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The Actuary The magazine of the Institute & Faculty of Actuaries

President's comment: Decent exposure

The enormous media and political interest in the recent News International ‘hackgate’ scandal has certainly put ethics at the centre of the public agenda. I suspect that this has led to many organisations in many fields re-thinking how they measure up in this regard.

So how does our profession perform in earning the public’s trust in our integrity?

In general, I think we stand up pretty well. As actuaries we have a reputation for professionalism and high standards in our work. Maintaining this public confidence is part of our ongoing strategy and, in implementing this approach, we need to ensure that we license and regulate the members of the Institute and Faculty in the best way possible, ensuring both public protection and upholding the strength and credibility of the profession.

Regulation of members in the public interest is one of the three key objectives of the Profession. In regulating its members the Profession acts as a self-regulatory body, to the extent that it also represents and promotes the interests of its members. It is, however, a hybrid model, because it is overseen by — and, to some extent, shares its regulatory powers with — the Financial Reporting Council (FRC). Although the Profession remains primarily responsible for regulation, it has an arrangement set out in a memorandum of understanding with the FRC whereby they undertake to regulate actuaries in three particular ways:

• First, the FRC oversees — through the Professional Oversight Board — the regulatory work undertaken by the Profession
• Second, the Board for Actuarial Standards of the FRC is responsible for setting technical actuarial standards
• Finally, the FRC — through the Accountancy and Actuarial Discipline Board — may investigate and bring disciplinary proceedings in relation to significant public interest complaints about actuaries, as an alternative to investigation and prosecution under the Profession’s own disciplinary scheme.

So, one might ask, what does that leave the Profession itself to regulate? The answer is a significant amount — the Profession is responsible for the setting and maintaining of ethical standards, including the Actuaries’ Code, all compliance activity, including the continuing professional development (CPD) regime, and for enforcement arising from the vast majority of professional disciplinary complaints. In addition, because the FRC’s role is limited to the United Kingdom only, the Profession is responsible for regulating its members outside this geographic area.

Together with the FRC, the Profession is working to develop a comprehensive set of ethical and conduct standards, guidance and other materials for practising actuaries — for example, in the areas of conflicts and whistle-blowing and to clarify the expected skills of practising actuaries, and establish a framework for developing, maintaining and confirming professional competence.

CPD is one of the topics on which I get high volumes of mail, and the failure to comply with CPD requirements provides the major source of cases for the Disciplinary Board. Both of these factors were taken into account in the revised CPD scheme, which has been updated for 2011/12. The Profession’s objective is to develop a CPD regime that is simpler and much more focused on relevant development, while also having sufficient ‘teeth’ to ensure its effective enforceability. Since 1 July 2010, members have fallen into only two CPD categories:

Category 1: All members holding a UK Practising Certificate
Category 2: All other members in paid work (other than some limited exceptions where there is no public interest in requiring that member to complete CPD).

There is also no longer any specific requirement as to the breakdown of hours between technical and professionalism skills for Category 2 members. Instead, members must make their own assessment of the type of development that would best suit his or her specific area of work. This change, when taken with the ability to include some element of private study within the requirements, should make it easier for members based in geographical locations outside major UK cities to source relevant CPD.

Changes are planned soon for the professionalism events that aim to improve content and delivery. Other courses will be tailored to provide wider training in a number of practice areas, making it far simpler for members to comply with the CPD requirements.

The Profession takes its regulatory and standard-setting responsibilities very seriously. We are looking to improve the ways we engage all our members in our shared responsibility to live up to our declared ethics and codes of conduct. This is, after all, at the heart of our role as a professional body and our vision to serve the public interest.