ in the current scheme, fulfils this criterion, but private study does not. However, if that private study is turned into an observable event, such as passing an exam, presenting on the subject to colleagues, or publishing a paper, then it becomes verifiable. Otherwise it will be regarded as a ‘personally assessed’ activity, which will be acceptable for the minimum amount of CPD needed in the second category but not in the first.
The new scheme includes a provision that allows the profession to require specific learning on designated topics. Any such requirement is likely to apply to only a subset of actuaries, such as those holding a particular practising certificate, and will help to ensure that all those concerned are familiar with particular developments, such as new legislation.

Fulfilling requirements
We expect that most actuaries will already be doing sufficient CPD to comply with the new scheme’s requirements. However, all actuaries will need to record their CPD in an appropriate format; we hope that this can be submitted online before long. During the consultation on revalidation of professional competence members were strongly opposed to excessive form-filling, so we will keep this task as simple as possible, but those who do want to fulfil the requirements by private study will need to provide enough details to make it clear that what they have done is sufficient and appropriate. The CPD records will be subject to scrutiny by the profession.

Part-time and pro bono work
The position of actuaries who work part-time or without pay has been much discussed, but it was eventually decided that they should not have any exemption from the requirements. The purpose of CPD is to keep actuaries up to date in their work, and actuaries whose skills and knowledge are out of date cannot deliver an appropriate service.

Next steps
The requirements will be published as soon as they are approved by the Faculty and Institute Management Committee (FIMC). There will then be a short period of consultation with members, although we do not plan to hold meetings since the scheme is simply the fulfilment of the revalidation of professional competence, which was fully consulted on. The requirements themselves are fairly short, and will be fleshed out in a revised CPD handbook, which should be published early next year. We expect that the requirements themselves will come into force on 1 July 2006.