The Institute and Faculty of Actuaries has recently published new guidance on conflicts of interest1 for all members and included new provisions on the subject in the Actuarial Profession Standards for life and pensions2.
Along with the Actuaries' Code, this guidance is intended to help actuaries manage any conflicts that may arise. Two potential scenarios are outlined below.
l Anthony engaged you to advise on a pensions mis-selling claim and to liaise with Cleopatra Insurers Ltd to obtain compensation. You ran a very busy practice at the time and did not have time to undertake proper conflict checks within your firm before accepting the engagement. When the time came for you to claim compensation, you discovered that Marcus, another actuary in your firm, had previously advised Cleopatra Insurers Ltd on their approach to determining mis-selling compensation.
l You are a scheme actuary and act for both the trustees and the employer of the Octavian Pension Scheme. As yet, you have not provided any advice that relates to the funding of, or has a direct bearing on, the benefits payable under that scheme3, but you have provided both parties with other advice and information about the scheme over the past six months. Last month, you were asked by the employer to provide detailed advice on a particular issue that affected both parties and that enabled the employer to make an informed choice. However, the employer asked you not to provide that information to the trustees, so you didn't - after all, they're not paying your fees.
What do these two scenarios have in common? It's not just that there's an actuary involved - clearly, conflicts of interest have arisen in both cases. Using the conflicts guide, you can analyse both cases to:
l Identify (potential) conflicts correctly: whether arising from your own interests or those of different clients.
l Assess whether that conflict could prevent you from acting, or is capable of being reconciled with careful management and planning.
l If it is capable of being reconciled, identify the steps required to manage (potential) conflicts appropriately. These are likely to include the early disclosure of the (potential) conflict to the clients concerned and the agreement of an appropriately worded plan for conflict management.
Remember, conflicts do matter and they can arise at any time. Moreover, it is your professional responsibility to ensure they are identified and acted upon appropriately. This will be in the interests of both yourself and your clients.
Read our analysis of the two cases used here as illustration and see the guidance and new provisions at bit.ly/NlVH8z
2 see APS P1 'Duties and responsibilities of members undertaking work in relation to pension schemes' and APS L1 'Duties and responsibilities of life assurance actuaries'
3 see APS P1 'Duties and responsibilities of members undertaking work in relation to pension schemes' v2.0, paragraph 5.3