The Professional Oversight Board, an operating body of the Financial Reporting Council (the FRC), has today announced that it will consult on additional quality assurance requirements for individual actuaries and actuarial firms. The announcement came as it published a summary of responses to its discussion paper ‘Monitoring and scrutiny of actuarial work’.

The discussion paper responded to a recommendation by the Morris Review that the FRC should satisfy itself that appropriate monitoring of actuaries’ compliance with professional standards and independent scrutiny of actuarial advice is occurring through either direct supervision by the regulator, audit or external peer review.

The Oversight Board has concluded that:

• There is enhanced independent scrutiny of actuarial advice since the Morris Review reported in March 2005, but only limited monitoring of compliance with professional standards.
• In life and general insurance, effectiveness of monitoring and scrutiny arrangements can be enhanced in the most proportionate manner through support for existing regulatory and market review practices, such as audit and FSA supervision. The Profession might pursue this strategy through education, Continuing Professional Development (CPD), and non-binding guidance.
• In pensions, the Profession should enhance the scope and application of compliance review through professional quality assurance requirements on individual actuaries or their firms. No immediate steps will be taken to develop strategies involving active external monitoring, such as an actuarial inspection unit.
• There is no need to develop separate strategies for other areas of actuarial work, although the strategies for insurance and pensions may be applicable more generally.

In recognition of the role of firms, the Oversight Board will also explore the possibility of allowing firms to take greater responsibility for aspects of the regulation of individual actuaries.

Dame Barbara Mills, Oversight Board Chair, commented:

”The responses we received to our discussion paper on monitoring and scrutiny of actuarial work have been well thought through and insightful. They have helped us formulate our approach to professional regulation generally and encouraged us to consult further on quality assurance options. We shall not at this stage be calling for active external monitoring, such as an actuarial inspection unit, as there are more proportionate actions whose impact should be considered first.”

1. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the FRC Board. The Committee on Corporate Governance assists the Board in its work on corporate governance.
2. The Professional Oversight Board contributes to the achievement of the Financial Reporting Council’s fundamental aim of promoting confidence in corporate reporting and governance. It has four main responsibilities:
   1. a statutory obligation to oversee the regulation of auditors by the recognised accountancy bodies;
   2. the monitoring of the quality of the auditing function in relation to economically significant entities; 
   3.  independent oversight of the regulation of the accountancy profession by the professional accountancy bodies;
   4. independent oversight of the regulatory activities of the professional actuarial bodies (the Faculty of Actuaries and the Institute of Actuaries, collectively known as the Actuarial Profession) in relation to their members. This includes education, training, continuing professional development, standards (except those which are the responsibility of the BAS), ethical matters, professional conduct and discipline, issuing practising certificates and monitoring, as well as making recommendations on how these activities might be improved.
3. The original discussion paper and the resulting feedback document can be accessed at http://www.frc.org.uk/pob/actuaries/reviewmonitoring.cfm
4. All media enquires should be directed to: Paul Kennedy, Head of Actuarial Oversight on 020 7492 2347 or email at p.kennedy@frc-pob.org.uk