One of the central recommendations of the Morris Review of the Actuarial Profession (published in March 2005) was that self-regulation by the actuarial profession should be subject to independent oversight by the Financial Reporting Council. The FRC assumed this responsibility in April 2006 and agreed a Memorandum of Understanding in May 2006 (now updated) with the Institute of Actuaries and the Faculty of Actuaries in Scotland, which have since merged to form the Institute and Faculty of Actuaries (IFoA). There is also a communications protocol in place, detailing the way that the FRC and IFoA will fulfil the communication requirements of the Memorandum of Understanding.
In relation to oversight of the Institute and Faculty of Actuaries, the FRC achieves its aims by:
- Monitoring the regulatory activities of the IFoA in relation to its members, including following up the IFoA's response to the FRC's earlier recommendations - through consideration of reports from the IFoA and the FRC's own independent assessments against indicators in the FRC's Actuarial Quality Framework;
- Monitoring other developments, assessing those issues that could adversely affect public confidence in actuaries - against indicators in the FRC's Actuarial Quality Framework;
- Where appropriate, undertaking more detailed research and making formal and informal recommendations to the IFoA or recommending the development of new standards.
In line with the FRC Plan 2015/16, the FRC's main priorities in relation to actuarial oversight are to oversee the IFoA on:
- Implementation of its standard: APS QA1 on quality assurance in organisations;
- Implementation of its standard: APS X2 on work review and independent peer review for individuals;
- Preparations for the full implementation of Solvency II in January 2016; and
- Its identification and response to public interest actuarial risks.
The FRC works closely with other bodies involved in the regulation of actuaries or their work, including the Institute and Faculty of Actuaries (IFoA), the Pensions Regulator (tPR), the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA) and the Funeral Planning Authority (FPA).
The FRC has also established an Actuarial Stakeholder Group primarily to provide input from direct and indirect users of actuarial services to the work of the FRC.
Through these arrangements, the FRC seeks to promote high quality actuarial practice and the integrity, competence and transparency of the actuarial profession to the benefit of all those who rely on actuarial advice or are affected by it.