I would like to thank Simon Carne for his article Is Regulation Still Good for us? (The Actuary, March 2014), putting more eloquently and succinctly than I could ever have done what I have feared for some time. Carne has cleverly sidestepped any accusations of 'self-interest' to highlight what should be a real concern to the profession. It is interesting that the article appears in the same issue as Nick Hewer's excellent interview and other items considering how the profession can improve its public image and influence.
Generally, I think that regulation is good and much of the new regime is excellent. However, through over-regulation and what I fear is a knee-jerk reaction to press criticism (mainly in the pensions industry) we are in danger of regulating ourselves out of a job. As someone who now works on the fringes of actuarial work I see this on a day-to-day basis. We are now very close to a situation whereby advice that could be given by me or a colleague, who's not an actuary, is more easily provided by my colleague since he does not have to comply with the profession's regulations. Not only does this make the advice cheaper (there is less compliance work to do) but it is also, paradoxically, easier for the client to understand (fewer caveats and warnings) and quicker for our employer to supply. The client may lose some actuarial insight but they don't know what they are missing.
Carne points out the difference between the approach being taken for actuaries and other professions and this is important to bear in mind. In many areas now we face competition from other professionals. One only needs to look at the area of pension scheme funding to see how the influence of accountants is driving behaviours more than actuarial advice. If we continue to constrain actuaries in this way then we will inevitably fall further behind in promoting our services through traditional and wider areas.
The fifth principle underlying the IFoA's regulatory strategy is:
"Targeted: regulatory action should be focused on identified problem(s), such as to minimise side effects."
I fear that we are regulating to address a problem that does not exist. I see no evidence of a lack of trust in the profession and Nick Hewer's interview supports this view. Rather than "minimise side effects" I fear that, if it continues to increase, regulation will have its own side effect of further sidelining the profession. We all need to take some responsibility to ensure that this does not happen.
John Reeve 12 March
The editor welcomes readers' letters but reserves the right to edit them for publication. Please email [email protected]. The deadline for receiving letters for the May issue is 14 April 2014.