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The Actuary The magazine of the Institute & Faculty of Actuaries

Regulation: Ethics: Made to measure

On 25 February 2010 at Staple Inn, the UK Inter-Professional Group and Inter-Disciplinary Ethics Applied (IDEA) organised a one-day conference, entitled Public trust in the professions, which examined the ethics in the Profession.

The conference brought together representatives of a number of professional groups to debate and consider:
>> The responsibility of professions to work in the public interest
>> The public perception of professions
>> Issues of accountability, responsibility, integrity, communication.

The keynote speaker was Sir Philip Mawer, chair of the Profession’s own Professional Regulation Executive Committee, who made a compelling and well-received speech that argued that the right of professions to self-govern was dependent on them being able to generate and maintain trust with the general public. The Actuaries’ Code, launched last year, simplified the previously complex set of ethical standards that members of the profession were bound by and is a straightforward code based on five key principles of integrity, competence and care, impartiality, compliance and open communication. The intention behind this move, as advanced by Sir Philip at the time, was that a principles-based system would better enable members to meet the needs of modern business.

His comments were echoed by Nigel Masters and Ronnie Bowie who made the case that individually and collectively, the profession’s strongest asset is the trust we have with those we serve. The Code is not only a commitment to the standards to which we expect our members to adhere, but also a public demonstration that we do not take this trust for granted.

The idea of trust was the principal focus of Sir Philip’s speech. Accepting the perception that public trust in the professions has eroded over the last 20-30 years, he examined some potential causes: “The effect of widely publicised failures in ethical standards or malpractice combined with widespread cultural changes including less deference and a greater tendency to question may be at the root of this.”

From this starting point, Sir Philip considered the nature of professional regulation. The Professional Associations Research Network (PARN) has identified three types of professional regulation:
1. Entry standards
2. Complaints and discipline
3. CPD and positive support for ethical behaviour.

The first two are, arguably, the more traditional methods. The Profession has long prided itself on having some of the most rigorous and challenging entrance examinations. Once an actuary is confirmed as a fellow of the Profession, he or she is bound by disciplinary regulations. Professional misconduct would be reported and investigated and those found in breach of these regulations would be subjected to the stiffest penalties.

There has, however, been a recent recognition that regulation by exception is not enough and it must be accompanied by proactive regulation. This is where CPD and positive support for ethical behaviour come to the fore.

Such thinking, argued Sir Philip, is reflected in the approach of the Profession:
>> We are moving from a rules-based to a principles-based regime, but find ourselves wrestling with how and when to supplement the principles with guidance to members on specifics.
>> We are increasingly seeing the need to emphasise proactive quality assurance mechanisms in the work place as a means of supplementing reactive regulation through codes and disciplinary schemes.
>> We are looking to define the skill-sets or competencies we expect of actuaries, not just at the point of entry but throughout their careers.
>> We are increasingly conscious of the importance of those skill-sets that include managerial and presentational skills and are about aspects of professionalism in its widest sense.
>> We are considering moving from inputs-based to outputs-based CPD and, as part of this process, are acutely aware of the need to improve the range and quality of the CPD we offer in professionalism and other skills.
>> We are very much aware of the importance of the working environment to the professional development of actuaries and, while we have traditionally regulated our members as individuals, we are increasingly looking to work closely with firms in advancing our regulatory agenda.

The pillars of professional regulation must be seen within the wider context of the culture and ethos of a profession. It is the culture of a profession that gives the three pillars their foundation, so training and CPD must not only be about the learning of skills but of the understanding of the culture and the values of that profession too.

Although trust in the professions may be weaker than it was, Sir Philip maintained that those in the professions had to work hard to maintain and rebuild it through their own ethical behaviour and by reminding government, media and the general public of the undoubted contributions the professions make to British civil society.


The full text of Sir Philip’s speech can be read at www.actuaries.org.uk/regulation/Mawer_Public_trust_20100225.pdf


The role of ethics
Professor Chris Megone and Jim Baxter take a look at the role of ethics in the professions. The feature can be found at www.the-actuary.org.uk/874366


Professor Chris Megone is director and Jim Baxter is development officer at Inter-Disciplinary Ethics Applied (IDEA), a Centre for Excellence in Teaching and Learning (CETL) based at the University of Leeds