Professional Skills Training for Experienced Members

Conflicts of Interest 2013-2014

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CONTENTS

The Institute and Faculty of Actuaries

Professional Skills Training (1 – 5)

Conflicts of Interest

Useful Resources

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The Institute and Faculty of Actuaries

The Institute and Faculty of Actuaries (IFoA):

has approximately 24,000 members, of which some 40% are based outside the United Kingdom.

is a self regulated professional body for actuaries, with regulatory oversight from the Financial Reporting Council (FRC), the UK’s independent financial regulator.

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Professional Skills Training (1)

Why?

To protect the public interest and to promote public confidence in the work of actuaries. The IFoA’s Professional Skills Training has been developed to suit all members at various points in their careers and comprises 3 stages:

Stage 1 – Online Professional Awareness Test (OPAT)

Stage 2 – Professional Skills Course (PSC)

Stage 3 – Professional Skills for Experienced Members

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Professional Skills Training (2)

How?

By ensuring our members are competent, not only in the technical skills required of an actuary, but also that they have the requisite professional skills.

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Professional Skills Training (3)

What?

Stage 3 - Professional Skills for Experienced Members: the IFoA requires experienced members to do two hours of verifiable Professional Skills Training each year.

The two hours of training can be acquired by viewing online content or attendance at events.

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Professional Skills Training (4)

When?

The new annual requirement for experienced members is effective from 1July 2013.

The year is aligned with the CPD Year i.e. 1 July to 30 June, or for members who hold Practising Certificates from the IFoA; the year is aligned with their Certificate renewal. Members in scope for the purposes of the IFoA’s CPD Scheme may count the hours completed towards meeting their requirements under the Scheme.

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Professional Skills Training (5)

Content The IFoA has developed new interactive case study-based content

designed to bring the Actuaries’ Code to life; illustrating challenges which can arise in your daily and/or professional life.

This will be delivered online via the IFoA’s website as well as at events.

The online content includes both generic and practice specific video clips, supported by learning and discussion points, and tools and tips to assist in identifying and managing conflicts.

The main theme for 2013-2014 is conflicts of interest and the impartiality principle to reinforce the new regulation and guidance published in July 2012.

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Conflicts of Interest (1)

The IFoA published new guidance on conflicts in 2012.

The guidance does not impose any new obligations upon you or your employer, but builds and elaborates on the provisions of the Code in relation to conflicts of interest and sets out the IFoA’s views of good practice in relation to conflicts of interest and how to manage those conflicts.

It is designed to assist you in assessing whether a conflict exists and to determine what steps to take to manage the conflict appropriately.

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Conflicts of Interest (2)

The guidance comprises:

Conflicts of interest: a guide for actuaries, and

Conflicts of interest: a note for pension scheme trustees

In addition, new conflicts of interest provisions have been included in APS P1: Duties and responsibilities of pensions actuaries (APS P1) which was published in July 2012, and effective from 1 July 2013.

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Conflicts of Interest (3)

Specific requirements in sections 5 and 6 are imposed on Scheme Actuaries and others involved in pensions work in relation to the production and maintenance of a conflicts management plan, and of the specific restriction on the types of advice which may be provided to trustees and employers.

APS L1: Duties and responsibilities of life actuaries, (APS L1) also includes conflicts of interest provisions at section 7, which life actuaries should be aware of. With-Profits Actuaries and Actuarial Function Holders should also be aware of the rules on conflicts of interest in SUP 4.3 of the FCA Handbook.

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Conflicts of Interest (4)

While there are no practice area specific conflicts of interest provisions for General Insurance, Enterprise Risk Management, Finance and Investment and Health and Care actuaries, they are reminded of their general obligations as regards conflicts of interest in the Actuaries’ Code.

A further guide for employers of actuaries is being developed along with a ‘Conflicts Toolkit’ to help employers of actuaries run their own in-house Conflicts of Interest sessions and will be published in the second half of 2013.

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Conflicts of Interest (5)

The Actuaries’ Code states:

Impartiality: members will not allow bias, conflict of interest, or the undue influence of others to override their professional judgement

3.1 Members will ensure that their ability to provide objective advice to their clients is not, and cannot reasonably be seen to be, compromised.

3.2 A conflict of interest arises if a member’s duty to act in the best interests of any client conflicts with:

a) the member’s own interest;

b) an interest of the member’s firm; or

c) the interests of other clients

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Conflicts of Interest (6)

3.3 Members will take reasonable steps to ensure that they are aware of any relevant interest, including income, of their firm.

3.4 Members will disqualify themselves from acting where there is a conflict of interest that cannot be reconciled.

3.5 Members will document the steps they have taken to reconcile a conflict and will agree those steps with their clients if they would be effective without agreement.

3.6 Before accepting any assignment members will consider carefully whether they should consult with any member who previously held such a position with the client, to establish whether there might be any professional reason why the assignment should be declined.

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Conflicts of Interest (7)

Client

The term ‘client’ should be considered in a wide context, so that it includes not only your existing client (or recipient of your advice and/or services) but may also include for example:

former clients,

potential clients, and

those affected by your advice.

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Useful Resources

There are a variety of additional resource documents on the IFoA’s website which you may wish to be aware of and refer to as required.

These are signposted on the Professional Skills pages and can be viewed via the onscreen buttons when working through the videos.

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