In conversation features@theactuary.com
Rules of
engagement Ben Kemp and Ann Muldoon discuss how the IFoA and the Financial Reporting Council work together to regulate and support actuaries. Chaired by Richard Purcell; written by Cintia Cheong
The Actuary invited Ann Muldoon, director of actuarial policy at the Financial Reporting Council (FRC), and Ben Kemp, general counsel and director at the IFoA, to discuss how the two bodies have worked together since 2006 to regulate the profession, and to explain the latest developments and big issues on their agenda.
The FRC has a much wider remit besides actuarial standards, and was deemed an appropriate home for setting technical actuarial standards because of its responsibilities in regulating other financial bodies, such as accountants and auditors.
Why do we set standards, and what’s changing? Describe the regulatory roles of the IFoA and the FRC BK Ben Kemp (BK)
We aim to discharge our public interest responsibility by regulating appropriately but proportionately all of our members, both in the UK and overseas. This begins with the qualification framework, the entry point to the profession, and includes the setting of standards and guidance as well as professional support and training and, if necessary, enforcement. In relation to the UK, we share the standardsetting responsibility with the FRC, which issues technical standards, while we are responsible for ethical standards. We aim to be outcome-focused and risk-based in our regulatory approach. This, in some ways, is more challenging for both the regulator and the regulated but it does, we believe, lead to more effective, targeted and more proportionate regulation, while allowing for and encouraging the exercise of professional judgment. We have a dual role in serving and supporting our members. These objectives are complementary because serving the public interest is also to the collective benefit of the profession.
AM Ann Muldoon (AM) The FRC is responsible for setting technical actuarial standards (TASs), which sit alongside the ethical standards and code of conduct that the IFoA sets. We provide oversight of the profession and ensure that it can regulate itself in an appropriate manner. Our work is governed by the reliability objective. It effectively sets a requirement; we seek to ensure that users of actuarial information can place a high degree of reliance on that information. That is the overarching principle that guides the standards that we develop and should guide individuals on how they interpret and apply them. 14
THE ACTUARY • June 2016 www.theactuary.com
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The overarching standard is the Actuaries’ Code. It sets out our core professional principles – for example, integrity and the importance of effective communications and competence – really core values. We are about to launch a review of the Actuaries’ Code, to ensure it remains up to date and fit for purpose. We set ethical standards to support and amplify the principles in the Code – for example, APS X2 (Actuarial Profession Standard Cross Practice 2), on peer review. Below that, we have non-mandatory guidance, educational and training material. We engage actively with supranational associations in relation to the development of international model standards, supporting the global recognition and development of actuarial science, including its increasingly crucial role in developing markets around the world.
BK
AM The FRC is more focused on the TAS framework for actuaries working in the UK. Under our current framework, we have three generic technical standards: data; modelling; and reporting. Then we have specific standards on insurance, pensions, funeral plans and transformations. The year before last, we consulted and created a new overarching framework. The outcome of this consultation is to replace the three generic technical standards with TAS100, which will apply to all areas of technical actuarial work, and will include some information that is currently in the specific standards. In deciding on the scope of the specific standards, we applied a risk-based approach. While we may have done that on an informal basis in the past, we’ve formalised it, and it’s also part of the consultation paper we will be issuing. We’ve tried to identify areas of technical actuarial work that pose a high risk of public interest. For example, one of the areas of work within PHOTOGRAPHY: SAM KESTEVEN
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