Professionalism Event forQualified Actuaries
Friday 16 July 2010
Chris DaykinPast President, Institute of ActuariesVice-Chairman, Groupe Consultatif
Aims of this event
to think about topical professional matters, away from day-to-day pressures
to share experiences and views
to keep up-to-date in your understanding of professional as well as technical matters
to consider your responsibilities to your employer, clients, the public and the actuarial profession
Professionalism for qualified actuaries
professionalism is a key component of actuarial education (separate topic in IAA Core Syllabus)
important to devote time to learning about professionalism as well as technical skills
need to develop a professional attitude and way of thinking – there are often no simple black and white answers
Added responsibilities for more experienced actuaries
setting a good example/professional tone of firm
management of (and advice to) colleagues
closer involvement in agreeing scope and terms of engagements
higher profile roles – more potential for adverse publicity or dissatisfaction of some party
greater likelihood of exposure to conflicts
dealing with adverse behaviours/attitudes of others
reserved roles and contact with regulators
Some current professional issues for actuaries
integrity
conflicts of interest
policyholders/shareholders
trustees /employers
communicating risk and uncertainty
peer review
commercialism in conflict with professionalism
criticising other actuaries
ensuring competence for the task in hand
Characteristics of a profession
6 key characteristics of a profession are:
• members join together to apply a specialised skill• the skill has been developed through appropriate
education• members have a special relationship with those
served (fiduciary relationship)• recognised by the public as an authority in field of
expertise, able to serve the public interest• standards of competence and conduct of members• high level of integrity by members in exercising
judgement
What do members, clients and the public gain from the existence of our Profession?
Clients, Public
specialist skills
quality control
high standards of service
integrity
input into public debate
statutory roles
Members
agreed standards
mutual support
lobby strength
status
income
What is expected of us as professional people?
demonstrating and applying specialist skills reliable up-to-date technical knowledge and advice complying with the profession’s code of conduct complying with legislation and standards of practice performing statutory roles to a high standard behaving ethically exercising judgement with high level of integrity communicating well having due regard to the interests of those affected
What is expected of us as professional people? (continued)
respecting and supporting others relationship of trust with clients being reliably confidential life-long learning – developing our knowledge and skills having no adverse disciplinary record assisting the profession to serve the public interest contributing to public debate contributing to the work of the profession
In our Profession, what must we comply with?
The Profession’s Controls
code of conduct
qualification standards
CPD scheme
standards of practice
recommended practice
educational notes
disciplinary scheme
External Controls
legislation
regulators
accounting standards
In our Profession, how should we contribute?
teach or mark exams participate actively in local actuarial association write a paper for, or speak at, a conference or seminar become a member of a committee join a working party or research group represent the association on an IAA or GC Committee
Your Profession Needs You
Professionalism in Practice
Professionalism concerns behaviour of professionals and the profession which will:
maintain the reputation and integrity of the profession
serve the interests of our clients
serve the public interest (common good)
Vision of IAA
To seek worldwide recognition for the actuarial profession
as a major player in the decision-making process
within the financial services industry,
in the area of social protection
and in the management of risk,
for the well-being of society as a whole.
Professionalism at two levels
professional issues facing the profession, e.g. responding to regulators helping to educate government, the media and public ensuring that the profession is ‘fit for purpose’
individual matters of professionalism, e.g. high ethical standards adhering to the code and standards of practice reporting if necessary (whistle-blowing)
Professionalism for the profession
ensuring profession operates in public interest …for the well-being of society as a whole setting high standards ensuring members comply with code/standards making sure actuaries stay competent/up-to-date educating policy-makers and opinion-formers engaging with regulators and law-makers
Professionalism for the individual - 1
fiduciary relationship with client or employer
focusing on how issues may affect stakeholders
and bringing such issues to attention of the client
addressing the questions the client should ask
or which those affected may ask
defining clearly the scope of the advice
understanding and communicating well
operating within competence and experience
Professionalism for the individual - 2
readiness to speak your mind
not just doing what the client tells you to do
integrity in advice
prepared to report (blow the whistle) if necessary
not taking a narrow technical view
operating within code and standards of practice
demonstrating good judgement
Generic professional issues
economy with the truth
Generic professional issues
economy with the truth
answering the question as asked …
???....
Generic professional issues
economy with the truth
answering the question as asked
not making clear the limits of advice
Generic professional issues
economy with the truth
answering the question as asked
not making clear the limits of advice
not considering the wider impact
…on third parties
Generic professional issues
economy with the truth
answering the question as asked
not making clear the limits of advice
not considering the wider impact
…on third parties
failing to blow the whistle
Professionalism Event forQualified Actuaries
Friday 16 July 2010
Code of Conduct
Minimum Code of Conduct of IAA
Having a code of conduct meeting the IAA minimum is one of main requirements to be fulfilled before an actuarial association can be admitted as a Full Member Association of the IAA
Groupe Consultatif also requires the same basic code of conduct
Minimum Code of Conduct of IAA (a)
An actuary shall perform professional services with integrity, skill and care (client responsibility) fulfil professional responsibility to client or employer
fiduciary relationship with client
Minimum Code of Conduct of IAA (b)
An actuary shall act in a manner to fulfil the profession’s responsibility to the public (common good) uphold the reputation of the actuarial profession
not engage in false or misleading advertising or business solicitation
Minimum Code of Conduct of IAA (c)
An actuary shall co-operate with others serving the actuary’s client or employer no disclosure of confidential information
Minimum Code of Conduct of IAA (d)
An actuary shall perform professional services only if competent and appropriately experienced an association may permit derogations, e.g.
where client would be disadvantaged if advice denied
where actuary is working with another fully competent and experienced actuary
Minimum Code of Conduct of IAA (e)
An actuary is responsible for conforming to all applicable practice standards conform to relevant binding (mandatory) practice-
related guidance or standards issued or endorsed by actuary’s Association
take into account any non-binding (recommended) guidance
know the requirements of the relevant Code of Conduct
Minimum Code of Conduct of IAA (f)
An actuary shall, in communicating professional findings, show that he/she takes full responsibility for them indicate whether the actuary is available to provide
supplementary information and explanation
Minimum Code of Conduct of IAA (g)
An actuary shall, in communicating professional findings, identify the client and the capacity in which the actuary is acting
Minimum Code of Conduct of IAA (h)
An actuary shall not perform professional services involving the actuary in an actual or potential conflict of interest unless ability to act is unimpaired (no inhibition);
and
there has been full disclosure of actual or potential conflict
Associations may require that an actuary may only act in these circumstances if all principals have expressly agreed to it
Minimum Code of Conduct of IAA (i)
When asked to take on professional services previously provided by another actuary, the actuary shall consider whether it is appropriate to consult the previous provider to ensure there are no professional reasons to decline to take it on
Minimum Code of Conduct of IAA (j)
An actuary shall disclose to the client any sources of material income that are related to any service on behalf of the client, as soon as such a source is identified
Minimum Code of Conduct of IAA (k)
An actuary shall be subject to the disciplinary procedures for his/her Association and, subject to any right of appeal, shall accept any judgement passed or the decision of any appeal procedure
The Actuaries’ Code(Institute and Faculty of Actuaries)
Chris Daykin
The Actuaries’ Code
principles-based
small number of principles
supported by Actuarial Profession Standards
actuaries who disregard the principles…
or operate outside their reasonable interpretation
…may be guilty of misconduct
The Actuaries’ Code (effective 1 October 2009)
Integrity
Competence and Care
Impartiality
Compliance
Open Communication
The Actuaries’ Code
Integrity
Members will act honestly and with the highest standards of integrity
show respect
confidentiality
honest, open and truthful
The Actuaries’ Code
Competence and Care
Members will perform their professional duties competently and with care
understand who your client is
appropriate level of knowledge and skill
care
new appointments
keep competence up to date (CPD)
The Actuaries’ Code
Impartiality
Members will not allow bias, conflict of interest, or the undue influence of others to override their professional judgement
objective and uncompromised advice
avoidance/management of conflicts of interests
consulting with previous adviser
The Actuaries’ Code
Compliance
Members will comply with all relevant legal, regulatory and professional requirements…..
challenging non-compliance
speaking up
The Actuaries’ Code
Open Communication
Members will communicate effectively and meet all applicable reporting standards
clear and appropriate communication for the intended audience
the purpose of the communication
the significance of the communication for the audience
the capacity in which the member is acting
accurate and not misleading
Personal Responsibility
discuss problems with colleagues …
… or a senior member of the profession
think through all aspects carefully
listen to your conscience
take your decision
have your work reviewed
Generic Case Studies
Report back from groups and discussion
Usma, 16 July 2010
Privileged information (CS2)
Mortality investigations
Duties carried out by actuaries in your company
Calculation of reserves on particular policy types
Salary levels of actuaries in your organisation
Current product development being undertaken
Detailed bases for valuations you carry out
Premium revisions to take into account higher commission and recent tax changes
Challenging another actuary (CD1)
is it appropriate to disagree with another actuary?
how should you handle such a situation?
what conditions apply to making criticisms?
should you report the other actuary?
Ethical concerns (CD2)
What should Jack have done differently?
How did he justify doing what he did?
How could he have retrieved the situation?
What lessons can we learn from this case?
Reporting (blowing the whistle) (CD3)
What should Simon do when he overhears?
Should he report the situation? To whom?
Is the liability valuation relevant?
What are his responsibilities?
Professionalism Event forQualified Actuaries
Friday 16 July 2010