Business Awareness & Critical Thinking

Session 2 Professionalism and ethics The Actuaries Code Case studies

www.le.ac.uk

What is professionalism and ethics?

What things would you expect from a professional? How would you define the term ethics?

The Actuaries Code:

A modern statement of principles for a growing profession

To whom does it apply? When does it apply?

What is it not?

The Actuaries Code:

A modern statement of principles for a growing profession

Integrity Competence and care

Impartiality
Compliance Open communication

Integrity: members will act honestly and with the highest

standards of integrity.

Respect for others Respect confidentiality

Honest, open and truthful

Competence and care: members will

perform their professional duties competently and with care.

Appropriate level of relevant knowledge and skill Appropriate to the needs of the client

Scope and remuneration to be agreed

Impartiality: members will not allow bias, conflict of interest,

or the undue influence of others to override their professional judgement.

Remain objective

Recognise conflicts of interest

Reconcile conflicts of interest

Compliance: 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.

Unlawful, unethical or improper Speak up Report

Open communication: members will communicate

effectively and meet all applicable reporting standards.

Timely
Appropriate level Accurate and not misleading

The Actuaries Code:

A modern statement of principles for a growing profession

Self-test questions & resources

http://participate.x10.mx

Those to whom the Code applies are referred to as A. Fellows

B. Actuaries C. Professionals D. Members

Under Status, the Code is A. For use by other professionals as well as actuaries
B. Not a set of rules

C. Intended to cover all possible circumstances

D. A document which can serve as defence in a court of law A B C D

What should members communication contain in order to enable its subject matter to be put in proper context?
A. Light hearted anecdotes

B. Practical examples
C. References to the Actuaries Code

D. Sufficient information
A B C D

Mr A.N. Actuary, a member of the profession work for LMN consulting and is negotiating a contract with a client XYZ. LMN consulting is being appointed by XYZ to advise on a number of actuarial matters. The Finance Director of XYZ insists on a contingent fees basis in the contract stating that this is how XYZ operates with all their other advisers. What action would be most appropriate?
A. Accept the appointment only if the fee income from XYZ represents a significant proportion of LMNs revenue.
Ensure that LMN consulting and A.N. Actuary have sufficient professional indemnity cover. Accept the appointment provided A.N. Actuary can satisfy himself that his objectivity would not be compromised by the conditions in the contract. Decline the appointment contingent fees should not be accepted under any circumstances.

B. C.

D.

What should members do if they believe that a course of action is unlawful, unethical or improper? A. Resign from the project
B. Contact an appropriate committee

C. Put the matter in the hands of a lawyer

D. Speak up to their clients or their employer or both A B C D

Members will take such steps as are sufficient and available to them to ensure that any communication with which they are associated is X?
I=containing sufficient information to enable its subject matter to be put in proper context II=available in Braille III=accurate IV=mot misleading V=produced in accordance with the scope of the original appointment or instruction What list would you ascribe to X?

A. I,II,V B. I,III,IV C. II,III,IV D. III,IV,V A B C D

Members will ensure that their ability to provide objective advice is A. Not compromised
B. Checked periodically by legal professionals

C. In accordance with the wishes of the President of the Institute and Faculty of Actuaries D. Approved by their firms professional indemnity insurers

Members will agree with the client

A. The level of actuarial resources which will be deployed within the appointment or instruction

B. Any key deadlines by which interim or final delivery is required C. The scope and nature of any appointment or instruction
D. The fees to be paid A B C D

Members will agree with the client the basis for their remuneration before commencing an appointment or instruction and before
A. Seeking any credit references on the clients ability to pay B. Checking the basis of remuneration charged by other actuarial firms C. Any material changes in the scope of an existing appointment or instruction

D. Including proposed increased chargeout rates to members working on the appointment or instruction.

What should members take to ensure that they are not placed in a position where they are unable to comply?
A. Records of all conversations and electronic communications B. Reasonable steps C. Professional indemnity insurance

D. The advice of a leading barrister

A B C D

The marketing actuary for insurance company XYZ has just been informed by the Board, on a confidential basis, that XYZ has joined a cartel of insurance companies that is in the process of agreeing major changes to the terms of core insurance products. The new terms will have the appearance of being better value to customers, but in fact the majority will be worse off. This change would dominate the market and would result in higher overall profits, but the marketing actuary feels that this is unethical. Which of the following best describes how he should proceed?
A. Although the information is confidential, you should considering disclosing it (if legal) because it would be in the public interest to do so. Your primary responsibility is to your employer and the shareholders of company XYZ, so you should implement the proposal irrespective of your own ethical views. As marketing actuary, it is your responsibility to differentiate yourself from competitors and for that reason you should recommend not joining the cartel. The information is confidential and you should therefore not discuss it with anyone outside the Board of XYZ.

B.

C.

D.

The Actuaries Code:

A modern statement of principles for a growing profession

Be aware Document thoroughly

Audit trails
Watch out for the obvious and the subtle

The Actuaries Code questions?