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