1. Professionalism and Protection of Public Interests – the Role of Actuaries Dr David Hare Past President, Institute and Faculty of Actuaries IFoA Membre Suppléant, Actuarial Association of Europe 6 November 2015

2. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 What does professionalism mean? 06 November 2015 1 Different things to different people What you do How you do it Overarching theme of quality

3. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 What is a profession? 06 November 2015 2 Three key requirements –Specialist knowledge and training –Ethical standards and commitment to serving the public interest –A body with disciplinary powers Typically has monopoly over an area of work Underpins public trust and confidence

4. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 Institute and Faculty of Actuaries Our Mission The objects of the Institute and Faculty of Actuaries shall be, in the public interest, to advance all matters relevant to actuarial science and its applications and to regulate and promote the actuarial profession. Our Vision We will serve the public interest by ensuring that where there is uncertainty of future financial outcomes, actuaries are trusted and sought after for their valued analysis and authority. (Charter of the Institute and Faculty of Actuaries, August 2010) 3 06 November 2015

5. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 How the IFoA contributes to the development of professionalism and expertise Robust Qualification framework – FIA, AIA, CAA Actuarial code of conduct and relevant standards (e.g. APS X2) Professionalism skills training Guidance materials and CPD opportunities Disciplinary Scheme Commissions research – both member-led and external Contributes to public policy making process Quality Assurance Scheme 4 06 November 2015

6. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 Why introduce the Certified Actuarial Analyst? For candidates membership of a globally recognised prestigious body globally recognised, portable qualification opens up a wide range of financial career options For employers professionalises technical and analytical roles aids staff retention and boosts morale helps employers to attract the best employees; opportunity to invest appropriately in staff development For the public interest brings those in support roles into a regulatory framework relevant and affordable promotes actuarial science and capacity building. 06 November 2015 5

7. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 Actuaries’ Code Integrity Competency and care Impartiality 06 November 2015 6 Members will act honestly and with the highest standards of integrity Members will perform their professional duties competently and with care Members will communicate effectively and meet all applicable reporting standards Compliance Communication Members will not allow bias, conflict of interest, or the undue influence of others to override their professional judgement Members will comply with all relevant legal, regulatory and professional requirements, take reasonable steps to ensure they are not placed in a position where they are unable to comply, and will challenge non-compliance by others

8. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 Professionalism skills training Online Professional Awareness Test for students Online professional skills course for Fellows, Associates, and students 4 to 6 years post admission Professional skills training for experienced members: Online case-study-based material available from the Institute and Faculty of Actuaries (IFoA) website Other, ad hoc, communications from Regulation Board (e.g. March 2015 letter regarding newly-introduced pensions freedoms; new annual risk outlook) 06 November 2015 7 We provide relevant training that assists members to understand and fulfil their obligations as professionals

9. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 Disciplinary scheme Rigorous process for dealing with complaints Independent Disciplinary Board Definition of misconduct covers “failure … to comply with the standards of behaviour, integrity or professional judgement which other Members or the public might reasonably expect …” Ensure people outside the profession can have confidence in actuaries and their work 06 November 2015 8

10. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 UK Twin regulators FSA split into PRA & FCA in April 2013 PRA & FCA have differing but complementary regulatory objectives Memorandum of Understanding 06 November 2015 9

11. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 PRA Regulatory Objectives The PRA combines regulation, (it sets standards or policies that it expects firms to meet.); and supervision, (it assess the risks that firms pose). To promote the safety and soundness of these firms. Specifically for insurers, to contribute to the securing of an appropriate degree of protection for policyholders. As a secondary objective, the PRA has a requirement to facilitate competition. The PRA approach to supervision does not seek to operate a “zero-failure” regime. Rather, the PRA seeks to ensure that a financial firm which fails does so in a way that avoids significant disruption to the supply of critical financial services. Characteristics of the PRA’s approach A judgement-based approach: A forward-looking approach: A focused approach: www.bankofengland.co.uk/pra 06 November 2015 10

12. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 FCA Regulatory Objectives 1. Protecting consumers 2. Market integrity 3. Promoting effective competition. What has FCA said it will do? Identify and assess risks to consumers and firms. Identify the risks that market failures impact competition. Make evidence-based policies that change behaviour. Prioritise, manage and mitigate risk consistently. Establish common standards and principles. Put in place the infrastructure to assess risk. Risk Outlook: forward-looking areas of focus Technological developments. Poor culture and controls. Large back-books. Retirement income products and distribution. The growth of consumer credit. Excessively complex terms and conditions. House price growth. www.frc.org.uk 06 November 2015 11

13. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 UK regulatory roles for actuaries include Chief Actuary (SIMF 20) –“must ensure that the Firm’s management are aware at all times of his/her interpretation of its obligations to (a) treat customers fairly; and (b) policyholders’ reasonable expectations which need to be taken into account in assessing the liabilities …” With-Profits Actuary (SIMF 21) –“advise the firm's management, at the level of seniority that is reasonably appropriate, on key aspects of the discretion to be exercised affecting those classes of the with-profits business of the firm in respect of which he has been appointed …”firm'swith-profits businessfirm Independent Experts –Opinion on not “materially adversely affected” on transfer 06 November 2015 12

14. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 Other UK governance opportunities for actuaries (in addition to NEDs and Pension Trustee roles) With-Profits Committee (COBS 20) –“in part, to act in an advisory capacity to inform the decision-making of a firm's governing body… also acts as a means by which the interests of with-profits policyholders are appropriately considered within a firm's governance structures…”firm'sgoverning bodywith-profits policyholders firm's Independent Governance Committees (COBS 19.5) –“the IGC will act solely in the interests of relevant policyholders; assess the ongoing value for money … delivered by [workplace DC contract-based schemes] …; raise with the firm's governing body any concerns it may have in relation to the value for money … ; escalate concerns as appropriate where the firm has not, in the IGC's opinion, addressed those concerns satisfactorily …”IGCrelevant policyholdersfirm'sgoverning bodyfirm IGC's 06 November 2015 13

15. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 An idea from our accountancy colleagues 06 November 2015 14

16. Colour palette for PowerPoint presentations Dark blue R17 G52 B88 Gold R217 G171 B22 Mid blue R64 G150 B184 Secondary colour palette Primary colour palette Light grey R63 G69 B72 Pea green R121 G163 B42 Forest green R0 G132 B82 Bottle green R17 G179 B162 Cyan R0 G156 B200 Light blue R124 G179 B225 Violet R128 G118 B207 Purple R143 G70 B147 Fuscia R233 G69 B140 Red R200 G30 B69 Orange R238 G116 29 Dark grey R63 G69 B72 Professionalism amongst actuaries is vital –It covers the what and the how –It underpins trust and confidence –It supports financial stability “Ethics is knowing the difference between what you have a right to do, and what it is right to do.” Potter Stewart (American Judge) 15 Concluding thoughts Is your integrity more important to you than your income?! 06 November 2015

17. I’d like to hear your thoughts Questions? Comments? Dr David Hare Past President, Institute and Faculty of Actuaries IFoA Membre Suppléant, Actuarial Association of Europe 6 November 2015