The IFoA: telling its members to “do as I say, not as I do”?

The Institute and Faculty of Actuaries had (in my view) built up a very good reputation as a professional body that acted in the public interest by educating its members well, demanding high standards of work from them, and acting as a source of impartial balanced analysis and advice on financial and social matters, especially insurance, pensions and investment. Having been a member for 34 years (30 of which as a Fellow), it saddens me that several IFoA recent actions have not been in line with that.

What does the IFoA demand of its members?

As well as adherence to technical standards, it demands that its members adhere strictly to its Actuaries’ Code, with its 6 principles of:

Integrity – Members must act honestly and with integrity.

Competence and care – Members must carry out work competently and with care.

Impartiality – Members must ensure that their professional judgement is not compromised, and cannot reasonably be seen to be compromised, by bias, conflict of interest, or the undue influence of others.

Compliance – Members must comply with all relevant legal, regulatory and professional requirements.

Speaking up – Members should speak up if they believe, or have reasonable cause to believe, that a course of action is unethical or is unlawful.

Communication – Members must communicate appropriately.

5.2 of the Actuaries’ Code says:

Members must report to the Institute and Faculty of Actuaries, as soon as reasonably possible, any matter which appears to constitute Misconduct for the purposes of the Disciplinary and Capacity for Membership Schemes of the Institute and Faculty of Actuaries and/or a material breach of any relevant legal, regulatory or professional requirements by one of its Members.

Also, under the current version (2018) of its Disciplinary Scheme paragraph 4.16:

Every Member has a duty to disclose promptly to the Institute and Faculty of Actuaries any conviction, adverse finding, judgement or determination or disqualification order of a type referred to in rules 4.8, 4.9, 4.10 or 4.11, to which she/he is subject.

the IFoA expects its members to report promptly to it a wide variety of adverse findings, including disciplinary findings by professional bodies, criminal convictions, but also any adverse court judgment (since that is what is referred to in 4.10 e)) seemingly on any matter whatsoever (so this would seem to encompass not only judgments about debts but also boundary disputes, a family court ruling about divorce or child custody, inheritance disputes, etc.).

You might think: why shouldn’t the IFoA expect its members to report such a wide range of possible misconduct activities to it? Well:

Firstly, I don’t think the equivalent US actuarial organisations (the SOA, Society of Actuaries, or CAS, Casualty Actuarial Society) police their members’ lives outside work to anywhere near the same extent. Their codes of conduct both date from 2001 and with regard to conduct outside work only refer to not committing professional conduct or acts that reflects adversely on the actuarial profession (e.g. for the SOA, Code of Professional Conduct Annotation 1.4 from Precept 1 Professional Integrity):

An Actuary shall not engage in any professional conduct involving dishonesty, fraud, deceit, or misrepresentation or commit any act that reflects adversely on the actuarial profession.

Are SOA or CAS actuaries less professional than IFoA ones? Is the IFoA claiming that its members are so much more professional than SOA or CAS ones? If so, then I think the governing bodies of the SOA and CAS would probably welcome the opportunity to challenge that.

Why is it that the IFoA has convicted on average a staggering 7 times as many members of “misconduct” than the SOA from the figures available (for the IFoA over the last 3 years, for the SOA over the last 10 years). (No figures seem available from the CAS website for some reason).

Why has the IFoA become so out of line with the SOA and CAS? Is it because it polices members’ lives outside work to a significant degree? (If not, what other causes are there?)

Secondly, when was it ever made clear to IFoA members that their professional body would police non work lives to such a degree? The IFoA now seems to be interpreting the Actuaries’ Code version 3 (introduced in 2019) to have a much wider scope than the previous one – despite making no mention of any widening of scope in the published reasons for reviewing the Code. (See page 2 of the Summary of Consultation Responses). All it takes is for someone to take offence at something a member has said, even outside their work, for this to be treated as a potential breach of the Code.

Actuaries are trained to analyse changes in risk and return tradeoffs – this widening of scope, combined with the policy change on disciplinary costs enacted last May (see Concern 1 in my letter to the Disciplinary Board) is a massive increase in risk for no extra return.

Remember that as far as the IFoA is concerned, it does not matter – except as a mitigating factor when considering what sanction(s) to impose – how professional an actuary is in his or her work, or how small a percentage of the life of the member the alleged misconduct relates to, if it appears to constitute misconduct, or is an adverse civil court judgment, it has to be disclosed to the IFoA. If 99% of a member’s life is admirably professional, but 1% of it appears to be notifiable under the IFoA’s very wide rules, then that 1% must be notified to the IFoA.

But has the IFoA been complying with the standards it demands for its members?

In many areas, I think the IFoA has been doing a very good job, e.g. with regard to providing online training materials, quality of research output, helping to provide and maintain a network of very skilled and trustworthy professionals. But even if other things happened to be as little of 1% of its actions, has the IFoA done things that if committed by a member it would demand the member notify it about?

I think so. Including the following.

Has the IFoA breached principle 1 of the Actuaries’ Code, Integrity?

This says “members must behave honestly and with integrity”.

The IFoA expects members to notify it promptly when their behaviour appears to have fallen short of the high standards expected of actuaries, including criticism by regulators or courts. Why then did the IFoA fail to notify members that it had lost the Disciplinary Tribunal Panel of (I think 18) January 2021? Further, why did the IFoA fail to notify members that the DTP had awarded costs against it, which under its guidance normally only happens when a DTP

is satisfied that the IFoA has acted negligently and/or improperly in its conduct of disciplinary proceedings against the Respondent. 

The IFoA abandoned a second DTP case scheduled for early February, shortly before it was due to commence, ostensibly because that case too was likely to involve an adverse finding against the IFoA.

The IFoA expects to be able to trust its members, indeed Panels have repeatedly stated that trustworthiness is the key component of integrity.

When the IFoA hides poor behaviour on its part (as it seems to have done here), why should members or the public trust it?

Has the IFoA breached principle 3, Impartiality?

This says “Members must ensure that their professional judgement is not compromised, and cannot reasonably be seen to be compromised, by bias, conflict of interest, or the undue influence of others.”

The IFoA consistently publishes Determinations (outcomes) of Adjudication Panels and Disciplinary Tribunal Panels where such panels find misconduct proven. Its publication Guidance makes clear that all DTP determinations should be published promptly.

Yet here we have a situation where two DTP cases were resolved in favour of the member (the Respondent), so against the IFoA, and the IFoA has failed to publish any details.

Does this partial publishing (only of cases which the IFoA “won”) not give the appearance of “bias” or “conflict of interest”? Of a lack of impartiality?

If, as reported to me, the IFoA excluded journalists and at least one member from the DTP of January 2021, which had (in line with the Disciplinary Board’s guidance for DTP hearings) been billed as “public” (although online), then does this not seem to further compromise the IFoA’s trustworthiness and impartiality?

Has the IFoA breached principle 5, Speaking up?

This says “Members should speak up if they believe, or have reasonable cause to believe, that a course of action is unethical or is unlawful.”

The IFoA expects its members to self-report, and members to report actions by others, that they reasonably believe are unethical.

If (as I think they do), the IFoA’s actions mentioned above breach principle 1 (integrity) and 3 (impartiality) then is that not unethical? So shouldn’t the IFoA report this to its members? Shouldn’t actuaries who become aware of these actions report this?

We don’t yet know at present know why the DTP of January 2021 felt the IFoA’s actions were “negligent” or “improper”. When the Determination is published (which I believe should happen, given the Disciplinary Board’s clear guidance on this – if necessary with the identity of the successful Respondent anonymised), might these actions not constitute further breaches of the Actuaries’ Code? Shouldn’t actuaries at the IFoA who have been given details about these speak up about this?

Has the IFoA breached principle 6, Communication?

This says “Members must communicate appropriately.”

In particular, the IFoA expects actuaries to provide information that is clear and sufficient for the intended recipients to enable them to make informed decisions.

But what has the IFoA done in its recent actions?

It has hidden adverse disciplinary findings from its members and the public. If a member omitted significant information from a report, wouldn’t the IFoA regard that as a breach of the communication principle?

It failed to make clear to members that its policy with regard to the operation of its disciplinary scheme has changed in two significant regards. (See Concerns 1 and 2 from my letter to the Disciplinary Board. I think the IFoA should have gone further because it should have consulted members. But to introduce significant changes without making them clear to members is extremely poor in my view).

How can members and the public expect to understand what might and might not constitute misconduct, if the IFoA hides information that might help members accused (perhaps unfairly) of misconduct?

Paragraph 1.2 of the IFoA’s Disciplinary Scheme says:

In the interpretation and operation of these Schemes regard shall be had to the principles of natural justice and procedural fairness and applicable articles of the European Convention
on Human Rights.

Given that the Disciplinary Board guidance is that all DTP determinations are to be published promptly, with no exception being made for situations where misconduct is not found, how is hiding information that might help a member accused of misconduct (perhaps similar in some regards) consistent with “the principles of natural justice and procedural fairness”, Institute and Faculty of Actuaries?

Is not the IFoA breaking the spirit of its own Disciplinary Scheme?

The IFoA can, and should, in my view put things right. I hope it now does so, for the sake of its members and the public it serves.