Proposals for an enhanced system to promote the quality of actuarial work ACA Sessional Meeting London, 13 September 2018
Panel Emma Gilpin, Head of Regulatory Policy, IFoA Andrew Chamberlain FIA, AMS Project Board Des Hudson, IFoA Regulation Board Chair
Emma Gilpin Head of Regulatory Policy
Introduction Royal Charter • Regulate the actuarial profession in the public interest • Uphold and demonstrate high standards of technical competence and ethical behaviour 4 12 September 2018
Rationale Currently IFoA does not monitor the quality of Members’ work. Gap in the information available to the IFoA to inform its regulatory role Proposals are not in response to any identified issues with quality of actuarial work Growing public scrutiny Risk for profession 5 12 September 2018
Summary of Proposals Introduce an enhanced system to gather information about the work being carried out by IFoA Members Provide evidence of the quality of actuarial work Promote best practice Develop and adapt training, education, standards and guidance 6 12 September 2018
Proposed Approach Risk based Category Type of Review Scope of Review A Direct review of actuarial work on Work of IFoA Practising Certificate (PC) a regular basis holders relating to that PC role. Recognition of roles identified by legislation or regulation as having some particular importance Significance in terms of the public interest 7 12 September 2018
Proposed Approach Risk based Category Type of Review Scope of Review A Direct review of actuarial work on Work of IFoA Practising Certificate (PC) a regular basis holders relating to that PC role. Take into account extent of other activities that already apply to the PC holder’s work • Quality Assurance Scheme (QAS) accredited • Internal audit • Other forms of regulatory monitoring 8 12 September 2018
Proposed Approach Risk based Category Type of Review Scope of Review B Thematic reviews of actuarial Any actuarial work potentially covered. Includes work outside the scope of the IFoA’s work PC Scheme. Evidence-based studies focused on particular theme, issue, or question Within and outside scope of PC Scheme Areas of work with some significance in terms of the public interest Carried out by agreement (IFoA Members and employers) Anonymous where possible (actuary’s name not disclosed to the reviewer) 9 12 September 2018
Proposed Approach Risk based Category Type of Review Scope of Review C Enhanced general information Any actuarial work potentially covered. gathering activities E.g. questionnaires, surveys, analysis of insights shared by co- regulators Scheduled and ad hoc Thematic 10 12 September 2018
Proportionate Approach Profession-led regulation - robust but appropriately targeted and proportionate Scope of proposals is broad but additional requirements are narrowly focussed (reserved work) 11 12 September 2018
Impact Time Minimised by risk-based approach to frequency and duration of visits Cost Funded in part from existing revenue streams FRC contribution 12 12 September 2018
Benefits Improve effectiveness of actuarial regulation Enhance the relevance of standards, guidance, and educational material Reinforce public reputation Enhance the credibility of the PC Scheme Assurance of the actuarial quality of the work undertaken in relation to these important public interest roles 13 12 September 2018
Benefits Mechanism for independent feedback to Members Designed for the profession by the profession Maintain effective and accountable self-regulation (subject to independent oversight) Ongoing reinforcement and continuous improvement 14 12 September 2018
Andrew Chamberlain FIA Actuarial Monitoring Scheme Project Board
Journey so far Project Board Practice FRC Boards and Committees Feedback /Review Regulators Council Focus Group Members 16 12 September 2018
We have seen at Lloyd’s that review and feedback works: Statements of actuarial opinion: fact based feedback and examples of good practice has led to increased “scores” since introduction especially in “full review” period 17 12 September 2018
You may have some questions…. 18 12 September 2018
Should I be worried? Have you anything to hide? Have you the time? Does it create confidentiality problems? How will I explain this to my firm? Do you think it makes sense? 19 12 September 2018
Is it proportionate? Category A will directly impact UK PC holders only: 7% of UK Members are PC holders 70% of IFoA Practising Certificates are Scheme Actuary PCs - 77% of Scheme Actuary holders currently employed by a QAS accredited organisation 30% of IFoA Practising Certificates are insurance PCs - Many will be subject to PRA, FCA and/or Lloyd’s supervision 20 12 September 2018
Category A: Direct Review Mandatory for all IFoA Practising Certificate (PC) holders Majority of “public interest” covered by PC roles Review visit (IFoA Review Team) so “onsite” Interview between the Review Team and PC holder 21 12 September 2018
How can professional judgements be evaluated effectively? Interviews, reviews of key pieces of work Focussed on requirements of actuarial professional standards Flexibility to allow for critical exercise of professional judgement Not substituting one view for another but assessing whether the decisions made were reasonable 22 12 September 2018
H ow often will the reviews be for “Cat A”? Doesn’t have to be every year Duration/frequency dependent on type of PC holder number of PC appointments particular work involved QAS accreditation internal or external audit Maybe previous findings “Every few years” makes sense 23 12 September 2018
Wider Thematic Reviews also make sense Look at particular topics, roles and/or areas of work Not limited to work within scope of PC Scheme or UK work Sources for themes Risk analysis (Regulation Board / FRC) Risk Perspective document (JFAR) Insights from regulators Other regulatory activities What would you select as thematic reviews….today? 24 12 September 2018
What are we going to get from this? Report to PC holder Summary of findings Best practice recommendations Report to IFoA Regulation Board Emerging themes or issues High-level, anonymised reports for generic findings Key point is to make sure there is value for the participants/profession 25 12 September 2018
Opportunity for our Members Project Board and Regulation Board recognise there may be alternative approaches Welcome your ideas and suggestions Please do let us know…chance to make a real difference And please be constructive where possible!! 26 12 September 2018
Consultation Consultation open for responses until 28 September 2018 Responses can be submitted online at: http://bit.ly/IFoAMonitoringConsultation Submissions can also be made by email or post: Actuarial Monitoring Scheme The Institute and Faculty of Actuaries Level 2 Exchange Crescent 7 Conference Square Edinburgh, EH3 8RA AMS@actuaries.org.uk 27
Any Questions? 28 12 September 2018
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