The last few months have seen dramatic changes in markets and increased uncertainty in the economy. To supplement the work of its operating bodies in setting technical actuarial standards and oversight of the actuarial profession, the Financial Reporting Council (FRC) has prepared a statement with a list of questions which may be useful for governing bodies of:

• pension schemes and sponsoring employers;
• insurance companies and friendly societies; and
• financial institutions and other entities which rely on actuarial work.

Paul Seymour, Chair of the Board for Actuarial Standards, said:

“Although the headlines have not focused on actuarial work, the risks to confidence in corporate governance and reporting are higher than they have been for decades. These increased risks require additional diligence on the part of actuaries and the users of actuarial information and advice.”

The FRC’s questions are not exhaustive or intended to apply to every case or to substitute for specific regulatory guidance, but they are intended to stimulate discussion and improve understanding of relevant issues, such as:

• business models;
• risk reduction and transfer;
• scenario analysis and stress testing; 
•  investment assumptions and discount rates; and
• scope of actuarial advice and pressures on actuaries.

Dame Barbara Mills, Chair of the Professional Oversight Board, said:

“These questions are addressed to members of governing bodies, such as pension trustees and directors, but should also be of help to other professionals such as auditors, analysts, managers, and investors; and of course to actuaries themselves who need effective dialogue and scrutiny by users of their work to support their delivery of high quality advice.”

Copies of the statement are available from the FRC’s website at: http://www.frc.org.uk/publications/pub1801.html

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 Board for Actuarial Standards has a primary objective of promoting competence and transparency of actuarial practice by establishing and improving actuarial technical standards and ensuring that they are coherent, consistent and comprehensive.
3. The Professional Oversight Board oversees 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.
4. All media enquiries should be addressed to Paul George, +44 (0)20 7492 2300 or email at: p.george@frc.org.uk